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Lecture 3

MKT 220 Lecture Notes - Lecture 3: T.J. Maxx, Sterling Jewelers, Warehouse Club

Course Code
MKT 220

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Chapter 15
Distribution – activities that make products available to customers when and where they want to purchase
Marketing channel – direct products from producers to consumers
Marketing intermediary – middleman link producers to consumers through arrangements
Direct channel: producer to the customer
Indirect channel: producer to intermediary to customer
Time utility – have products available when the customer wants them
Place utility – make products available in locations where the customers wish to purchase them
Possession utility – customer has access to the product to use or store for future use
Exchange Efficiencies
- Overall costs of market exchanges
- Reduce search costs for customers
- Maintain order in the marketplace
Supply chain management- long term partnerships that reduce inefficiencies to satisfy customers
Dual distribution – use of 2 or more channels to distribute the same product to the same target market
Strategic channel alliance- products of one organization are distributed through the marketing channels of
Intensive distribution – convenience products with high replacement rates
Provides availability and reduces search time
Selective distribution – shopping products and durable goods with low replacement rates (only use some
outlets to distribute products)
Exclusive distribution – using a single outlet to distribute a product (expensive, high-quality)
Physical distribution – activities to move product to producer to consumer
Outsourcing – contracting of physical distribution tasks to third parties with specialized skills
Meeting customer service standards, reducing total distribution costs, and reducing cycle time
1. Order processing – order entry, handling, and delivery
2. Inventory management – developing and maintaining adequate assortment of product to meet
customer needs
a. Minimize inventory costs
b. Stockouts = inventory-related shortages of products
c. Reorder point = (Order Lead Time x Usage Rate) + Safety stock - reorder when you have
x in stock
3. Materials handling – physical handling of products in warehousing op and the transportation from
points of production to points of consumption
a. Unit loading – one or more boxes on a pallet handled by mechanical means
b. Containerization – consolidation of many small items into a single large container
4. Warehousing – design and operation of facilities for storing and moving goods
a. Design and operation of facilities for storing and moving goods
b. Private – storing and shipping products owned by the company
c. Public – lease storage space and related physical distribution facilities to other firms
d. Distribution center- focus on moving rather than storing goods
5. Transportation- movement of products from where they are made to where they are used
a. Railroads: heavy, bulk
b. Trucks: flexible, speed, access
c. Waterways: heavy, low-value nonperishables
d. Airway: fast delivery, high value goods
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e. Pipelines – petroleum and chemicals
Intermodal transportation – two or more transportation modes are used in combination
Piggyback: truck and train; fishyback: ship and truck, and birdyback: plane and truck
Freight forwarders: consolidate shipments from several firms into efficient lot sizes
Megacarriers – firms that provide several modes of shipment
Chapter 16
Retailing – transactions in which ultimate consumers are the buyers
Personal, household, or family use
Occurs through stores/establishments
Retailers – organizations that purchase products for the purpose of reselling them to consumers for profit
Add value and create utility (time, place, possession, and form)
General Merchandise Retailers
Offers a variety of product lines
1. Department stores – large, wide product mixes, separate departments
2. Discount stores – offer brand and private name products at low prices
3. Supermarkets – large, self-service stores that carry a complete line of food products
4. Superstores – giant retail outlets
5. Hypermarket – combine supermarket and discount shopping in one location
6. Warehouse club – combine cash-and-carry with discount retailing
7. Warehouse showroom- large, low cost buildings with large on premise inventories
8. Convenience stores- consumers can shop from a catalog
Specialty retailers –
1. Traditional - “limited line / single line”; carry a narrow product mix with deep product lines (kay
2. Off-price: buy manufacturers overruns and offseason merchandise; charge less than department
stores (TJ Maxx)
3. Category killers – concentrate on a major product category; compete on low prices and product
Non-store Retailers- selling of products outside the confines of a retail facility
1. Direct marketing – use of telephone to sell products to consumers (catalog, direct response,
telemarketing, TV Home shopping, and online retailing
2. Catalog marketing – customers can purchase from the catalog (efficient, convenient but
inflexible and limited selection)
3. Direct response marketing- occurs when a retailer advertises product and makes it available
through mail or telephone orders
4. Telemarketing – performance of marketing related activities by telephone
5. Television home shopping – products are presented to television viewers who can buy them
6. Online retailing – makes products available to buyers with computer connections
7. Direct selling – face to face sales presentations (personal attention but high costs)
8. Automatic vending – use of machines to dispense products
Franchising – arrangement in which a supplier grants a dealer the right to sell products in exchange for
some type of consideration
Manufacturer authorization – product producer licenses retailers to sell its brand name products
Distributor authorization – sell its brand name products to other retailers
Producer authorization – franchiser supplies brand names, production tech, or other services
while maintain development and control of marketing strategies
Advantage: limited capital, attracts customers, allows immediate market entry
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