Distribution Decision (21) Flashcards
Intensive vs Selective marketing Online vs store Length of the channel (B->B or B->C)
Intensive vs. Selective Distribution
Intensive (soft drinks)
Selective (Kronuts)
Importance (functions) of Distribution (3 functions)
3 functions tell us why we need distributions channels: TLF
- Transactional Function
- buying, selling, negotiating, risk taking - Logistical Function
- assorting, storing, sorting, transportation - Facilitating Function
- financing, grading, providing information
Types of Distribution Systems
Indirect distribution Systems vs direct Direct: a. producer to consumers (Schwan's) Indirect: b. producer-> retailer-> consumer GM c. producer-> wholesale-> retail-> consumer d. producer-> agend-> wholesale-> retail-> consumer OR COSTCO= producer-wholesaler-consumer
why are channel decisions important?
- affects every other element of marketing mix
- relatively long-term and complex relationships
length of the channel system
Direct sales force- (in- house sales force)
Indirect - through intermediaries
Advantages of Direct Channel
- control over distribution functions
- better satisfy customer needs
- cost effective if large enough volume base
- know more about your product
- Your employees livelihood relies on companies success
- main goal is to create demand for your product to end-users
Disadvantages of Direct Channel System
- slower process
- limited coverage
- higher risk
- higher fixed cost
- no brand identity
Different ways of going indirect (3 Ways)
3 C's All vertical market system and are an alternative to traditional marketing channels 1. Corporate Systems 2. Contractual Systems 3. Conventional System
Corporate Vertical Systems- indirect channel
owns/ opperates a vertically integrated “captive”
pro- control, customer service
cons investments
Polo, Kroger
Contractual Vertical Systems- indirect channel
signs contracts with independent intermediaries
- franchising
pros-
- franchisee - no experience needed, easy to get business help
cons-
- control
cons-
- franchisee may over change
- franchiser quick buck
Conventional Vertical System
utilizes independent intermediaries pros- - risk reduc - efficiency cons- instability
Channel Conflict
Veritical conflict:
occurs between different levels in a marketing channel (ie. between wholesaler and manufacturer)
Horizontal conflict:
occurs between intermediaries at the same level in the marketing channel are handling the same brand ie. two retailers: kmart+walmart
Vertical Marketing System
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
Corporate Contractual and Conventional (administered)
Breadth/ Density of the Channel System
achieving the best coverage of the target market requires attention to the density
There are 2 Degrees of distribution density
3 Degrees of distribution density (Types in a given market area)
Intensive distribution: place products and services in as many outlets as possible! “convenience” items
(soft drinks, starbucks)
Exclusive distribution: opposite of intensive- for “specialty” items
Selective distribution: Limited number of outlets (dell has its direct channel and then selective distribution for where dell products are sold)
