Download Marketing Intermediaries

WEEK 10:
DISTRIBUTION AND LOGISTICS
BUSN 102 – Özge Can
Marketing Intermediaries
15-2

Distribution Strategy
A
firm’s overall plan for moving products through
intermediaries and on to final customers

Marketing Intermediaries
 Businesspeople
and organizations that assist in
moving and marketing goods and services
between producers and consumers
Wholesaling vs. Retailing
15-3

Wholesalers:
 Intermediaries
that
sell products to
other intermediaries
for resale or to
organizations for
internal use

Retailers:
 Intermediaries
that
sell goods and
services to
individuals for their
own personal use
Contributions of Marketing
Intermediaries:
15-4

Matching buyers and sellers
 Reducing
the number of transactions between producers
and customers

Providing market information
 Collecting

data about who buys, how often, how much
Providing promotional and sales support
 Advertising,

in-store displays, other promotional efforts
Gathering assortments of goods
 Breaking
bulk shipments into smaller units/packages
Contributions of Marketing
Intermediaries:
15-5


Transporting and storing products
Assuming risks
 Take


the risks with damage, thefti product perishability
Providing financing
Completing product solutions
 Value-added

resellers (VARs), system integrators
Facilitating transactions and supporting
customers
 Help
with the selection, purchase and use of products
Major Types of Wholesalers
15-6
1) Merchant Wholesalers
 Independent
wholesalers that take legal title to
goods they distribute

By intensity of service:
 Full-service
merchant wholesalers
 Limited-service merchant wholesalers

By their customers:
 Usual
wholesalers
 Distributors
Major Types of Wholesalers
15-7

Distributors
 Merchant
wholesalers that sell products to
organizational customers for internal operations
or the production of other goods, rather than to
retailers for resale
Major Types of Wholesalers
15-8
2) Agents and Brokers
 Independent
wholesalers that do not own and
take title of the goods they produce and that
perform fewer services
 They
are generally pain a commission to for
arranging sales
The Outlook for Wholesaling
15-9
Integrated logistics management
Threat of disintermediation
Unbundling of services
Industry consolidation
The Outlook of Wholesaling
10

Third-party logistics (3PL) firms
 Taking over not only traditional whosaling activities
but also order fulfillment, product repair, customer
service, and other functions
 Increased with outsourcing

Disintermediation
 The replacement of intermediaries by producers,
customers, or other intermediaries when those
other parties can perform channel functions more
effectively or efficiently
Retailing Formats
15-11

Department Stores (J.C.Penney)
 Large
stores that carry a variety of products in
multiple categories, such as clothing, house
wares, gifts, bedding, and furniture

Specialty Stores
 Stores
that carry only a particular type of goods,
often with deep selection in those specific
categories
 Category killers (specific products on a massive
scale)
Retailing Formats
15-12

Discount Stores (Target, Walmart)
 Retailers
that sell a variety of everyday goods
below the market price by keeping their overhead
low

Off-Price Stores
 Stores
that sell designer labels and other
fashionable products at steep discounts
Retailing Formats
15-13

Online Retailers (amazon.com)
 Companies
that use e-commerce technologies to
sell over the Internet; includes Internet-only
retailers and the online arm of store-based
retailers

E-commerce
 The
application of Internet technologies to
wholesaling and retailing
 Not limited to retailing!
Retailing Formats
15-14





Convenience Stores (7-Eleven)
Factory/ retail outlets (Nike outlet store)
Supermarkets (DiaSa, Bim)
Hypermarkets (Migros, Carrefour)
Warehouse clubs (Costco, Metro)
The Outlook for Retailing
15-15

Successful retailers do the following:
1. Maintain a clear sense of purpose in the minds
of target customers
2. Crafting an overall shopping experience
3. Protecting the credibility of the retail brand
4. Adapting to customer trends without overreacting to short-term fads.
The Outlook for Retailing
15-16
Overcapacity
 Continued growth in online retailing
 Growth of multichannel retailing
 Format innovations
 Retail theater
 Threat of disintermediation

The Outlook for Retailing
15-17

Multichannel
Retailing:
 Coordinated
efforts
to reach consumers
through more than
one retail channel

Retail Theater:
 The
addition of
entertainment or
education aspects to
the retail experience
Distribution Strategies
15-18

Distribution Mix
A
combination of intermediaries and channels a
producer uses to reach target customers
Should we sell directly to end users or rely on
intermediaries?
 Which intermediaries should we choose?
 Should we sell our product everywhere available
or limit distribution to fewer outlets?
 Should we use more than one channel?

Strategic Considerations:
15-19





Customer needs and expectations
Product support requirements
Segmentation, targeting, and positioning
Competitors’ distribution channels
Established industry patterns and
requirements
Channel Design Considerations
20





Channel length
Market coverage
Distribution costs
Channel conflicts
Channel organization of control
Common Distribution Channel Models
15-21
Common Distribution Channel Models
15-22
Market Coverage
15-23

Intensive Distribution:
A
market coverage strategy that tries to place a
product in as many outlets as possible

Selective Distribution:
A
market coverage strategy that uses a limited
number of carefully chosen outlets to distribute
products
Market Coverage
15-24

Exclusive Distribution:
A
market coverage strategy that gives
intermediaries exclusive rights to sell a product in
a specific geographic area
In-Class Exercise:
25
Product Type
Product Example
Distribution
Channel
Convenience
Products
BMWs
Selective
Distribution
Shopping
Products
Chewing Gum
Exclusive
Distribution
Specialty
Products
Men’s Suits
Intensive
Distribution
Channel Conflict
15-26

Channel Conflict
 Disagreement
or tension between two or more
members in a distribution channel, such as
competition between channel partners trying to
reach the same group of customers
Channel Organization and Control
15-27

Marketing Systems
 Arrangements
by which channel partners
coordinate their activities under the leadership of
one of the partners
Factors That Influence Distribution
Channel Choices:
15-28
Factors That Influence Distribution
Channel Choices:
15-29
Physical Distribution and Logistics
15-30

Physical
Distribution
 All
the activities
required to move
finished products
from the producer to
the consumer

Logistics
 The
planning,
movement, and flow
of goods and related
information
throughout the
supply chain
Physical Distribution Process:
15-31
Physical Distribution and Logistics
15-32

In-House Operations
 Forecasting
 Order
Processing
 Inventory control
 Warehousing
 Materials handling

Transportation
Major Modes of Transportation
33
Rail
 Trucks
 Ships and barges
 Air
 Pipelines
 Digital networks

Major Modes of Transportation
15-34

Intermodal Transportation
 The
coordinated use of multiple modes of
transportation, particularly with containers that
can be shipped by truck, rail, and sea
Assignment #2:
35
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

Written Group Assignment:
Building Your Team Skills, Chapter 15, p. 351
Submission: Next week
Assignment #2 - Details:
36



You have to analyze the shopping experience on
three competitive e-retail websites.
First, choose a product that you find interesting but you
have not purchased online before.
Then, identify three (3) websites that are likely to offer
the product and examine tjem in detail.
Answer the following questions and summarize your
impression of each of the three sites. Based on the
strengths and weaknesses of each site, identify four (4)
pieces of advice for a company that wants to compete
against them.
Assignment #2 – Details:
37
1. How much information is available? Complete product details
or just a few highlights? (Ex: any photos or a 3D virtual
experience?)
2. How difficult was it to find the product you wanted on the
website?
3. How easy was it to compare this product to similar products?
4. Could you find the store’s privacy and return policies? Were
they acceptable to you?
5. What forms of help were available in case you had questions
or concerns about this product?
6. What social commerce elements did you encounter on the
website? Were they helpful in your search?