Week 10 Distribution Seg 1 So we re gonna move on and we re area This is the framework that we And here we re transitioning to the marketing mixed decision variables gonna begin talking about the distribution talk about when we re sorta transitioning distribution area So with regard to the we are now moving into distribution We ve talked about product and we ve talked about price So one of the problems I should say two of the problems that an economy s total distribution network or system has to overcome is referred to as the discrepancy and assortment and the discrepancy in number Take a minute or so to copy this down if you didn t bring it to class Yes this is an original drawing In case you can t tell for sure and this is not in the book It probably is online It s probably in the notes Yep but essentially what this is is if you look at the rectangles in the middle the rectangles in the middle represent three manufacturers And the circles around those three just manufacturers they represent consumers The manufacturers are manufacturing narrow assortments of products It could be that one of those is making shoes Another might be making a snack food The other might be making detergent But each manufacture produces a narrow assortment of products but they produce it in very large quantities Individual consumers represented by the circles they want a wide assortment of products and they want just a little bit of each one Think about your assortment Think about your stuff your assortment is quite broad when you think about all the stuff that you had But within your assortment you have just a little bit of each one So if were looking at the discrepancy in assortment manufacturers are manufacturing narrow assortments Customers consumers want broad assortments If were looking at the discrepancy in number manufacturers are producing large amounts on a daily basis You know that detergent manufacturer might have made or maybe ten box cars of detergent today Each individual consumer they want a small container of detergent or just one little bit of detergent That is the discrepancy in number sometimes called the discrepancy in quantity An economy s total distribution system has to reduce those two discrepancies and as we talk about distribution we will talk about how that happens For a mass production complex economy we have to resolve what s known as the discrepancy in assortment and the discrepancy in number And I pointed out to you that this is done through our distribution system for the whole economy This distribution system consists of a large number of marketing channels So let me describe a marketing channel to begin A marketing channel can be described as the course through which title two and control over the product passes from original producer to end user Again we can describe a marketing channel as the course through which title two and control over the product passes from original producer to end user A new marketing channel begins when the form of the product is substantially changed For example if we were looking at the marketing channel for bread it wouldn t begin with the wheat farmer It would not begin with the flour milling It would begin with the baker In other words it s the baker that is the producer of the bread So realize that marketing channels have a beginning and they have an end And they end when the form is changed or the product is concerned So we re going to look at several types of marketing channels for consumer products Realize that although we re going to be looking at consumer product channels there are distribution channels or marketing channels for industrial products or business to business products So we re going to look at four major types of consumer product marketing channels or our distribution channels for marketing products I will use marketing channel and distribution channel interchangeably We re going to be looking at four different types There are others for consumer products but this covers a large number of them right here Channel A is referred to as a direct channel distribution It s called that because there are no intermediaries There are no wholesalers no retailers no resellers It s called direct because products move from the producer directly to the consumer Examples of this would be if you were to purchase products from at a farmer s market and you re buying these products directly from the grower That would be an example of a direct channel distribution If you were to go out and purchase a custom made birthday cake for someone happy birthday Jennifer on it and you re buying it directly from the bakery that would be a direct channel of distribution We know that when Dell first started that They sold computers direct only It was referred to as Dell direct and You ordered it directly from Dell And distribution Today of Dell engages in they you can still buy direct but you well if you wanted to by a Dell computer that would be a direct channel of multichannel distribution meaning that could also buy it through retailers as So a direct channel distribution is a simple type of distribution channel There s not a lot of what we call channel conflict in a direct channel distribution and one reason is due to its simplicity It doesn t involve intermediaries We look at channel B notice that there is a retailer level between the producer and the consumer So there s one level of intermediaries in channel B This means that products flow from the producer down to retailers And then retailers market it to consumers Examples of this would be in the car industry New cars are sold through channel B Those of us as consumers when we go out to buy a new car we go to a retail dealer don t we That retail dealer has received the products directly from the manufacturer This would be a channel in which we d see new cars distributed When you buy a new textbook from the bookstore that product has gone through channel B Publishers sell new books directly to bookstores Bookstores then sell them to consumers Clothing primarily is sold to channel V Generally speaking clothing manufacturers directly to retail stores and then to consumers When products need very broad distribution then and let s say the product is fairly inexpensive then it s fairly common to use channel C Channel C would be used for convenience goods Remember these are products that are sold in a large amount of retail outlets they re not very expensive They are replaced fairly often for which