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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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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
transfer ownership
Form
Types of UtilityPossession
Time
when needed
Service
where wanted
before during & after sale
Place
OPEN 24 HRS
Information
two-way communication
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
How Retailers Compete
- Price
- Service
- Location
- Selection
- Entertainment
Is it Becoming aWal-Mart World?
*There are 2,985 stores in the U.S.
Source: Wal-Mart Annual Report 2000
Non-Store Distribution
- E-tailing/ Internet
- Telemarketing
- Vending Machines, Kiosks, Carts
- Direct Selling (Avon)
- Multilevel Marketing (Amway)
- Direct Marketing (mail, catalogues)
E-Business Expectations
Share of company revenues CEOs say come from e-business Now vs. In 5 years
Source:USA Today
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 OnlineSource: blink, www.earthlink.net/blink
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 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
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
members bound to cooperate through contracts
- Franchise Systems
- Wholesaler-Sponsored Chains
- Retail Cooperatives
McDonald’s, KFC
Ace Hardware, IGA Foods
