ASPECTS OF THE PLACEMENT
DECISION
WHAT IS DISTRIBUTION?
Distribution refers to the process of making a product
available for the consumption or use of the consumer or
business user.
TWO COMPONENTS:
Distribution channel- is a set of interdependent organizations involved
in making a product or service available for use by the target market.
Marketing intermediaries- are companies that act as middlemen to
facilitate the transfer of products from the company to the consumers
LEVELS OF DISTRIBUTION
ZERO LEVEL DISTRIBUTION CHANNEL
MANUFACTURER
CONSUMER
ONE LEVEL DISTRIBUTION CHANNEL
MANUFACTURER
RETAILER OR WHOLSALER
CONSUMER
TWO LEVEL DISTRIBUTION CHANNEL
MANUFACTURER
RETAILER
WHOLSALER
CONSUMER
THREE LEVEL DISTRIBUTION CHANNEL
MANUFACTURER
RETAILER
WHOLSALER
JOBBER
CONSUMER
FUNCTIONS OF DISTRIBUTION CHANNEL
1. Information gathering
2. Promotion
3. Contact
4. Matching
5. Negotiation
6. Physical Distribution
7. Financing
8. Risk taking
DISTRIBUTION STRATEGIES
1. Intensive Distribution- In this strategy, a company distributes its
products in as many outlets as possible based on the belief that the
product must be available when and where consumers want them.
2. Selective Distribution- Some companies limit the number of
intermediaries handling their product.
3. Exclusive Distribution- A company gives only one category of
store the exclusive right to distribute its product in the territory.
RETAILING
This form of distribution includes all activities involved in selling
goods and services to final consumers for their personal and nonbusiness use.
TWO TYPES
1. STORE RETAILING
2. NON STORE RETAILING
STORE RETAILING
TYPES OF STORES BASED ON AMOUNT OF SERVICE
1. Self- service retailers- allow customers to perform their “ locatecompare-select” process.
2. Limited service retailers- These retail stores provide more sales
assistance because they offer/ carry more shopping goods.
3. Full service retailers- First class department stores and specialty
stores are examples of these retailers.
STORE RETAILING
TYPES OF STORES BASED ON PRODUCT LINE
1. Specialty stores- carry narrow product line with deep
assortment within the line.
2. Department stores- carry wide variety of product lines and
each line is managed as a separate department.
3. Supermarkets- are low cost, low margin, high volume, selfservice stores that carry a wide variety of food, laundry, and
household items.
STORE RETAILING
TYPES OF STORES BASED ON PRODUCT LINE
4. Convenience stores- are stores which carry a limited line of
high turn-over convenience goods and are usually open over long
hours seven days a week.
5. Super stores- stores which are twice larger as regular
supermarkets and a carry a large assortment of commonly
purchased food and non food items.
6. Service Businesses- the product line is actually service.
STORE RETAILING
TYPES OF STORES BASED ON RELATIVE PRICES
1. Discount stores- these stores sell standard merchandise at lower
prices by accepting low margins and selling large volumes.
2. Off- price retailers- These stores sell at price lower than retail.
3. Catalog showrooms- These stores sell a wide selection of highmark up, fast moving, branded name goods at discounted price.
STORE RETAILING
TYPES OF STORES BASED ON CONTROL OF OUTLETS
1. CORPORATE CHAINS
2. VOLUNTARY CHAIN AND RETAILER COOPERATIVE
3. FRANCHISES
4. CONGLOMERATES
STORE RETAILING
TYPES OF STORES BASED ON STORE CLUSTER
1. CENTRAL BUSINESS DISTRICT
2. SHOPPING CENTER
NONSTORE RETAILING
1. DIRECT MARKETING- this retailing done through the use of
various advertising media to with interact directly with consumers,
generally calling for the consumer to make a direct response.
2. DIRECT SELLING OR “IN HOME SELLING”- House to house selling
3. AUTOMATIC VENDING MACHINES.
WHOLESALING
Wholesaling includes all activities in selling products to those
people or companies buying for resale or business purposes.
1. MERCHANT WHOLESALERS- independently owned businesses
that take title to the merchandise that they sell. They are the
largest single group of wholesalers.
Full Service Wholesalers – provide a full line of services like
warehousing, credit, delivery and management assistance.
WHOLESALING
Limited- Service Wholesalers
a. Cash and Carry wholesalers- have limited line of fast moving
goods to sell to small retailers for cash and normally do not deliver.
b. Drop Shippers- operate in bulk industries and do not hold inventory
or handle the product that they sell.
c. Rack jobbers-serve grocery and drug retailers
d. Producer’s cooperative- are owned by member farmers who
assemble farm produce to sell in local markets
e. Mail order wholesalers- send catalog to retail, industrial, and
institutional customers.