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Lecture 4

MKT 220 Lecture Notes - Lecture 4: Marketing Channel, Order Processing, Distribution Center

Course Code
MKT 220

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Distribution- the activities that make products available to customers when and where they want to
purchase them
Marketing channel – group of individuals and organizations directing products from producers to
Facilitate exchange – reduce overall costs, reduce search costs, maintain order in marketplace
Reduce search costs for customers
Maintain order in the marketplace
Go in one location to find everything you need
Marketing intermediary – middleman linking producers to other middlemen
Producer – Direct Channel – Customer
Producer – Indirect Channel (Intermediary = Wholesalers/Retailers) – Customer
Create utility
Time utility – have products available when customers want them
Place utility- make them available in locations where customers want to buy them
Possession utility – customer has access to the product to use or store for future use
Supply chain management – long term partnerships among marketing channel members that reduce
inefficiencies, costs, and redundancies and develop innovative approaches to satisfy customers
Optimizes costs throughout the whole channel for efficiency and service
Arises from need to achieve a more competitive position
Business products use the direct channel
Industrial distributor buy product from producer and sell it to business
Dual distribution – use of 2 or more channels to distribute the same product to same target market
Strategic channel alliance – an agreement whereby the products of one organization are distributed
through the marketing channels of another
Coke bottles Dr. Pepper
Intensive distribution – using all available outlets to distribute a product
Convenience products with high replacement rates – availability > outlet type
Selective distribution – using only some available outlets to distribute a product
Shopping products – high qualification requirements to distribute and support products
Exclusive distribution – using a single outlet in a fairly large geographic area to distribute product
Expensive, high-quality products purchased infrequently
Exclusive outlets provide an incentive to sellers in limited markets
Carry complete inventory and have staff for sales and services
Physical distribution – activities to move product to producer to consumer and other end users
1. Meeting standards of customer services based on availability of product from inventory,
timeliness, and accuracy of order fulfillment
2. Reducing total distribution costs – overall goal is to achieve lowest total distribution costs
compatible with the firm’s customer service objectives
3. Reducing cycle (process completion time) – faster processes for increased customer service
1. Order processing – receipt and transmission of sales order information
a. Order entry, order handling, and order delivery
2. Inventory management- developing and maintain adequate assortment of products to customer
needs – minimize inventory costs
a. Stockouts – inventory related shortages of products
b. Reorder point = order lead time x usage rate + safety stock
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