CHANNELS OF DISTRIBUTION • All businesses need to distribute their product either • to a place where a consumer can find it • OR • directly to the consumer • IF the consumer has the product, the marketer has been SUCCESSFUL
Components of Distribution • There are two components to distribution • selecting, developing, and managing distribution channels • physically distributing goods through those channels
Channels of distribution • …are the paths of ownership that goods follow as they pass from the producer to the consumer • Channel selection • deciding what path a product should take to reach the target consumer • Logistics • arranging for the product to move efficiently, safely, cheaply, and quickly
Distribution Policies • Intensive • Selective • Exclusive • Integrated
Intensive Distribution • Used if the product is sold everywhere • Ex: Coca-cola is found in schools, bus stations, parks, malls, arenas, cafeterias, grocery stores, drugstores, retail outlets, planes, trains, movie theatres, restaurants, etc.
Selective Distribution • Try to control the distribution of their product • May seek to avoid conflicts in positioning/brand image • If a retailer orders a manufacturer’s product, by law the manufacturer cannot refuse to sell the product to the store without a valid reason
Exclusive Distribution • The manufacturer has made a deal with one or two retailers in a particular area to sell the manufacturer’s product exclusively • This allows the product to have a prestige image and allows the manufacturer to dictate some of the retail strategies. • Ex: High fashion clothing, famous-name watches, luxury giftware
Integrated Distribution • In this case a manufacturer, distributor, or retailer owns both distribution outlets and manufacturing facilities for a product • Ex: IKEA, Lee Valley tools – own and operate their own manufacturing & retail stores
Questions • Pick an item you have on you right now • What distribution channels do you think it took to get to you? • Think of an example for each of the four types of distribution strategy • How do you think e-commerce has affected distribution – especially Exclusive distribution?
Looking ahead… • List as many sources/places you can from which you could buy a product (any product)