#10 PLACE Flashcards
What is distribution?
Activities required to get the right product to the r place at the r time in the rquantity
What is a distribution channel?
The transferring of goods
Move them from the point of production to the point of consumption
Distribution channels add value by…
- making products accessible
- reducing inefficiencies
- providing specialized functions (like promotion and storage).
Managing distribution channels involves…
balancing cooperation and conflict
- using systems like contracts to ensure smooth operations.
Types of Distribution Channels (2)
- Direct goods 2 consumers
- Indirectthrough intermediaries
Supply Chain
road the product makes from factory to consumer
Basic supply chain
manufactures make products and sell them to intermediaries
Intermediaries (2)
- Wholesalers
- Retailers
Intermediaries
Wholesalers
Buy in Bulk
buy from manufacturers and them 2 stores
Costco
Intermediaries
Retailers
Stores we shop
Stores buy from whole or directly from manu and sell to consumers
Zara
The more steps there are in the chain…
everything is more complicates
- more transactions
- more people involved
What is a Distribution strategy?
How to sell good to consumers
Types of distribution strategies (2)
- direct
- indirect
Types of distribution strategies
Direct Distribution
no intermediaries between seller and buyer
- seller often manu
artesanos vendiendo artesanias en pueblitos
Types of distribution strategies
Indirect Distribution
one or more intermediaries work with manus to provide to consumers
car agencies: Ford 2 inflable 2 customers
- extra inter can be wholesale
What is Distribution Intensity?
how widely a product is distributed
how many places sell it
companies decide their distribution intensity based on…
brand image & type of product
Types of Distribution Intensity (3)
- intensive
- exclusive
- selective
Types of Distribution Intensity
Intensive Distribution
get the product in as * many places as possible*
- the more places people see it, the more they will buy it
soft drinks or snacks
Types of Distribution Intensity
Exclusive Distribution
Sell only thorugh a few specific retailers
- keep the product prestigious and mantains its premium image
luxury items
Types of Distribution Intensity
Selective Distribution
sell trought a few, carefully* choosen stores*
- balances brand control with wider availability
San Pellegrino @ gourmet grocery stores
Specialization
each member focuses on what they are best at
Specialization @ manufactures
create products
Specialization @ wholesalers
buy in bulk 2 distribute to retailers
Specialization @ retailers
provide products to consumers & offers services like customer education, delivery and installation
Value Addition
at each step in supply chain the product become more valuable
Value Addtion @ raw materials
are turned into finished products
Value Addtion @ Transportation
bring products closer to consumers
Value Addtion @ Retailers
offer product comparision, customer service, installation
Distribution Channels
Vertical Channel Conflicts
between members of different levels
manufactures vs retailers: arriving late
Distribution Channels
Horizontal Channel Conflict
between members at the same level
2 retailers
Power in Distribution Channels
when one member can influence another
Types of Power in Distribution Channels (3)
- Reward
- Coercive
- Referent
Power in Distribution Channels
Reward
offering incentives
Coca paga more por estar centro de shelves
Power in Distribution Channels
Coercive
Threatening penalties
delaying payments for later deliveries
Power in Distribution Channels
Referent
big desirable to partner with
brands wants to be walmart suppliers
Key Functions of an Effective channel of distribution (4)
- Efficency
- Sorting
- Facilitation
- Standardization
Key Functions of an Effective channel of distribution
Efficiency
Reduces the number of marketplace interactions needed for products to reach customers.
Key Functions of an Effective channel of distribution
Sorting
Matches customers’ needs with the right products or services.
Key Functions of an Effective channel of distribution
Facilitation
Ensures smooth flow of products, information, promotions, payments, and ownership transfers.
Key Functions of an Effective channel of distribution
Standardization
Makes transactions fair and efficient for all parties involved.
Channel Types of Supply Chains
Vertical (3)
- Administered
- Contractual
- Corporate
Vertical Channel Type in Supply Chains
Administered
One channel member uses power to control others
Walmart
Vertical Channel Type in Supply Chains
Contractual
Members are bound by contracts
Franchises Mc Donalds
Vertical Channel Type in Supply Chains
Corporate
A single company owns multiple levels of the supply chain
Tesla
Channel Selection and Design (4)
Factors:
1. Customer/market
2. Product
3. Organizational
4. Competitive
Channel Selection and Design
Customer/ Market Factors
- Customer expectations (e.g., convenience or customization).
- Geographic dispersion of the market.
- Typical order size or quantity.
- Service requirements.
Channel Selection and Design
Product Factors
- Product type (specialty, shopping, convenience, or unsought).
- Perishability.
- Complexity or customization.
- Distribution intensity (intensive, selective, or exclusive).
Channel Selection and Design
Organizational Factors
- Company size and resources.
- Scope of the product line.
- Desired level of control over the channel.
Channel Selection and Design
Competitive Factors
- Market positioning and how competitors structure their channels.
Retailing Strategies at the Store (3)
- Product
- Pricing
- Distribution
Retailing Strategies at the Store
Product Strategy
- Merchandise categories (e.g., private labels, branded products).
- Services offered (e.g., delivery, installation).
- Atmospherics: Store design to enhance brand image and engage customers.
Retailing Strategies at the Store
Pricing Strategy
- Markups: Setting retail prices above cost to earn profit.
- Markdowns: Discounts or promotional pricing to attract customers.
Retailing Strategies at the Store
Distribution Strategy
- Location of stores (physical, online, or catalog).
- Hours of operation.
- Merchandising organization (how products are arranged in-store).
