Upload
carthik19
View
218
Download
0
Embed Size (px)
Citation preview
8/22/2019 Deciding on a Distribution Channel
1/36
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
2/36
Distribution Channel
The way a product reaches the consumer
Two categories of distribution channels
Direct
Indirect
SLIDE 1
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
3/36
Direct Distribution (Sales)
Producer of product sells directly
to the consumer
Advantages:
Less complicated
Less expensive
Eliminates cost of middle man
Allows for market research
SLIDE 2
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
4/36
Direct Distribution (Sales)
Disadvantages:
Producers may not be good marketers
Direct sales take time away from production
Producers may not be objective in sales
Allows for market research
SLIDE 3
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
5/36
Direct Distribution (Sales) Examples
Person to Person
Display booths at events
Party-plan sales
In-home demos
SLIDE 4
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
6/36
Additional Direct Distribution (Sales) Examples
Business trade shows
Temp space in shopping malls
Direct mail
Mail order
Telemarketing
SLIDE 5
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
7/36
Indirect Distribution Utilizes Middlemen Who Sell
Advantages:
Middlemen are sales professionals
Useful when zoning prevents home sales
Useful when location of home base is too far
from consumers
Greater sales volume potential
Frees producer to focus on production
SLIDE 6
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
8/36
Indirect Distribution
Disadvantages:
Producer removed from consumers
More expensive than direct distribution
Less control over product
SLIDE 7
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
9/36
Indirect Distribution Examples
Sales Representatives
Wholesalers, Distributors, Jobbers
Wholesale Trade Shows
Wholesale to Retailers
Consignment
Mail Order
SLIDE 8
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
10/36
Indirect Distribution Channels
Wholesalers
Distributors
Jobbers
SLIDE 9
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
11/36
Manufacturer or Sales Reps
Move merchandise
Call on retailers
Handle marketing within a territory
Get commission on orders
SLIDE 10
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
12/36
Wholesale Trade Shows
Build long lasting relationships
Good packaging and nice display are critical
Quality business cards, brochures and/or free
Sales literature and pre-determined pricingstructure will help in attracting retail accounts
SLIDE 11
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
13/36
Selling Wholesale to Retailers
Producer can make contact
Must know trade practices
Need written agreements
Cannot undercut retail price
SLIDE 12
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
14/36
Consignment
Contracting with Retailers to Display
and Sell Product
Advantages:
Exposure without overhead expenses of utility and space
Disadvantages:. Money tied up in inventory with possibility of damage
Merchandise may not be displayed to advantage
Merchandise may not be aggressively marketed
SLIDE 13
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
15/36
Mail Order
Producers may develop their own catalogs,fliers, or indirect distribution
Buy ad space in an established catalog,
magazine, tabloid, etc.
SLIDE 14
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
16/36
Mail Order
Timing is important
Knowledge of postal regulations, FTC
rules, and tax laws in each state where
merchandise is exchanging hands Need good mailing lists
SLIDE 15
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
17/36
Securing Mailing Lists
Can be rented or purchased
Need clear description of customer profile
Check library for mailing list brokers
Check listings in trade journals
SLIDE 16
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
18/36
When Evaluating Mail-Order Media, Ask About:
Demographics of readership (sex, age, ethnicity)
Regional publications
Number of ongoing advertisers
Circulation numbers
SLIDE 17
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
19/36
Magazine Advertising
Advantages:
Longer shelf life than other ad media
Often read cover to cover by different people
Associates your product with prestige of magazine
More sophisticated production process and betterquality paper than newspapers and most catalogs
SLIDE 18
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
20/36
Magazine Advertising
Disadvantages:
Longer lead from ad placement
time to published ad
High cost
SLIDE 19
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
21/36
Questions When Considering Catalogs
Is there a fee to be included in the catalog or do youpay a percentage of the sales?
Is there minimum inventory that must be available?
What is your knowledge of laws and regulations?
Is merchandise warehoused by catalog company or
does producer drop ship.
SLIDE 20
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
22/36
Questions When Considering Catalogs
How is merchandise evaluated actualproduct or photographs?
What is the pricing structure?
What is the time frame for catalogproduction and distribution?
SLIDE 21
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
23/36
Additional Indirect Distribution Examples
TV Marketing
Computer Networks
Vending Machines / Rack Merchandising
Cooperatives Franchises
Multilevel Marketing (MLM)
SLIDE 22
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
24/36
Telemarketing
A sales approach conducted
entirely by phone.
SLIDE 23
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
25/36
Television Marketing
Cable network channels
Infomercials
SLIDE 24
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
26/36
Computer Networks
Vast online information system that
links businesses and potential customers
all over the world.
SLIDE 25
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
27/36
Internet Marketing
Web sites
Social Marketing
Internet Sales
SLIDE 26
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
28/36
Vending Machines
&
Rack Merchandising
SLIDE 27
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
29/36
Cooperative
A business formed by a group of people to
market their products together
SLIDE 28
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
30/36
Franchises
Buying continuous direction and support frompeople who are experts in their field
Owned and managed by self-employed
business people
SLIDE 29
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
31/36
Franchise Agreements May Include
Using the franchisors name
Help in finding a location
Store design and outfitting
SLIDE 30
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
32/36
Franchise Agreements May Include
Advertising
Acquiring Supplies
Management Training
Protected Territory
SLIDE 31
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
33/36
Franchise Agreements May Include
Financing
Marketing and Promotion
Record Keeping
SLIDE 32
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
34/36
Multi-Level / Network Marketing
People sell at different levels in company
hierarchy. Distributors recruit new people to join
the program. The practice is sometimes calledsharing business.
SLIDE 33
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
35/36
Possible Distribution Channels
Direct Channel: Producer > Consumer
Single Channel (w/ middleman):
Producer > Retailer > Consumer
Double Channel (w/ middleman):Producer > Wholesaler > Retailer > Consumer
Simultaneous Dual Channel:
(Producer > Wholesaler > Retailer) and (Producer > Consumer)
SLIDE 34
Deciding on a Distribution Channel
8/22/2019 Deciding on a Distribution Channel
36/36
Making Choices
Consider:
Opportunities available
Appropriate for your business
Delivery time frame
Packaging for shipment
Cost
Keep up to dateSLIDE 35
Deciding on a Distribution Channel