NAME
3.07 MARKETING CHANNELS OF DISTRIBUTION
1.
Distribution is the
goods and services from the
2. A
travels from the
3. 4 P’s of Marketing are:
or
of distribution is the
to the ultimate
,
.
4. Channel management tasks include:
of the ownership of
to the
a product
,
= Place
5. Channel management decisions include:
a. Select channel
b. Manage and
channel members
c.
channel members
6. Channel design decisions include:
a. Analyze
needs
b. Set channel
c. Identify major alternative
i. Types of
ii.
of intermediaries
iii.
of intermediaries
7. Who is an intermediary (
)?
a. Channel members who
the producer in getting the
goods and services to the
user
b. Various intermediaries include: wholesalers = rack jobber and drop shipper, retailers =
brick-and-mortar and non-store; agents.
8. Wholesalers:
that purchase
quantities from
, store products in
and
sell them to
businesses.
a. Rack jobber: a
that provides
filled with
in space that is
from
.
b. Drop shipper a
that accepts an
and ships
from the
without taking
of the goods.
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9. Retailers: businesses that
products to the
a. Brick-and-mortar retail: A
products
b. Non-store retail: a way to reach
store that sells their
to
through
,
, direct
10.
11.
12.
13.
14.
user or
retailing, TV
shopping and
Exclusive dealers: situation where
and
enter into an
that
only allows the
distributor to
a specific
product.
Agents: and
or
that
the buyers and sellers. Agents
the products they sell i.e. no
ownership of the products.
What is a direct channel?
that occurs
from the
to the
. Cuts
out the
.
What is an indirect channel? Distribution that occurs through
or
more
before reaching the
user
An
channel is used when a
doesn’t want
for the
activities of a large retailer
To
to
to
OR because
usually buy in
.
To
to
to
TRANSPORTATION SYSTEMS AND SERVICES
15. Physical distribution is
products through the
ordering, transporting
16.
17.
18.
19.
and
. AKA
, handling and
=
. The third largest
for most
businesses. 1 =
#2 =
Needs to be as
and
effective as possible
Needs to be
with other business functions such as:
Finance,
, Packaging,
Transportation is
moving from
A
Place B
Trucking and motor carriers = tractor trailers
a. Common carriers – provide transportation services to
business in
their operating area for a
; multiple
may be
consolidated into
truckloads.
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b. Contract carriers and
between carrier and the shipper;
continual basis
c. Private carriers – transport for an
expensive = more
d. Exempt carriers – carry
carriers that provide
for specific routes, according to
flexibility; one-time or
business; more
products; rates are
20. Intermodal combines
or more transportation
to
maximize advantages
a. Piggyback service is carrying
truck trailers on
flatcars; trucks take trailers to final destination
21. Railroads – move
and
freight
a. Coal,
, lumber, grain,
along rail lines
b. Ton mile is moving 1 ton (
) 1 mile
c. Carload is
number of pounds to fill a
22. Marine shipping – within US and around world
a. Barges transport
, iron
, and
Tankers and merchant vessels
b. Inland,
and
waterways
23. Pipelines – transport
and natural
a. BP owns
that move crude oil from
oil fields to the
b. Product moves
but
24. Air cargo – high
, low
and time
products; positive speed, negative cost
a. Flowers shipped by air from Hawaii to NC
b. Seafood shipped
c. Chocolates shipped from France
25. A transportation company helps move
packages from A to B. For
example: US
26. A transportation company – UPS and FedEx companies that
combine shipment from
businesses to help reduce
to those businesses
27. Freight forwarders companies that combine less-thancarload or
truckload shipments from several
businesses and
them to their
Provide
expertise to companies
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INVENTORY STORAGE
Methods to store merchandise
28. Storage – the
of products until they are
;
produced in large
; amounts of
stored
is called
.
29. Storage is needed
a. Until
are
from customers
b. Production is
than
or demand
decreases
c. Commodity
makes
products available year-round
d. Buy in
e. Faster
to customers
30. Private vs. Public Warehouses
a. Private warehouse – a
designed to meet the needs of
the
. It may be based on
,
temperature control or
; costly to build and
maintain
b. Public warehouse – Storage and
facility that may be
provided for
business willing to
for the space;
rent-a-warehouse
31. Distribution center – a storage facility used to
and speed up
the
of goods and
storage costs.
32. Bonded warehouse – private or public warehouse used to
products until
have been paid on the product(s). Duty is a tax paid on
imported goods.
33. Methods of handling inventory include: products ordered by a
are
received,
, marked (
), and transferred.
Receiving record is a document used to keep track of
inventory.
34. Check the received merchandise:
a. Blind check method – writing a
list of merchandise and its
quantity. This list is then compared to the
invoice. This method is
time consuming but is considered the
b. Direct check method – the merchandise is
against the
or purchase order
c. Spot check method – merchandise is
checked for
and
.
d. Quality check method – merchandise is
for
workmanship and making sure there is no
to
merchandise.
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35. When merchandise has been received and
, other information
must be
on the merchandise: selling price and UPC. Once
marked,
to
floor.
36. Inventory is storing of merchandise
it is sold
a. Perpetual inventory control – tracks inventory on a
basis. A company can track and know the
and
of products on hand at
time.
b. Physical inventory control – stock is physically
and
for accuracy
DISTRIBUTION PLANNING
37. Channel members add
to a product by performing certain
channel activities
: marketing, packaging,
storage,
, merchandising and
selling.
38. Distribution planning involves decisions about a product’s
movement and transfer of
from
to
. Some of the major considerations are
a. Multiple channels – some products meet the
of both
and
markets
b. Control vs. cost – all manufacturers and producers must weigh the
they want to keep over the
of their products
against the
and
i. Direct sales force – company
are expensive
with payroll, benefits, expenses; may set sales
and
easily
performance
ii. Agents – work
, running their own businesses;
less expensive = less control; agents sell product
that
make them more
c. Distribution intensity – how
a product will be distributed;
marketers want to
the
market
.
i. Exclusive distribution territories for
distribution of a product in a
geographic
business maintains
control over a product. Ex.
Franchisor
requires a
to sell only the
products.
1. Integrated distribution is where the
acts as
AND
for its own products.
ii. Selective distribution – a
number of outlets in a
given geographic
are used to sell the product. Very
NAME
important to
channel members that can
maintain the
of the product and are good
credit risks, aggressive
and good inventory
planners.
iii. Intensive distribution – the use of
suitable outlets to sell
a product. The objective is
market
and the ultimate goal is to sell to as
customers as
possible, wherever they choose to shop.
39. Dual distribution – a manufacturer may sell its products through
outlets
at the same time: toll-free
systems, company
multiple
.
40. Horizontal conflict – occurs
channel members at the same level,
good old-fashioned business
41. Vertical conflict – occurs
channel members at different levels
within the same channel.
LEGAL CONSIDERATIONS, ETHICS, CUSTOMER SERVICE AND TECHNOLOGY
LEGAL CONSIDERATIONS:
42. Franchisor
of franchisee is
a. Closed territories – part of an economy or market
open to new
entrants or
.
b. Sherman Act – US federal
of 1890 that
the creation of
by outlawing direct or indirect
attempts to
with the
and
competitive nature of the
and
of goods. Amended by the
in 1914.
c. Clayton Act – US federal legislation of 1914 that amended the
provisions of the
of 1890 to include prohibition
of (1)
discrimination and
arrangements, (2) sales based on exclusive-dealing
(3)
and interlocking directorates where “ the effect of such
may be substantially to lessen
competition or tend to
a
in any line of
.
d. Robinson-Patman Act of 1936 – the Act prohibits sales that
in
on the sale of goods to equally-situated distributor when the
effect of such sales is to
Price means net price and includes all
paid. The
seller may not throw in
goods or services. Injured
parties or the US Government may bring an
under the Act.
NAME
ETHICS AND CUSTOMER SERVICE
43. Ensures
delivery of products. Effective
is important.
a. Order processing:
shipping information,
products, handling
,
the
probability of complaints, nice and friendly
.
44. Bad customer service
a. Vendor
has back orders; product no available when
ordered
b. Coercion – large business
to stop using a
unless given major
i. Tying agreement – purchase agreement in which the customer is
to purchase a
or unknown
or product with a fast-selling or
one. Such
coercion is usually
.
45. Grey-market strategy – selling product in
countries for a
price than customers can get
46. Full-line forcing or supplier insistence that the
must carry the full
of products in the line. This policy may not be
illegal if it can be established that it
a
business need.
47. Slotting allowance or fee – sum
by a
or
manufacturer to a retail chain or establishment (1) making
for a product on its
store
, (2) making room for the product in its
(3)
entering the product
in its
system and (4)
programming its
to recognize the product’s
. In the US, slotting fees often run up to $50,000 or more pr product per store,
on an annual basis.
TECHNOLOGY
48. Some businesses have the capacity to
products through the
a. E-commerce – products are sold to
most or all of their
.
and
buyers through the Internet.
b. E-marketplace
49. Satellite tracking = a
has current knowledge of a delivery
truck’s
and
.
50. Tracking of package =
code on package, package scanned at
points in distribution chain, customer uses
to follow package
along distribution
, e-mail may be used.
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a. Global distribution – in some countries the
service is not reliable;
package tracking facilitates global
51. Problems with technology:
a.
of technology
b. Changing technology =
equipment
c. Need for
systems within and
countries