MGT 2306

MARKETING MANAGEMENT

Lesson 8

LESSON 8 OBJECTIVES

• Define what is Distribution

• Explain the role of distribution in the marketing

mix

• Comprehend the distribution channel functions &

intermediaries

• List and explain the distribution strategy & types

of distribution

DISTRIBUTION (PENGEDARAN)

• Distribution is the process of making a product

or service available for use or consumption by a

consumer or business user, using direct means,

or using indirect means through distribution

channels involving intermediaries.

THE ROLE OF DISTRIBUTION IN

THE MARKETING MIX

• provides locational

convenience

(kemudahan tempat)

place utility

time utility

WHAT DOES PHYSICAL

DISTRIBUTION INVOLVE?• Transporting

(pengangkutan)

• Warehousing

(pergudangan)

• Inventory

management

(pengurusan

inventori)

• Order processing

(pemprosesan

pesanan)

WHAT IS A DISTRIBUTION CHANNEL?

(SALURAN PENGEDARAN)

• A set of interdependent

organisations (producers and

intermediaries) involved in

the process of making a

product or service available

to target markets

TYPES OF DISTRIBUTION CHANNELS

TRIVIA QUESTION…

How do eggs from the chicken reared in the

chicken farm get to the supermarket where you

buy them?

HOW DO EGGS GET FROM THE

CHICKEN TO YOUR TABLE?

• Collected from various chicken farms

• Graded (Categorized : Free-range, low-

cholesterol, Omega 3/6 infused)

• Washed

• Candled (???)

• Graded By weight (A, B, C)

• Packed (primary, secondary, shipping)

• Coded

WHAT IS A DISTRIBUTION

INTERMEDIARY?

• Individual or firm (such as an agent, distributor,

wholesaler, retailer) that links producers to other

intermediaries or the ultimate buyer. Distribution

intermediaries help a firm to promote, sell, and

make-available a good or service through

contractual arrangements or purchase and resale

of the item.

• Also called marketing intermediary.

WHY USE INTERMEDIARIES?

• lack of distribution facilities and expertise

- high cost of acquiring distribution capability

warehouses, order processing, transportation

etc.)

• specialisation

• contactual efficiency

• achieve economies of scale

• overcome the discrepancy of quantity and

assortment

DISTRIBUTION CHANNEL

FUNCTIONS

Contact

Financing

InformationRisk taking

Promotion

MatchingNegotiation

Physical

distribution

INFORMATION

• Intermediaries provide information to

manufacturers about the market demands and

changes in regards to products.

• With these valuable information, manufacturers

may adjust their product offerings according to

customer’s demands

Intermediaries give information..

PROMOTION

• Intermediaries play a role in helping promote the

manufacturer’s products to retailers to persuade

them to take on the product to sell it to their

customers.

CONTACT

• Intermediaries know many other

intermediaries and retailers so they can

spread the manufacturer’s products far and

wide in terms of presence and availability

MATCHING

• Intermediaries help with bulk-breaking (pembahagian pukal) and order matching (pesanan pemadanan) to ensure manufacturers sell their products and retailers take their products.

NEGOTIATION

• Intermediaries negotiate (runding) prices, quantity

purchased, delivery modes and payment terms

with retailers so that it best maximizes the interest

of their manufacturers and themselves.

PHYSICAL DISTRIBUTION

• Intermediaries provide essential transportation

facilities and arrange inter-modal transportation to

ship goods from manufacturers’ factory to

destinations where retailers and wholesalers may

have easy access to them

SPIDERMAN DELIVERS PIZZA

FINANCING

• Intermediaries come with upfront payments for

transportation, oil, toll and other charges while

shipping goods from manufacturers to retailers.

• Sometimes, they also need to pay deposits or

settle outstanding customs and taxes to the

government before they could take hold of their

stocks.

RISK TAKING

• Products which are perishable, fragile,

dangerous and pose risks to people have to be

handled in order to reach the market in good

condition and most of all in a safe manner. The

intermediary bears the risks of unforeseen

events like accidents, hijacking, theft and

spoilage of goods.

• A distribution network is established by

answering the questions of who, what, when,

where, and how in terms of getting products to

their end point.

DISTRIBUTION NETWORK

(RANGKAIAN PENGEDARAN)

TYPES OF DISTRIBUTION

• Three types of distribution can be used to

make product available to consumers:

(1) intensive distribution,

(2) selective distribution

(3) exclusive distribution.

INTENSIVE DISTRIBUTION

• Also known as “one to many” distribution

• The aim is to make available the product in as

many places possible

• Focus on production capability and wide

coverage

• Normally used for fast-moving consumer goods

(FMCG) like food items, drink, snacks,

household items.

SELECTIVE DISTRIBUTION

• These are shopping products that require

consumer involvement and also effort to

purchase.

• The coverage is lesser as availability is only

targeted at the location where a large number

of consumers exist and may look for it.

• Goods are normally priced higher

• Examples would be branded shoes, petrol,

pharmaceutical products or middle-range

clothing or electronic equipment.

EXCLUSIVE DISTRIBUTION

• These are specialty products which are

sometimes pricey.

• Manufacturer might decide to open their own

stores to sell their own product or control their

distribution by careful selection of outlets or

places to preserve exclusivity & image

• Examples would be golf equipment, pewter

ware, high-end cars, designer equipment like

watches, clothes, shoes etc.

CLASS EXERCISE

How are these products distributed?

a) Mandarin Oranges

b) Petrol

c) Ferrari Cars

d) Nike Shoes