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Adapt ed fr om Wikipedia, t he fr ee encyclopedia.
3ODFH or 'LVWULEXWLRQ is one of the four aspects of marketing. A distribution business is the
middleman between the manufacturer and retailer or, in commercial or industrial, the business
customer. After a product is manufactured by a supplier/factory, it is typically stored in a
distribution company's warehouse. The product is then sold to retailers or customers.
Tradit ionally, dist ribut ion has been seen as dealing w it h logist ics: how t o get t he product or
service t o t he cust om er. I t m ust answ er quest ions such as:
Should t he product be sold t hrough a ret ailer ?
Should t he product be dist ribut ed t hrough w holesale?
Should m ult i- level m arket ing channels be used?
How long should t he channel be ( how m any m em bers) ?
Where should t he product or service be available?
Should dist r ibut ion be ex clusiv e, select ive or ext ensive?
Who should cont rol t he channel ( refer red t o as t he channel capt ain) ?
Should channel m em bers share adver t ising ( referred t o as co- op ads) ?
Should elect ronic m et hods of dist ribut ion be used?
What w ill it cost t o keep an invent ory of product s on st ore shelv es and in channel
w arehouses?
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Frequent ly t here m ay be a chain of int erm ediaries, each passing t he product dow n t he
chain t o t he nex t or ganizat ion, before it finally reaches t he consum er or end- user. This
process is know n as t he ’dist ribut ion chain’ or, rat her m ore exot ically, as t he ’channel’.
Each of t he elem ent s in t hese chains w ill hav e t heir ow n specific needs; w hich t he producer
m ust t ake int o account , along w it h t hose of t he all- im port ant end- user.
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A num ber of alt ernat ive ’channels’ of dist ribut ion m ay be available:
Selling direct
Mail order ( including I nt ernet and t elephone sales)
Ret ailer
Wholesaler
Agent ( w ho act s on behalf of t he producer)
Dist ribut ion channels m ay not be rest rict ed t o physical product s. They m ay be j ust as
im port ant for m oving a service from producer t o consum er in cert ain sect ors; since bot h
direct and indirect channels m ay be used. Hot els, for exam ple, m ay sell t heir services
( t ypically room s) direct or t hrough t ravel agent s, t our operat or s, airlines, t ourist boards,
cent ralised reserv at ion sy st em s, and so on.
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There have also been som e innovat ions in t he dist ribut ion of services. For exam ple, t here
has been an increase in franchising and in rent al services - t he lat t er offering anyt hing
from t elevisions t hrough t o DI Y ( do it y ourself) t ools. There has also been som e evidence
of service int egrat ion, w it h serv ices linking t oget her, part icularly in t he t r avel and t ourism
sect or: for ex am ple, link s now ex ist bet w een airlines, hot els and car rent al services. I n
addit ion, t her e has been a significant increase in r et ail out let s for t he ser vice sect or;
out let s such as real est at e agencies ( real est at e agent s) and building societ y offices, for
exam ple, are crow ding out t he t radit ional grocers and gr eengrocers from t he high st reet
( m aj or shopping areas) .
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Dist ribut ion channels can, t hus, have a num ber of ` levels'.
Kot ler defined t he sim plest level, t hat of direct cont act w it h no int erm ediaries
involved, as t he ` zero- level' channel.
The nex t level, t he ` one- level' channel, feat ures j ust one int erm ediary; in consum er
goods a ret ailer , for indust rial goods a dist ribut or, say. I n r ecent years t his has been
t he level w hich, t oget her w it h t he zero- level, has account ed for t he great est
percent age of t he overall volum es dist ribut ed in, say, t he UK; alt hough t he very
elaborat e dist ribut ion syst em s in Japan are at t he ot her end of t he spect rum , w it h
m any levels being encount ered ev en for t he sim plest of consum er goods.
I n t he UK, a second level, a w holesaler for exam ple, is now m ainly used t o ext end
dist ribut ion t o t he large num ber of sm all, neighbourhood ret ailer .
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To t he various ` levels' of dist ribut ion, w hich t hey refer t o as t he FKDQQHO OHQJWK,
Lancast er and Massingham also added anot her st ruct ural elem ent , t he relat ionship
bet w een it s m em bers:
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- This is t he usual, w idely recognized, channel w it h a range of
m iddle- m en passing t he goods on t o t he end- user.
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- A t em porary channel m ay be set up for one t ransact ion; for
exam ple, t he sale of propert y or a specific civil engineering proj ect . This does not share
m any charact erist ics w it h ot her channel t ransact ions, each one being unique.
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int egr at ed.
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Many of t he m arket ing principles and t echniques w hich are applied t o t he ext ernal
cust om ers of an organizat ion can be j ust as effect ively applied t o each subsidiary's, or each
depart m ent 's, 'int ernal' cust om ers.
I n som e part s of cert ain organizat ions t his m ay in fact be form alized, as goods are
t ransferr ed bet w een separat e par t s of t he organizat ion at a WUDQVIHU SULFH. To all int ent s
and purposes, w it h t he possible except ion of t he pricing m echanism it self, t his process can
and should be view ed as a norm al buyer - seller relat ionship. The fact t hat t his is a capt iv e
m arket , result ing in a ` m onopoly price', should not discourage t he part icipant s from
em ploying m arket ing t echniques.
Less obvious, but j ust as pract ical, is t he use of m arket ing by serv ice and adm inist rat ive
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depart m ent s; t o opt im ize t heir cont ribut ion t o t heir ’cust om ers’ ( t he rest of t he
organizat ion in general, and t hose part s of it w hich deal direct ly w it h t hem in par t icular) . I n
all of t his, t he lessons of t he non- profit organizat ions, in dealing w it h t heir client s, offer a
very useful parallel.
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The channel decision is very im port ant . I n t heory at least , t here is a form of t rade- off: t he
cost of using int er m ediaries t o achieve w ider dist ribut ion is supposedly low er. I ndeed, m ost
consum er goods m anufact urers could never j ust ify t he cost of selling direct t o t heir
consum er s, ex cept by m ail order. I n pract ice, if t he producer is large enough, t he use of
int erm ediaries ( part icularly at t he agent and w holesaler lev el) can som et im es cost m ore
t han going direct .
Many of t he t heoret ical argum ent s about channels t herefore rev olv e around cost . On t he
ot her hand, m ost of t he pract ical decisions are concerned w it h cont rol of t he consum er.
The sm all com pany has no alt ernat iv e but t o use int erm ediaries, oft en sev eral layers of
t hem , but large com panies ’do’ hav e t he choice.
How ever , m any suppliers seem t o assum e t hat once t heir product has been sold int o t he
channel, int o t he beginning of t he dist r ibut ion chain, t heir j ob is finished. Yet t hat
dist ribut ion chain is m erely assum ing a part of t he supplier’s responsibilit y; and, if he has
any aspirat ions t o be m arket - orient ed, his j ob should really be ext ended t o m anaging,
albeit v ery indirect ly , all t he processes involved in t hat chain, unt il t he product or service
arrives w it h t he end- user. This m ay involve a num ber of decisions on t he part of t he
supplier.
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- Where t he m aj orit y of resellers st ock t he product ( w it h
convenience product s, for exam ple, and part icularly t he brand leader s in consum er goods
m arket s) pr ice com pet it ion m ay be evident .
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- This is t he norm al pat t ern ( in bot h consum er and indust rial
m arket s) w here suit able resellers st ock t he product .
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GLVWULEXWLRQ Only specially select ed r eseller s ( t ypically
geographical area) are allow ed t o sell t he product .
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I t is difficult enough t o m ot ivat e direct em ployees t o provide t he necessary sales and
service support . Mot ivat ing t he ow ners and em ployees of t he independent organizat ions in
a dist ribut ion chain requires even great er effort . There ar e m any devices for achieving such
m ot ivat ion.
Perhaps t he m ost usual is LQFHQWLYH: t he supplier offers a bet t er m argin, t o t em pt
t he ow ners in t he channel t o push t he product rat her t han it s com pet it ors; or a
com pet it ion is offered t o t he dist ribut ors’ sales personnel, so t hat t hey are t em pt ed t o
push t he product .
At t he ot her end of t he spect rum is t he alm ost V\PELRWLF UHODWLRQVKLS t hat t he all
t oo rare supplier in t he com put er field develops w it h it s agent s; w here t he agent 's
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personnel, support as w ell as sales, ar e t rained t o alm ost t he sam e st andard as t he
supplier's ow n st aff.
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I n m uch t he sam e w ay t hat t he organizat ion’s ow n sales and dist ribut ion act ivit ies need t o
be m onit ored and m anaged, so w ill t hose of t he dist ribut ion chain.
I n pract ice, of course, m any organizat ions use a m ix of different channels; in part icular,
t hey m ay com plem ent a direct sales for ce, calling on t he larger account s, w it h agent s,
covering t he sm aller cust om ers and prospect s.
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This relat ively recent developm ent int egr at es t he channel w it h t he original supplier producer, w holesalers and ret ailers w ork ing in one unified syst em . This m ay arise because
one m em ber of t he chain ow ns t he ot her elem ent s ( oft en called 'corporat e syst em s
int egr at ion') ; a supplier ow ning it s ow n ret ail out let s, t his being forw ard' int egrat ion.
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I t is perhaps m ore likely t hat a r et ailer w ill ow n it s ow n suppliers, t his being 'back w ard'
int egr at ion. ( For exam ple, MFI , t he fur nit ure ret ailer, ow ns Hygena w hich m ak es it s kit chen
and bedroom unit s.) The int egrat ion can also be by franchise ( such as t hat offered by
McDonald's ham burgers and Benet t on clot hes) or sim ple co- operat ion ( in t he w ay t hat
Marks & Spencer co- operat es w it h it s suppliers) .
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Alt ernat iv e appr oaches are cont ract ual syst em s, oft en led by a w holesale or ret ail cooperat ive, and adm inist ered m arket ing syst em s w here one ( GRPLQDQW) m em ber of t he
dist ribut ion chain uses it s posit ion t o co- ordinat e t he ot her m em ber s' act ivit ies. This has
t radit ionally been t he form led by m anufact urers.
The int ent ion of vert ical m arket ing is t o give all t hose involved ( and part icularly t he
supplier at one end, and t he ret ailer at t he ot her) cont rol over t he dist ribut ion chain. This
rem oves one set of variables from t he m arket ing equat ions.
Ot her research indicat es t hat vert ical int egrat ion is a st rat egy w hich is best pursued at t he
m at ure st age of t he m ark et ( or product ) . At earlier st ages it can act ually reduce profit s. I t
is arguable t hat it also diver t s at t ent ion from t he real business of t he organizat ion.
Suppliers r arely excel in ret ail operat ions and, in t heory , ret ailers should focus on t heir
sales out let s rat her t han on m anufact uring facilit ies ( Marks & Spencer, very deliberat ely
prov ides considerable am ount s of t echnical assist ance t o it s supplier s, but does not ow n
t hem ) .
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A rat her less frequent exam ple of new approaches t o channels is w here t w o or m ore noncom pet ing organisat ions agree on a j oint vent ure - because it is beyond t he capacit y of
each individual organizat ion alone.
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middleman
intermediario
vendite multi-livello
m ult i- level m arket ing
a system of selling a company’s products directly
to consumers, in which you sell to people you
know and persuade them to help you sell as well.
channel captain
ad
invent ory
shelf (shelves)
along w it h
on behalf of
t ourist board
ret ail out let
crowd out
real est at e agency
grocer
greengrocer
feature
t rade- off
revolve
concern with
layer
albeit
st ock
suitable
effort
device
spect rum
com plem ent
sales force
account
prospect
arise
forward integration
back w ard int egrat ion
franchise
pursue
arguable
divert
j oint vent ure
I l m em bro più pot ent e della cat ena di
dist ribuzione
annuncio pubblicitario, inserzione
scorte di magazzino, inventario
scaffale
insieme a, con
per conto di
ente per il turismo
punto vendita al dettaglio
svuotare (gente)
agenzia immobiliare
droghiere (mesticheria)
fruttivendolo
presenta
compromesso
basarsi, dipendere
riguardare
strato
anche se, sebbene
fare scorte
qualificato
sforzo
stratagemma, dispositivo
gamma
completare
forza di vendita
conto del cliente
cliente potenziale
presentarsi
integrazione a valle
integrazione a monte
affiliazione commerciale, concessione,
rappresentanza
perseguire, portare avanti
sostenibile
distogliere, deviare
associazione in partecipazione
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The following words are all to do with the marketing mix. See if you can put the in the right P.
Brand name, List price, Location, Advertising, Surcharge, Design, Quality, Press, Discounts,
Services
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This part of the marketing mix is about many things. It is about
Location – where it is located, how easy it is to get there (accessibility)
Access – when is it open, are their special access facilities for people with special needs
Distribution channels – how can you buy the product or service provided or buy tickets for
the attraction.
Choose an attraction:
Explain the different ways that you can get there.
Where can you buy tickets to get into the attraction?
What are the opening times?
What special access facilities are provided?
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Look at the following types of travel and tourism products and state how the customer can buy
them.
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Package holidays
Theme park tickets
Car hire
Theatre tickets
Scheduled flight seats
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Answer the following:
Explain how the 4Ps might work together to meet the following objectives at a theme park.
Increase profits
Attract more school parties
Promotion and Place
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