Chapter 15 Distributing Products 1 The Emergence of Marketing Intermediaries Make exchange process more efficient and easier a Marketing Intermediaries Middlemen Organizations that assist in moving goods and services from producers to businesses B2B and from businesses to consumers B2C b Channel of Distribution A whole set of marketing intermediaries such as agents brokers wholesalers and retailers that join together to transport and store goods in their path or channel from producers to consumers c Agents Brokers Marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but who do not own the goods d Wholesaler Marketing intermediary that sells to other organizations such as retailers manufacturers and hospitals Part of B2B system e Retailer An organization that sells to ultimate consumers f Basic Points i Marketing intermediaries can be eliminated but their job cannot be If you eliminate some wholesalers and retailers then consumers or someone else would have to perform the intermediary s tasks including transporting and storing goods finding suppliers and establishing communication with suppliers ii Intermediaries perform marketing functions faster and more cheaply than others can But they must adopt the latest technology such as search engine optimization social networking etc iii Intermediaries add costs to products but these costs do not exceed value 2 Utilities Used by Intermediaries a Utility The want satisfying ability or value that organizations add to goods or services by making them more useful or accessible to consumers than they were before i Form Utility Changing raw materials into useful products Producers more than intermediaries provide more ii Time Utility Making products available when the customer needs them iii Place Utility Placing products where the people want them iv Possession Utility Doing whatever is necessary to transfer ownership from one party to another including providing credit delivery installation guarantees and follow up service v Information Utility Adding value to products by opening two way flows of information between marketing participants vi Service Utility Providing fast friendly service during and after the sale and by teaching customers how to best use products over time 3 Wholesale Intermediaries a Retail Sale The sale of goods and services to consumers for their own use B2C b Wholesale Sale The sale of goods and services to businesses and institutions like schools or hospitals for use in the business or to wholesalers or retailers for resale B2B c Merchant Wholesalers Independently owned firms that take title to the goods they handle i Full Service Perform all distribution functions ii Limited Function Perform only selected functions but try to do them especially well 1 Rack Jobbers Furnish racks or shelves full of merchandise like music toys hosiery and health and beauty aids to retailers and then sell them on consignment 2 Cash and Carry Serve mostly smaller retailers with a limited assortment of products 3 Drop Shippers Solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer a Coal lumber and chemicals d Agents Brokers NEVER own the products that they distribute earn commission based on the percentage of sales revenues a Intensive Distribution Puts products into as many retail outlets as possible including vending 4 Retail Intermediaries machines i Gum Soda Water etc b Selective Distribution Uses only a preferred group of the available retailers in an area i Appliances furniture and clothing c Exclusive Distribution The use of only one retail outlet in a given geographic area i Luxury manufacturers specialty goods etc 5 Non Store Retailing a Electronic Retailing Selling goods and services to ultimate consumers over the Internet b Telemarketing Sale of goods and services by telephone c Direct Selling Reaches consumers in their homes or workplace d Direct Marketing Any activity that directly links manufacturers or intermediaries with the ultimate customer 6 Building Cooperation in Channel Systems a Corporate Distribution Systems One firm owns all the organizations in the channel of distribution i If the manufacturer owns the retail firm it will have a great deal of control with its operations such as display pricing promotion inventory control etc b Contractual Distribution System Members are bound to cooperate through contractual agreements i Franchise systems ii Wholesaler sponsored chains iii Retail Cooperatives c Administered Distribution System Producers manage all the marketing functions at the retail level d Supply Chain All the linked activities various organizations must perform to move goods and services from the source of raw material to ultimate customers i Supply Chain Management Managing the movement of raw materials parts work in progress finished goods and retailed information through all the organizations in the supply chain managing the return of such goods if necessary and recycling materials when appropriate 7 Getting Goods to Consumers Efficiently a Logistics The planning implementing and controlling of the physical flow of materials final goods and relation information from points of origin to points of consumption to meet customer requirements at a profit b Inbound Logistics Brings raw materials packaging or other goods and services and information from suppliers to producers c Materials Handling The movement of goods within a warehouse from warehouses to the factory floor and from the factory floor to various workstations d Outbound Logistics Manages the flow of finished products and information to business buyers and ultimately to consumers like you and me e Reserve Logistics Brings goods back to the manufacturer because of defects or for recycling materials f Freight Forwarder Puts many small shipments together to create a single large shipment that can be transported cost effectively to the final destination g Intermodal Shipping Uses multiple modes of transportation such as highway air water rail to complete a single long distance movement of freight h Storage Warehouse Holds products for a relatively long time i Distribution Warehouse Facilities used to gather and redistribute products
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