Download Distribution (Place)

CHAPTER 15
Distributing
Products
McGraw-Hill/Irwin
Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.
WHAT IS THE DISTRIBUTION (PLACE)
ELEMENT OF THE MARKETING MIX?
The process that makes products available
to consumers when and where consumers
want them.
15-2
WHAT are MARKETING
INTERMEDIARIES?
LO 15-1
• Marketing Intermediaries (aka Middlemen) -- Organizations that
assist in moving goods and services from businesses to businesses
(B2B) and from businesses to consumers (B2C).
• They are called intermediaries because they’re in the middle of a
series of firms that distribute goods.
•
Channel of Distribution -- A
group of marketing
intermediaries that joining
together to transport and store
goods from producers to
consumers.
15-3
DISTRIBUTION: GETTING THE
PRODUCT TO THE CONSUMER
Producer
Wholesaler
LO 15-1
Consumer
Channel of Distribution –
the path that a product takes from
the producer to the consumer
Distribution Strategy: getting the right product to the right
person at the right place, at the right time
15-4
TYPES of MARKETING
INTERMEDIARIES?
LO 15-1
•
Agents and Brokers -- Intermediaries who bring buyers and sellers together and assist in negotiating an exchange
but do not take title to the goods.
•
Wholesaler -- An intermediary that sells products to other organizations such as retailers, manufacturers, and
hospitals.
•
Retailer -- An organization that sells products to ultimate customers.
15-5
SELECTED CHANNELS of
DISTRIBUTION
LO 15-1
15-6
WHY MARKETING NEEDS
INTERMEDIARIES
LO 15-1
Justifications for marketing
intermediaries
• Intermediaries perform essential marketing services
(promotion of products, help sell product)
• Intermediaries provide important market information to
producers (what’s selling, who’s buying, customer
feedback)
• Intermediaries help store products (producers won’t be
burdened with storage costs)
• Intermediaries provide customers with convenience and
choice selection
• Intermediaries accept risk for customer non-payment or
non-sold products
• Intermediaries create EFFICIENCY and UTILITY
• Intermediaries help REDUCE COSTS and provide VALUE!
How?
15-7
HOW INTERMEDIARIES CREATE
EXCHANGE EFFICIENCY
LO 15-1
15-8
THREE KEY FACTS ABOUT
MARKETING INTERMEDIARIES
LO 15-1
1) Marketing intermediaries can be eliminated but
their activities cannot.
2) Intermediaries perform marketing functions
faster and cheaper than other organizations can.
3) Marketing intermediaries add costs to products
but they are generally offset by the values they
provide.
15-9
DISTRIBUTION’S EFFECT on
YOUR FOOD DOLLAR
LO 15-1
15-10
INTERMEDIARIES
CREATE UTILITY
LO 15-2
• Utility -- The want-satisfying ability, or value, that
organizations add to goods and services by making
them more useful or accessible to consumers.
• Four types of utilities:
1. Form
2. Time
3. Place
4. Possession
15-11
HOW MARKETERS USE UTILITY
•
•
•
•
LO 15-2
Form Utility -- Changes raw materials into useful products; producers generally provide form utility.
-
Starbucks makes coffee the way the customers want it.
-
Dell assembles computers according to customer needs.
Time Utility -- Makes products available when customers want them.
-
Many Walgreens stores are open 24-hours a day.
-
Colleges offer day and evening classes.
Place Utility -- Adds value to products by placing them where people want them.
-
Banks place ATMs at convenient locations.
-
7-11 stores are found in easy-to-reach locations.
Possession Utility -- Helps transfer ownership from one party to another, including providing credit.
-
Pay for lunch at McDonalds with your Visa card.
-
A savings and loan office offers loans to home/car buyers.
15-12
RETAILING in the U.S.
LO 15-4
• There are over 2 million retailers in the U.S., not
including websites.
• Retailers in the U.S.
employ about 5 million
people and operate
under many different
structures.
15-13
FASTEST GROWING RETAIL
CATEGORIES
LO 15-4
• Video games
• Sports and fitness
• Home, garden, and
furniture
• Event tickets
• Consumer electronics
15-14
TYPES of RETAIL STORES
Types
LO 15-4
Examples
Department Store
Sears, JC Penney, Nordstom
Discount Store
Wal-Mart, Target
Supermarket
Safeway, Kroger, Albertson’s
Warehouse Club
Costco, Sam’s Club
Convenience Store
7-Eleven
Category Killer
Toys-R-Us, Bass Pro Shops, Office
Depot
Outlet Store
Nordstrom Rack, TJ Maxx, Nike
Outlet
Specialty Store
Jewelry store, shoe stores, bicycle
shops
15-15
RETAIL DISTRIBUTION
STRATEGIES
LO 15-4
 Intensity of market coverage
• Intensive distribution
– The use of all available outlets for a
product to saturate the market
– Convenience Products
• Selective distribution
– The use of only a portion of the
available outlets for a product in each
geographic area
– Shopping Products
• Exclusive distribution
– The use of only a single retail outlet
for a product in a larger geographic
area
– Specialty Products
15-16
PICK a STRATEGY…
LO 15-4
What’s the Correct Retail Strategy for These Products?
• Ralph Lauren Polo Shirts
• Diet Pepsi
• Rolls Royce Automobiles
• Calloway Golf Clubs
• Snickers Candy Bars
• Steinway Pianos
15-17