????•What advantages and

disadvantages do an actual (physical) retail store give a company?

7 Core Functions

7 Core Functions

Channel Management

4 Ps

Distribution•How does the product get to the customer?

Channel of Distribution• The path a product takes from the

producer/manufacturer to the final user.–Industrial user–Consumer –Both?

Channel Members• Intermediaries (middlemen) –

businesses that are involved in sales transactions that move products from the manufacturers to the final users

• Think about if Apple sold only to individuals… what would be the advantage of selling to a retail store?

Ownership?• These intermediaries (middle men) are

classified based on whether or not they TAKE OWNERSHIP of the goods.

• 1. Merchant intermediaries- TAKE OWNERSHIP

• 2. Agent intermediaries- DO NOT take ownership; receive sale commissions

Channel Members(merchant intermediaries)

WHOLESALERS RETAILERS

Rack Jobbers Drop Shippers Brick and Mortar

E-tailers

Merchant Intermediaries:• (two major types:)• 1. Wholesalers (aka distributors)- businesses that

buy in large quantity; store the goods; resell the goods TO RETAILERS. A. Rack jobbers manage inventory and merchandising; fill shelves; maintain displays; bill retailer for products sold

B. Drop Shippers still own the products, but they don’t physically handle the product (coal, lumber, chemicals, etc); drop shippers sell the goods and have the producer ship the good directly to the customer.

Merchant Intermediaries:

• (two major types:)• 2. Retailers- sell goods to the final consumer for

personal useA. Brick and mortar retailers (traditional) sell goods to

customers from a physical store; these retailers buy the products from the manufacturer (non-store retailing: online, mail, catalog, tv, vending machines)

B. E-tailers sell the products online

Channel Members(agent intermediaries)

Independent Manufacturer

RepresentativesBrokers

Related products; different manufactures; commission; not

on co. payroll

Brings buyers and sellers together; negotiators; no

continued relationship; commission

Distribution

Intensity

Distribution Intensity• Illustrates how widely a product

will be distributed

3 Levels of Distribution Intensity

• 1. exclusive- distribution in a protected area. – ONE outlet within a controlled area to sell a specific

product– A lot of control and very high profit margins– A LOT of control over the adv/marketing/cust

service– High end items– Ex: Luxury cars

3 Levels of Distribution Intensity

• 2. SELECTIVE- A limited number of outlets in a given geographic area sell a particular product

• These outlets have good credit and strong marketing

• NOT the general public • Ex: Vera Wang, Armani

3 Levels of Distribution• 3. intensive- as many outlets as

possible to sell a product = COMPLETE MARKET COVERAGE• WHY would this make sense based

on what we have already talked about? What kind of products are we talking about?

• https://www.youtube.com/watch?v=4yefGOif2WU 1997

• https://www.youtube.com/watch?v=xBIVlM435Zg