Distribution/Channel Management
OC LOGISTICS OF GOODS AND SERVICES
Importance of distribution in marketing. The distribution function determines the best methods and procedures to use so that prospective customers can locate, obtain, and use a business's products and services. It plays a part in economics (utility: place and time), as well as a part of the marketing mix (place). It is known to be the most challenging part of marketing. Distribution makes things convenient for its consumers.
Channels of Distribution- the path a product takes from its producer or manufacturer to the final user.
Industrial user-final user when a product purchased for business use
Consumer-final user when a product purchased for personal use
OC 1 DEMONSTRATE A CUSTOMER-SERVICE MINDSET AS IT RELATES TO MARKETING ACTIVITIES (E.G., DISTRIBUTION, SALES, MANAGEMENT)
CUSTOMER SERVICE MINDSET: Relationship between customer service and distribution. Distribution's main goal is to satisfy the customers, so if a company as good customer service, they most likely have good disstribution that fully completes the needs and wants of consumers. Distribution is involved with economic utility within place and time, as well as in the marketing mix within place.
The different distribution channels. There can be many different ways to distribute a product to a consumer through many distribution channels. Those channels may involve wholesalers, retailers, agents, and industrial distributors. It depends what channel a business decides to take when distributing a product. The choices (explained below) are direct and indirect channels.
Nature of channel-member relationships with each type of intermediary. A direct channel is when the producer sells the product the final consumers. The producer or consumer is responsible for completing each marketing function. In an indirect channel, it involves other businesses between a producer and consumer.
OC 2 DIFFERENTIATE BETWEEN DIRECT AND INDIRECT CHANNELS OF DISTRIBUTION
Direct channels are used more for business-to-business marketing, where indirect channels are used in the sale of consumer products. Buy an apple at the farm
The indirect channel involves the intermediaries (agents, wholesalers, and retailers) with the different businesses between the producer and consumer. (each stops adds to final price)
OC 3 IDENTIFY THE CHANNELS OF DISTRIBUTION MEMBERS (E.G., MANUFACTURER, WHOLESALER, RETAILER)
Intermediates - middle men - move product from manufacturer or producer to consumer
-Retailers: The final business organization in an indirect channel of distribution for consumer products. Retailers offer products and services to consumers and support the marketing activities of wholesalers and manufactures.
-Specialty or limited-line retailers: Offer products from one category of merchandise or closely related items.
-Mixed merchandise retailers: Offer products from several different categories.
-Service retailers: Services are their primary offer with few products for sale that complement their services.
-Non-store retailing: Selling directly to a consumer at home rather than in a store.
-Franchising~a business relationship in which the developer of a business idea sells others the rights to the idea as well as the name
-Atmospherics~elements of the shopping environment that are appealing to customers, attract them to a store, and encourage them to buy.
-Wholesalers: Companies that assist with distribution activites between businesses. They don't work with final consumers. They provide needed marketing functions as products and services move through the channel of distribution between producers and other businesses.
-Full-service wholesalers: Take title to the products they sell and provide a full range of distribution activities and arranging transportation services, as well as offer credit and promotional ASSISTANCE.
-Limited-service wholesalers: The concentrate on two things, warehousing and storage, product delivery, or accumulating products for sale in a convenient location.
-Agents and brokers: They provide specialized exchange functions like locating suppliers, selling, financing, or arranging shipments. They don't take title to products.
-Rack Jobbers - wholesalers that manage inventory for retailers by counting stock, refilling orders, and display - pepsi guy at speedway
-Drop Shippers - own the goods they sell but never physically have them - coal business
Agents - bring intermediaries together but never own the product - real estate
OC 4 IDENTIFY THE LEVELS OF DISTRIBUTION INTENSITY (E.G., EXCLUSIVE, SELECTIVE, INTENSIVE)
know this - distribution INTENSITY
intensive - achieve mass market selling - CONVENIENCE goods - many intermediaries - coca cola
selective - work with selected intermediaries - shopping goods - NIKE - several intermediaries
exclusive - single intermediary - SPECIALTY goods - american eagle
OC 7 EXPLAIN THE TRANSPORTATION SYSTEMS AND SERVICES USED IN DISTRIBUTION (E.G., MOTOR, RAIL, WATER, AIR)
Transportation systems and services that move products from manufacturer to consumer.
Physical Distribution: the process of efficiently and effectively moving products and materials through the distribution channel.
Trucking
Advantages: Cheap, right to the location, easy travel
Disadvantages: Maintenance, use less gas, spillage
Railroads:
Advantages: Cheap, carries large quantities
Disadvantages:Not right at location, speed.
Pipelines:
Advantages: Large volume
Disadvantages: Limited
Marine Shipping:
Advantages: International, inexpensive compared to air cargo
Disadvantages: weather and speed
Air Cargo Services:
Advantages: Fast!
Disadvantages: Expensive
OC 5 IDENTIFY, PREPARE, AND EXPLAIN THE USE OF INVOICES
invoices are an itemized list of goods that include prices, terms of sale, total ,taxes, and fees and the amount due - it is a bill...The item numbers, quantities, unit costs, and extensions must match the purchase order.
DATING terms - discount for paying bill early - 2/10 net 30 - 2% discount if you pay within 10 days...total must be paid in 30 days...this is IMPORTANT in retail because as a store woner you must buy the goods before you sell them...the longer the terms the better for the retailer.
OC 6 EXPLAIN THE RECEIVING PROCESS (E.G., RECEIVING, CHECKING, MARKING)
All businesses must have a stock handling process in place to receive deliveries of materials or products. This process affects maintenance of inventory levels.
receiving record
Information recorded by businesses about the goods they receive.
blind check method
A method of checking whereby the receiver writes the description of the merchandise, counts the quantities received, and lists them on a blank form or dummy invoice. The list is then compared to the actual invoice after the blind check is made.
direct check method
A method of checking in which the merchandise is checked directly against the actual invoice or purchase order.
spot check method
A random checking method of one carton in a shipment for quantity, and one item in the carton is inspected for quality; if the item is as stated on invoice, remaining cartons are assumed to be in the same condition.
quality check method
check each item for quality
The Different Methods of Marking Merchandise and the Benefits of Each Method
OC 8 EXPLAIN THE TYPE OF WAREHOUSING (E.G., DISTRIBUTION CENTERS,
PUBLIC, PRIVATE)
Inventory storage allows a business to keep its products in a safe location until they are needed or ready to be sold.
Storage
Facilitates the movement of products through the distribution
channel as products are sold
Products are stored until sold
Products are stored if production exceeds consumption
Products are stored safely and securely at convenient locations
Storage adds time and place utility to products
Internet-based stores require warehouse space
private warehouse
A storage facility designed to meet the specific needs of its owner.
public warehouse
A storage and handling facility offered to any individual or company that will pay for its used
distribution center
A warehouse designed to speed delivery of goods and to minimize storage costs.
bonded warehouse
A public or private warehouse that stores products requiring payment of a federal tax.
Delivery Time
Average or normal time between placing an order and receiving the delivery
COD -
collect on delivery ; payment due by the recipient on delivery; as, a COD parcel
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PUBLIC, PRIVATE)
Inventory storage allows a business to keep its products in a safe location until they are needed or ready to be sold.
Storage
Facilitates the movement of products through the distribution
channel as products are sold
Products are stored until sold
Products are stored if production exceeds consumption
Products are stored safely and securely at convenient locations
Storage adds time and place utility to products
Internet-based stores require warehouse space
private warehouse
A storage facility designed to meet the specific needs of its owner.
public warehouse
A storage and handling facility offered to any individual or company that will pay for its used
distribution center
A warehouse designed to speed delivery of goods and to minimize storage costs.
bonded warehouse
A public or private warehouse that stores products requiring payment of a federal tax.
Delivery Time
Average or normal time between placing an order and receiving the delivery
COD -
collect on delivery ; payment due by the recipient on delivery; as, a COD parcel
Click here for more...