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MKT 100 (485)
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Chapter 12

CHAPTER 12.pdf

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Ryerson University
MKT 100
Asif Salam

CHAPTER 12: DISTRIBUTION Importance of Distribution Good distribution is critical to marketing success  DISTRIBUTION CHANNEL Institutions that transfer the ownership and move goods from the point of productionconsumption  Marketing department (direction of vice-president)  transactional buying, risk taking, promo, selling  logistical physical distribution, storing  facilitating gather info, financing functions Buying wholesalers, retailers Selling manufacturers, wholesalers Exchange transportation  SUPPLY CHAIN MANAGEMENT Set of approaches/techniques firms employ to efficiently/effectively integrate their suppliers, manufacturers warehouses, stores, transportation intermediaries into seamless value chain in which merchandise is produced/distributed in right quantities/right time  Focus on relationships among members of supply chain/distribution channel  Need to coordinate efforts to provide customers w/ best value  WHOLESALERS those firms engaged in buying, taking title to, storing, physically handling goods in large quantities, reselling goods (smaller quantities) to retailers/industrial/business users  Manufacturers Wholesalers  Costco, Home Depot, Wholesale Club function as retailers and wholesalers  RETAILERS Sell products directly to consumers  LOGISTICS MANAGEMENT Integration of 2 (+) activities for purpose of planning, implementing, controlling efficient flow of raw materials  In-process inventory, finished goods from point of originconsumption  Customer service, demand forecasting, distribution comm., inventory control, materials handling, order processing, parts/service support, plant/warehouse site selection, procurement, packaging, return goods handling, salvage/scrap disposal, traffic/transportation, warehousing/storage  Distribution channel mngmt supply chain mngmt logistics mngmt are related Designing Distribution Channels Channel Structure  DIRECT distribution  manufacturer consumer  INDIRECT distribution  manufacturer wholesalerretailerconsumer  MULTICHANNEL distribution  Catalogues, direct marketing Manufacturer Consumer seg 1 Manufacturer Retailers Consumer seg 2 Manufacturer Distributors Dealers Business seg 1 Manufacturer Business seg 2 Channel Member Characteristics Larger, sophisticated less likely to use intermediaries Small specialty toy manufacturer group of salespeople to sell Large manufacturer use own sales force Large national convenience deal w/ one regional supplier store chains Distribution Intensity # channel members to use at each lvl of supply chain  INTENSIVE distribution designed to get products into as many outlets as possible (WalMart, Zellers, Loblaws)  EXCLUSIVE distribution strategy of granting exclusive rights to sell to one or very few retail customers  geographic territories territories granted to one, few retail customers by manufacturer using exclusive strategy  no one can sell a particular brand in these territories  (Cartier, Tiffany&co)  SELECTIVE distribution lies btw/ intensive & exclusive, uses few selected customers in territory (Sears, the Bay) Managing Distribution Channels  Channel conflict  results when supply chain members are not in agreement about their goals, roles, rewards Vertical Marketing Systems: supply chain, members act as unified system ADMINISTERED No common ownership/no contractual relationships, dominant channel member controls channel relationship CONTRACTUAL System which independent firms at diff lvls of supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict  Franchising
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