Distribution
Download
1 / 35

Distribution - PowerPoint PPT Presentation


  • 214 Views
  • Updated On :

Distribution. Whose point of view is considered? Intermediaries--functions Intermediaries--structures and their justifications Channel power Cross-national variations Selectivity of distribution--do we want our product available at K-Mart? Parallel Distribution Structures Diversion.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Distribution' - wren


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Distribution l.jpg
Distribution

  • Whose point of view is considered?

  • Intermediaries--functions

  • Intermediaries--structures and their justifications

  • Channel power

  • Cross-national variations

  • Selectivity of distribution--do we want our product available at K-Mart?

  • Parallel Distribution Structures

  • Diversion


Mini case study the roasted chicken that didn t sell l.jpg
Mini Case Study: The Roasted Chicken That Didn’t Sell

  • Manufactured offered pre-roasted chickens to stores too small to warrant in-store rotisserie

  • This product should appeal to time squeezed customers

  • Taste tests showed that consumers liked the product

  • HOWEVER, sales were disappointing. Why?


Intermediaries adding value l.jpg
Intermediaries: Adding Value

WHOLE-

SALER

(or agent) 1

MANUF. 1

RETAILER

MANUF. 2

WHOLE-

SALER

(or agent) 2

  • Value added:

    • breaking bulk

    • consolidating supplies

    • holding inventory

    • financing

MANUF. 3

PRODUCTS FROM

OTHER MANU-

FACTURERS.


Other issues l.jpg
Other Issues

  • Can you make money on “eliminating the middleman?” It depends:

    • How efficient is the existing distribution channel?

  • International variations

    • Some structures are less well developed

    • Tradition may govern structure

  • Power--who needs whom most?


Potential channel structures u s l.jpg
Potential Channel Structures (U.S.)

Farmer

Farmer

Farmer

Farmer

Agents/

Brokers

Manufacturer

Wholesalers

Wholesalers

Retailers

Retailers

Retailers

Consumer

Consumer

Consumer

Consumer


Some other intermediaries l.jpg

CORN

GROWER

HOG

FARMER

AUCTION

HOUSE

SLAUGHTER

HOUSE

FOOD

MANUFAC-

RURER

WHOLE-

SALER

MARKET RESEARCH

BRAND MANAGEMENT

ADVERTISING/PROMOTION

GROCERY

STORE

Some Other Intermediaries

FERTILIZER

SELLER

FERTILIZER

MANUFACT.

  • Processors

  • Co-ops


Types of wholesalers and substitutes for food products l.jpg
Types of Wholesalers and Substitutes for Food Products

  • Agents and brokers (do not take possession)

  • Manufacturers’ sales branches

  • General

    • Full service

    • Limited service

    • Cash ‘n’ carry

  • Specialty

  • Retailers’ distribution centers


Type of goods l.jpg
Type of Goods

  • Convenience

  • Shopping goods


Approaches to distribution manufacturer s perspective l.jpg
Approaches to Distribution—Manufacturer’s Perspective

  • These strategies require tradeoffs:

    • Wide--essential to low involvement goods

    • Selective--desire to maintain image

    • Exclusive--very high prestige needed or very high service requirements

Admission By

INVITATION

ONLY



Manufacturer and retailer distribution interests l.jpg
Manufacturer and Retailer Distribution Interests

  • Full service retailers tend dislike intensive distribution

  • Low service channel members can “free ride” on full service sellers

  • Manufacturers may be tempted toward intensive distribution—appropriate only for some; may be profitable in the short run

  • Market balance suggests a need for diversity in product categories where intensive distribution is appropriate

  • Service requirements differ by product category


Parallel distribution structures l.jpg
Parallel Distribution Structures

MANUFAC-

TURER

DISTRI-

BUTOR

RETAILER

MAJOR

CHAIN

(e.g., Wal-Mart)

DIRECT

MARKETING

FACTORY

OUTLET


Types of retailers l.jpg
Types of Retailers

  • Supermarkets

    • High service

    • Low service


Types of retailers14 l.jpg
Types of Retailers

  • Mom and pop are closing up shop, hanging up their prosciutto knives, bagging the last plump tomatoes and calling it a day. Or, rather, a lifetime, as they take off their white grocers' aprons for good


Types of retailers15 l.jpg
Types of Retailers

  • Convenience stores

    • Hotels

    • Waikiki


Types of retailers16 l.jpg
Types of Retailers

  • Specialty

    coffee and tea shops

    Meat shops

    Fish shops

    Florist

    Local 'Kine' and Lifestyle Flower Shop, Hilo"Flower Shop, Hilo"


Types of retailers17 l.jpg
Types of Retailers

Stores with food as secondary products

  • Gas stations

  • Discount stores

    • Walmart Hilo is something of an experience. It actually caters to the local population, so you see things like udon and hawaiian shirts. Muumuu's too.


Types of retailers18 l.jpg
Types of Retailers

  • Online http://hawaiianagriculturalproducts.com/


Types of retailers19 l.jpg
Types of Retailers

  • Restaurants (47% of consumer food expenditures)


Characteristics of u s supermarkets l.jpg
Characteristics of U.S. Supermarkets

  • 20,000-80,000 stock-keeping units SKUs (product variations—e.g., 4 oz Dannon light raspberry yogurt)


Margins l.jpg

Margins

Gross = sale price - price paid to wholesaler

Per unit

Per dollar

Per unit of space

Net margin = gross margin vs. allocated overhead

Very large increases in sales volumes are needed to “break even” on low prices

Margins


Characteristics of u s supermarkets22 l.jpg
Characteristics of U.S. Supermarkets

Margins

  • Average gross margin: 20-25% (probably decreasing)

  • Average net margin: 1-3%


Characteristics of u s supermarkets23 l.jpg
Characteristics of U.S. Supermarkets

  • 20% of SKUs, may sell less than one case per month!

  • Location is most important variable for consumers but price competition is still intense!


Slotting fees l.jpg
Slotting Fees

  • Retailers may charge fees to retailers to stock their products

    • New products

    • “Slow” moving products

  • How fair is this?

  • Does this actually raise the price paid by consumers?

  • Additional concessions gained from manufacturers


Category management l.jpg
Category Management

  • Retailer tries to maximize profits from a given product category (e.g., cola drinks) rather than for brand (e.g., Coca Cola)

    • High cross-price elasticity

    • Additional gains by putting one brand on sale will be nearly cancelled out by losses from switchers from other brands


Category management26 l.jpg
Category Management

  • Increasing enforcement ability of manufacturers due to scanner technology

    • As more products compete for space retailers have gained an increasing power to determine what is “in” and what is “out”

      • Hold out for better price

      • Concessions

      • Private label brands

        • Sell it at lower cost than the national brand


Characteristics of u s supermarkets27 l.jpg
Characteristics of U.S. Supermarkets

  • “Wheel of Retailing”

    The tendency of the stores to progressively add to their services


Wheel of retailing l.jpg
Wheel of Retailing

“BARE BONES” RETAILERS

ENTER TO SERVE PRICE

SENSITIVE CONSUMERS

CUSTOMERS DEMAND

MORE SERVICES

RETAILERS ADD

MORE SERVICES

AND RAISE PRICES


Micro segmentation l.jpg
Micro-Segmentation

  • Adapting individual stores in chain to local conditions based on statistical analysis of scanner data

    • Exceptional physical power “Brute force” analysis of sales volumes in store may reveal effects of

      • Ethnic or other demographic characteristics of the location

      • Seasonal patterns

      • Geographic location (e.g., near beach)


More scanner data analysis l.jpg
More Scanner Data Analysis

  • Store placement of products

    • Based on “correlated” products

    • Multiple placement within the same store


More scanner data analysis31 l.jpg
More Scanner Data Analysis

  • Effects of promotional strategies

    • Product placement

    • Price promotion

    • Redeem Coupons

    • Advertising

    • Purchases can be compared to past purchases

    • Timing of purchases

    • How do a particular store’s sales compare to those in others


Positioning issues l.jpg
Positioning Issues

  • Some generic profit strategies:

    • Sell large quantity with small margin on each sale

    • Sell small quantity with large margin of each sale

    • Combination

      • Tiny (or negative) margins on “loss leaders”

      • Larger margins on other merchandise

  • “Everyday low price” vs. “high-low”

Why not medium margins on medium quantity?


Two types of retail pricing l.jpg

“High-low”

High everyday prices

Frequent sales

Profit on price discrimination--only some people will bother to

Shop while sale is on

Switch brands

Every Day Low Price (EDLP)

Consistent prices--theoretically no sales, but lower non-sale prices

Typically lower service

Note that retailers provide for many promotions

Two Types of Retail Pricing


Strategic issues l.jpg
Strategic Issues

  • Importance of convenience

  • Increasing power of retailers

  • Private label branding

    • Lower price but higher margins


Retailing polarity l.jpg
Retailing Polarity

  • Trend toward either

    • Low price--e.g., Food-4-Less, Wal-Mart supercenters

    • High quality--e.g., Vons Pavilion


ad