The Place Component of the Marketing Mix:
Channels of Distribution
LogisticsMaterials
ManagementPhysical Distribution
Marketing ChannelsA set of
interdependent organizations that facilitate the transfer of ownership as products move from producer to business user or consumer
Supply Chain – the connected chain of business entities (internal and external) that perform or support the channel functions
Marketing Channel Functions
Specialization and division of laborSpecialization and division of labor
Overcoming discrepanciesOvercoming discrepancies
Providing contact efficiencyProviding contact efficiency
Overcoming DiscrepanciesDiscrepancy
of Quantity
Discrepancyof
Quantity
Discrepancyof
Assortment
Discrepancyof
Assortment
The difference between the amount of product produced and the amount an end user
wants to buy.
The difference between the amount of product produced and the amount an end user
wants to buy.
The lack of all the items a customer needs to receive full satisfaction from a product or
products.
The lack of all the items a customer needs to receive full satisfaction from a product or
products.
Channel members - IntermediariesRetailers –
Organizations whose activities are directed toward sales to final (ultimate) consumers
Wholesalers – Organizations that sell to retailers or other wholesalers, and/or to businesses or institutions for use in the conduct of business
Channel Intermediaries
RetailersRetailers
Merchant WholesalersMerchant
Wholesalers
Agents and
Brokers
Agents and
Brokers
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods
Factors Suggesting Type of Wholesaling Intermediary to Use
Product characteristicsProduct characteristics
Buyer considerationsBuyer considerations
Market characteristicsMarket characteristics
Producer Producer Producer Producer
Consumers Consumers Consumers Consumers
Retailers Retailers Retailers
Wholesalers Wholesalers
Agents orBrokers
WholesalerWholesalerChannelChannel
RetailerRetailerChannelChannel
DirectDirectChannelChannel
Agent/BrokerAgent/BrokerChannelChannel
Channels for Consumer Products
Channels for Business Products
Producer
IndustrialUser
DirectDirectChannelChannel
Producer
Govt.Buyer
DirectDirectChannelChannel
Producer Producer Producer
IndustrialUser
IndustrialUser
IndustrialUser
IndustrialDistributor
IndustrialDistributor
Agents orBrokers
Agents orBrokers
Agent/BrokerAgent/BrokerChannelChannel
IndustrialIndustrialDistributorDistributor
Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel
Alternative Channel Arrangements
Multiple channels
Strategic channel alliances
Nontraditional channels
Supply Chain Management
Supply Chain
A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.
Benefits of Supply Chain Management
Means of differentiation
Greater supply chain flexibility
Improved customer service
Higher revenues
Reduced costs
Channel Strategy DecisionsFactors Factors
Affecting Affecting Channel Channel ChoiceChoice
Factors Factors Affecting Affecting Channel Channel ChoiceChoice
Producer FactorsProducer FactorsProduct FactorsProduct FactorsMarket FactorsMarket Factors
Exclusive DistributionExclusive DistributionSelective DistributionSelective DistributionIntensive DistributionIntensive Distribution
Level ofLevel ofDistributionDistribution
IntensityIntensity
Level ofLevel ofDistributionDistribution
IntensityIntensity
Market Factors
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Customer profilesCustomer profiles
Consumer or IndustrialCustomer
Consumer or IndustrialCustomer
Size of marketSize of market
Geographic location
Product Factors
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Complexity Product Complexity
Product StandardizationProduct Standardization
Product Life CycleProduct Life Cycle
Product DelicacyProduct Delicacy
Product PriceProduct Price
Producer Factors
Producer Producer FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Producer Producer FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Producer Resources Producer Resources
Number of Product LinesNumber of Product Lines
Desire for Channel ControlDesire for Channel Control
Levels of Distribution Intensity
IntensiveA form of distribution aimed at having a product available in every outlet
SelectiveA form of distribution achievedby screening dealers to eliminate all but a few in any single area
ExclusiveA form of distribution that established one or a few dealers within a given area
Channel Leadership, Conflict, & Partnering
ChannelRelationship
Synergy
Channel Conflict
Horizontal Vertical
Channel Power,Control, Leadership
Channel Partnering
Logistical Components of the Supply Chain
SupplySupplyChainChainTeamTeam
Sourcing & ProcurementSourcing & Procurement
Production SchedulingProduction Scheduling
Order ProcessingOrder Processing
Inventory ControlInventory Control
Warehouse & Materials HandlingWarehouse & Materials Handling
TransportationTransportationLogi
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Logi
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