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Chapter 9

MGTA02H3 Chapter Notes - Chapter 9: Direct Selling, Telemarketing, Warehouse Club


Department
Management (MGT)
Course Code
MGTA02H3
Professor
Chris Bovaird
Chapter
9

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Chapter 9 The 4 Ps - Place
THE DISTRIBUTION MIX
Distribution mix is the combination of distribution channels a firm selects to get a
product to end-users.
Intermediaries and Distribution Channels
Intermediary (middleman) is any individual or firm other than the producer who
participates in a products distribution.
Generally classified as:
oWholesalers are intermediaries who sell products to other businesses, which
in turn resell them to the end-users.
oRetailers are intermediaries who sell products to end-users.
Distribution of Consumer Products
A distribution channel is the path a product follows from the producer to the end-
user.
Direct Distribution of Consumer Products
Direct channel is a distribution channel in which the product travels from the
producer to the consumer without passing through any intermediary.
The direct channel is also prominent on the internet.
Retail Distribution of Consumer Products
In this channel, producers distribute products through retailers.
Wholesale Distribution of Consumer Products
Wholesalers entered the distribution network to perform the storage function.
Distribution Through Sales Agents or Brokers
Sales agent (broker) is an independent business person who represents a business
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and receives a commission in return, but never takes legal possession of the product.
Agents generally deal in the related product lines of a few producers and work on a
long-term basis.
The Pros and Cons of Non-Direct Distribution
Each link in the distribution chain makes a profit by charging a markup or
commissions. Thus, non-direct distribution means higher prices.
The more members in the channelthe more intermediariesthe higher the final
price.
E-intermediaries are wholesalers and agents who use internet channels.
Markup levels depend on competitive conditions and practices in a particular
industry.
Creating Added Value
Intermediaries provide added value by saving consumers both time and money.
The value accumulates with each link in the supply chain.
Distribution Strategies
The choice of distribution strategy determines the amount of market exposure the
product gets and the cost of that exposure.
The goal is to make a product accessible in just enough locations to satisfy
customers needs.
Three strategies providing different degrees of market coverage are:
oIntensive distribution a product is distributed in nearly every possible
outlet, using many channels and channel members.
oExclusive distribution a products distribution is limited to only one
wholesaler or retailer in a given geographic area.
oSelective distribution falls between intensive and extensive distribution,
calling for the use of a limited number of outlets for a product.
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WHOLESALING
In addition to storing products and providing an assortment of products for their
customers, wholesalers offer delivery, credit, and information about products.
Merchant Wholesalers
Merchant wholesaler is an independent wholesaler that buys and takes legal
possession of goods before selling them to customers.
They usually provide storage and means of delivery.
A full-service merchant wholesaler provides credit, marketing, and merchandising
services.
Limited-function merchant wholesaler provides only a few services, sometimes
merely storage.
Agents and Brokers
Agents and brokers serve as sales forces for various manufacturers.
They are independent representatives, work on commissions, do not own the
merchandise they sell, they serve as the sales and merchandising arms of
manufacturers that not have their own sales forces.
They also provide a wide range of services.
They maintain product saleability by removing open, torn, or dirty packages,
arranging products neatly, and generally keeping them attractively displayed.
RETAILING
Types of Retail Outlets
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