Distribution - Chapter 14
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Transcript Distribution - Chapter 14
What We Will Discuss Today
SHOPPER’S HEAVEN
Distribution
channels
• What are their functions?
• How are they organized?
Distribution
channel decisions
• Design decisions
• Management decisions
Why Use Distribution Channels?
Why Use Distribution Channels?
To
make the product or service available to
consumers.
• risk
• cost
Why Use Distributors?
Efficiency
Information
Contact
and promotion
Matching
Transportation
Financing
and storage
and risk taking
Negotiation
Direct Channels of Distribution
Manufacturer’s
sales office
Manufacturer’s
branch office
Catalog
mail order
Indirect Channels of Distribution
Direct
to retailer
Through
wholesaler to retailer
Through
wholesaler to jobber to retailer
Through
exporter to freight forwarder to
shipper to importer.....
Channel Behavior
Power
Conflict
• Horizontal
• Vertical
Trust
Trends in Marketing Channel
Systems
Vertical
Marketing Systems
• Corporate
• Contractual
• Administered
Horizontal
Marketing Systems
Multi-channel
Marketing Systems
Channel Design Decisions
Types
of distributors
Number
of distributors
• Intensive distribution
• Exclusive distribution
• Selective distribution
Alternative Evaluation Criteria
Economic
Control
Adaptive
Channel Management Decisions
Selecting
channel members
Motivating
channel members
Evaluating
channel members
Wholesalers and Retailers
Mostly
business customers
Larger
trade areas, larger transactions
Less
resources to promotion, atmosphere
and location
Regulations
and taxes
Why Direct Marketing?
Less shopping time
Costs of driving and lines
Toll free telephone numbers
Use of credit cards
Growth of computer power
Reduces high costs of reaching customers through sales
people
Allows sellers greater selectivity
Forms of Direct Marketing
Direct
Mail
Catalog
Marketing
Telemarketing
TV
Marketing
A Theory!
Transaction Cost Analysis
Should
an activity be performed within the
organization by employees or should
the organization contract with an
external agent to perform the activity?
Distribution
Transaction Cost Analsysis 2
Examples:
• Make or buy
• Direct salesperson or manufacturer's
representative
• In-house advertising or advertising agency
Transaction Cost Analysis 3
Assumptions
• Humans are subject to bounded rationality
• Agents are given to opportunism
Factors Underlying
Decision to Integrate
Asset
Specificity
External
Uncertainty
• Supply Uncertainty
• Demand Uncertainty
Frequency
of Transactions
What We Discussed Today
Distribution
channels
• What are their functions?
• How are they organized?
Distribution
channel decisions
• Design decisions
• Management decisions