Week 10- Distribution Seg 1->> So we're gonna move on and we're gonna begin talking about the distributionarea. This is the framework that we talk about when we're sorta transitioning.And here we're transitioning to the distribution area. So with regard to the marketing mixed decision variables, 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 isnot 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 snackfood. 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 manufacturermight have made, or maybe ten box cars of detergent today.Each individual consumer they want a small container of detergent, or just onelittle 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 talkabout 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 isthe 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 adirect channel of distribution. We know that when Dell first started, that, They sold computers direct only.It was referred to as Dell direct, and if you wanted to by a Dell computer. You ordered it directly from Dell. And that would be a direct channel of distribution. Today of Dell engages in multichannel distribution meaning that they, you can still buy direct but you could also buy it through retailers as well.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 wego 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 anew textbook from the bookstore that product has gone through channel B. Publishers sell new books directly to bookstores. Bookstores then sell them toconsumers.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 fairlyinexpensive 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