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Lecture 16

2320 Lecture 16: Chapter12

7 Pages
100 Views

Department
Business Administration
Course Code
Business Administration 3301K
Professor
Angela White

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Marketing Channels: Distribution Strategy:
The Importance of Distribution
Convincing intermediaries, such as wholesalers and retailers to carry new
products can be very difficult
- Distribution is not only difficult, its also expensive and involves paying
listing fees o get shelf space
A well thought out distribution strategy that is well integrated with other elements
of the marketing mix can result in increased revenues
- Ex. Brick Brewing introduced 473-militre brown plastic bottles that chill
faster, stay cold longer, and are light weight and unbreakable, making
Brick the first Canadian company to put beer in a plastic bottle
The plastic bottles were closely tied to distribution strategy
because it allowed Brick to expand its sales to outlets where glass
bottles were prohibited (university residence, sports events, and
concert venues)
Distribution Channels, Supply Chain, And Logistics Are Related:
Distribution Channel: The set of institutions that transfer the ownership of and
move the goods from the point of production to the point of consumption
Supply Chain Management: Refers to the set of approaches and techniques firms
employ to efficiently and effectively integrate their suppliers, manufacturers,
warehouses, stores and transportation intermediaries into a seamless value chain
in which merchandise is produced and distributed in the right quantities, to the
right locations, and at the right time, as well as to minimize system wide costs
while satisfying the service levels their customers require
Wholesalers: Are firms that buy products from manufacturers and resell them to
retailers and retailers sell products directly to consumers
-The more intermediaries that are involved in the supply chain, the greater
the complexity and number of transactions involved for a company to
reach consumers
Logistics Management: Describes the integration of two or more activities to plan,
implements, and control the efficient flow of raw materials, in-process inventory,
and finished goods from the point of origin to the point of consumption
Distribution channel management has been the responsibility of marketing
departments, under the direction of a marketing vice-president
Logistics is the responsibility of operations, under the vice-president of operations
Distribution Channels Add Value
Distribution channels are composed of entities that are buying, such as retailers or
wholesalers; selling, such an manufacturers or wholesalers; or helping facilitate
the exchange, such as transportation companies
Intermediaries reduce the number of marketplace contacts, resulting in more
efficient systems
oMatch the requirements of individual consumers to the goods that
manufacturers produce; handle physical distribution and storage of goods,
making them available for customers to purchase
Designing Distribution Channels
Channel Structure:
When a firm is just starting out or entering a new market, it doesn’t have the
option of designing the best distribution channel structure
Direct Distribution-
Direct Distribution channels allow manufacturers to deal directly with consumers
-Plays a significant role in B2B dealings with companies that sell directly
to their largest customers in the public and private sectors
-Some companies may be forced to distribute their goods directly because
they are unable to secure shelf space in retail outlets or are unable to pay
the high listing fees demanded by retailers for the shelf space
Indirect Distribution-
Indirect Distribution: One or more intermediaries work with manufacturers to
provide goods and services to consumers
-Wholesalers are often used when a company does not buy in sufficient
quantity to make it cost effective for a manufacturer to deal directly with a
retailers
Common for low-cost or low-unit items (candy and chips)
Push Strategy: A manufacturer focuses its promotional efforts on channel
members to convince them to carry its product
Pull Strategy: Promotional efforts are directed at consumers to build demand for
products that, in turn may convince retailers to carry them
Multichannel Distribution-
Many companies are embracing a multichannel or hybrid approach to distribution
-Ex. Sony is better able to reach both consumers and business customers by
using a combination of both direct and interact distribution channels
Customer Expectations-
From a retailer’s perspective, it is important to know from which manufacturers
its customers want to buy
-Manufacturers need to know where their target market customers expect
to find their products and those of their competitors
-Companies need to stay ahead of changes in where customers buy
products and what products they request, and the change their distribution
strategies accordingly
Channel Member Characteristics-
The larger and more sophisticated the channel member, the less likely that it will
use intermediaries
-Larger firms find that be performing distribution functions themselves,
they can gain more control, be more efficient, and save money
Distribution Intensity:

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Description
Marketing Channels: Distribution Strategy: The Importance of Distribution Convincing intermediaries, such as wholesalers and retailers to carry new products can be very difficult Distribution is not only difficult, its also expensive and involves paying listing fees o get shelf space A well thought out distribution strategy that is well integrated with other elements of the marketing mix can result in increased revenues Ex. Brick Brewing introduced 473militre brown plastic bottles that chill faster, stay cold longer, and are light weight and unbreakable, making Brick the first Canadian company to put beer in a plastic bottle The plastic bottles were closely tied to distribution strategy because it allowed Brick to expand its sales to outlets where glass bottles were prohibited (university residence, sports events, and concert venues) Distribution Channels, Supply Chain, And Logistics Are Related: Distribution Channel: The set of institutions that transfer the ownership of and move the goods from the point of production to the point of consumption Supply Chain Management: Refers to the set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels their customers require Wholesalers: Are firms that buy products from manufacturers and resell them to retailers and retailers sell products directly to consumers The more intermediaries that are involved in the supply chain, the greater the complexity and number of transactions involved for a company to reach consumers Logistics Management: Describes the integration of two or more activities to plan, implements, and control the efficient flow of raw materials, inprocess inventory, and finished goods from the point of origin to the point of consumption Distribution channel management has been the responsibility of marketing departments, under the direction of a marketing vicepresident Logistics is the responsibility of operations, under the vicepresident of operations Distribution Channels Add Value Distribution channels are composed of entities that are buying, such as retailers or wholesalers; selling, such an manufacturers or wholesalers; or helping facilitate the exchange, such as transportation companies Intermediaries reduce the number of marketplace contacts, resulting in more efficient systems
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