PowerPoint Slides to accompany Rix Marketing: A Practical Approach 7e
What is Distribution?
The role of distribution (placement) is to make the firm’s
products available to customers:
• Fast and efficient
• Convenient and accessible
• Safe and secure
These qualities of distribution
add to customer satisfaction
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Next: Distribution Performs Several Functions
Learn more on page 390
Handles, stores
and delivers
goods
Transfers title to
products
As a marketing
mix element,
distribution
performs
several
functions:
Finances stock
between
manufacturer
and customer
Estimates the
level of demand
Provides
information
about products
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Next: Middlemen (Intermediaries)
Learn more on page 390
Middlemen (Intermediaries)
Independent firms that provide links between producers and customers
Services
provided to
suppliers
• provides market
information
•interprets
consumers’ wants
• promotes
producers’ products
• creates assortments
•stores products
• negotiates with
customers
• provides financing
• owns products
• shares risks
Services
provided to
buyers
Middleman
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
• anticipates wants
• subdivides large
quantities of a
product
• stores products
• transports products
• creates assortments
• provides financing
• makes products
readily available
• guarantees
products
• shares risks
Next: Distribution Channels
Learn more on pages 391 - 393
Distribution Channels
The people or firms who carry out the distribution functions:
Producers or Services Providers
agents
merchant
wholesalers
retailers
retailers
agents
merchant
wholesalers
retailers
retailers
Ultimate Consumers or Business Customers
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Next: Vertical Marketing Systems (VMS)
Learn more on pages 393 - 398
Vertical Marketing Systems (VMS)
A channel whose members are tightly coordinated to achieve
operating efficiencies and marketing effectiveness. Three types:
• Corporate
o
Darrel Lea, Country Road
• Administered
• Contractual
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
o
Bristol Paints
Wholesaler owned; IGA
o Retailer owned; Mitre 10
o Franchise; Flight Centre
o
Next: Franchising: the largest form of VMS
Learn more on pages 398 - 399
Franchising: the largest form of VMS
Advantages:
• Allows for fast expansion
• Spreads capital investment
and risk
• Franchisee’s commitment
compared to employees
• Gives franchisees access to
management skills
• Allows for wide promotion
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Limitations (in some
instances):
• Poor operating systems
• Unfair franchise agreements
Next: Choosing the Right Channel
Learn more on pages 400 - 402
Choosing the Right Channel
Need to take several factors into account:
• Market factors
o market type
o number of customers
o dispersion of customers
o average order size
• Middlemen factors
o competence
o availability and willingness
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
• Product factors
o unit value
o technical complexity
o trade-ins
o service support required
• Company factors
o financial resources
o management ability
o desire for channel control
Next: Distribution Intensity
Learn more on pages 403 - 406
Distribution Intensity
How many middlemen to use in each market place.
Intensity of distribution
Intensive
Distribution
through every
reasonable outlet
in a market
Selective
Distribution
through multiple but
not all outlets in a
market
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Exclusive
Distribution
through single
wholesaling middleman
and/or retailer in a market
Next: Working with Channel Members
Learn more on pages 407 - 409
Working with Channel Members
Managing a channel requires constant attention and effort:
• Negotiate the most appropriate agreement
• Support & motivate channel partners
• Evaluate members’ performance
• Deal with channel conflict
o horizontal conflict
o vertical conflict
• Work within legal constraints
o dealer selection
o exclusive dealing
o tied contracts
o exclusive territories
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies
Next: Five Minute Quiz
Learn more on pages 410 – 413
Five Minute Quiz
1.
2.
3.
4.
5.
List five roles for distribution in the marketing mix
List five services performed by middlemen
Contrast direct and indirect distribution
List four advantages of franchising
Give examples of firms using intensive,
selective and exclusive distribution
Rix Marketing: A Practical Approach 7e
Chapter Eleven: Distribution Strategies