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Distributing Products Quickly and Efficiently. Chapter. 15. 15- 1. Channel of Distribution from raw materials to distribution. Marketing Intermediaries Wholesaler – sells to retailers Retailer – sells to public Brokers – brings buyers to seller Role of Intermediaries Create Efficiency

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Presentation Transcript
channel of distribution from raw materials to distribution
Channel of Distribution from raw materials to distribution
  • Marketing Intermediaries
    • Wholesaler – sells to retailers
    • Retailer – sells to public
    • Brokers – brings buyers to seller
  • Role of Intermediaries
    • Create Efficiency
    • Value vs. Cost
types of utility

using raw materials

transfer ownership


Types of Utility



when needed


where wanted

before during & after sale




two-way communication

wholesale intermediaries
Wholesale Intermediaries

take ownership to goods they handle

  • Merchant Wholesalers
    • Rack Jobbers
    • Cash-and-Carry
    • Drop Shippers
  • Business to Business (B2B)

furnish racks full of merchandise to retailers

wide assortment to small businesses

goods shipped from producer to buyer

XYZ Warehouse

percent of b2b commerce from internet
Percent of B2B Commerce from Internet

*Excludes Service Industries

Source: Forrester Research Inc.

how retailers compete
How Retailers Compete
  • Price
  • Service
  • Location
  • Selection
  • Entertainment
is it becoming a wal mart world
Is it Becoming aWal-Mart World?

*There are 2,985 stores in the U.S.

Source: Wal-Mart Annual Report 2000

retail store distribution
Retail Store Distribution
  • Intensive
  • Selective
  • Exclusive
non store distribution
Non-Store Distribution
  • E-tailing/ Internet
  • Telemarketing
  • Vending Machines, Kiosks, Carts
  • Direct Selling (Avon)
  • Multilevel Marketing (Amway)
  • Direct Marketing (mail, catalogues)
e business expectations
E-Business Expectations

Share of company revenues CEOs say come from e-business Now vs. In 5 years

Source:USA Today

why people don t shop online
It isn’t secure

It will jeopardize my privacy

Usually must pay shipping charges

Not enough selection

Can’t touch/try things first

No satisfaction guarantee

Returns are a hassle

Won’t arrive on time

Hard to find things online

Enjoy getting out of house to shop

Why People Don’t Shop Online

Source: blink,

has the internet changed your shopping habits
Has The Internet Changed Your Shopping Habits?

Survey of Americans who have high* Internet use vs. those with low use

* high use = 15+ hours per week

Source: USA Today

what online shoppers bought per month in 2000
What Online Shoppers Bought* Per Month in 2000

*In thousands of dollars

Source: Forrester Research

what does it take to persuade consumers to buy online
What does it take to persuade consumers to buy online?

*Survey of 1,944 Web users that had notmade an online purchase

Source: CIO Web Business, 10/1/1999

channel cooperation to compete with online retailers
Channel Cooperation to compete with online retailers

1. Corporate Distribution

2. Administered Distribution

all distribution orgs. are owned by same firm (Sherwin-Williams)

producers manage all marketing functions at retail level. Beer?

3 contractual distribution
3. Contractual Distribution

members bound to cooperate through contracts

  • Franchise Systems
  • Wholesaler-Sponsored Chains
  • Retail Cooperatives

McDonald’s, KFC

Ace Hardware, IGA Foods


4. Supply Chain Management

all organizations from raw materials to final customer

The Supply Chain

distribution storage mode

Motor Vehicles






Materials Handling

Distribution/Storage Mode