DistributionDistributionDefined: (or place) is one of the four elements of Defined: (or place) is one of the four elements of

marketing mix. An organization or set of organizations marketing mix. An organization or set of organizations (middle men) involved in the process of making a (middle men) involved in the process of making a

product or service available for use or consumption by product or service available for use or consumption by a consumer or business user.a consumer or business user.

Channels of DistributionChannels of Distribution

Integrated DistributionIntegrated Distribution

A company that owns both the distribution outlets A company that owns both the distribution outlets (stores) and the manufacturing facilities (distributor, (stores) and the manufacturing facilities (distributor, manufacturer, or retailer or all parts for a product or line manufacturer, or retailer or all parts for a product or line of products)of products)Example? Example?

IKEA!IKEA! In the big picture, IKEA's Distribution Services division controls In the big picture, IKEA's Distribution Services division controls

the movement of product, allowing IKEA to plan, manage and the movement of product, allowing IKEA to plan, manage and maintains high levels of inventory globally. Six distribution maintains high levels of inventory globally. Six distribution centers serve the 37 retail locations in the United States and 11 centers serve the 37 retail locations in the United States and 11 stores in Canada. Distribution Services functions as a stores in Canada. Distribution Services functions as a wholesaler for IKEA, securing local storage capacity for stores wholesaler for IKEA, securing local storage capacity for stores and transporting inventory to retail locations. Products generally and transporting inventory to retail locations. Products generally follow the typical path from suppliers to distribution centers, follow the typical path from suppliers to distribution centers, where they are held until they are ordered by a store where they are held until they are ordered by a store

Exclusive DistributionExclusive Distribution

A deal made by a manufacturer with a retailer to A deal made by a manufacturer with a retailer to sell only that specific product. sell only that specific product. This gives a limited number of sellers the This gives a limited number of sellers the exclusive right to distribute the company’s exclusive right to distribute the company’s products in their region.products in their region.Establishes a prestigious image and allows the Establishes a prestigious image and allows the manufacturer the advantage of dictating some of manufacturer the advantage of dictating some of the retail strategiesthe retail strategiesExamples?Examples? New cars – Bentley, Mercedes, Ferrari, etc..New cars – Bentley, Mercedes, Ferrari, etc.. Prestigious Couture – Women’s clothingPrestigious Couture – Women’s clothing

Selective DistributionSelective Distribution

Companies that control the distribution of their products Companies that control the distribution of their products by selling it only to certain stores by selling it only to certain stores Uses more than one intermediary, but is very specificUses more than one intermediary, but is very specificDo not spread their products over many outletsDo not spread their products over many outletsCan develop better working relationships with outlets Can develop better working relationships with outlets and thus increases better than average selling effortsand thus increases better than average selling effortsProvides good market coverage – not excellentProvides good market coverage – not excellentCompanies do this when they feel they have an image to Companies do this when they feel they have an image to upholdupholdExamples?Examples?

Most televisions, furniture and small appliances Most televisions, furniture and small appliances KitchenAid, Maytag, Whirlpool, etc…KitchenAid, Maytag, Whirlpool, etc…

Specialty ChannelsSpecialty Channels

Indirect channels of distribution that do not Indirect channels of distribution that do not require a retail storerequire a retail store

Reach a consumer through:Reach a consumer through: Vending MachinesVending Machines InternetInternet Catalogues Catalogues TelemarketingTelemarketing Online shopping!Online shopping!

Vending MachinesVending Machines

Operate unattended, dispensing products in Operate unattended, dispensing products in exchange for money and operate 24 hours a dayexchange for money and operate 24 hours a day

Requires only occasional attention and refillingRequires only occasional attention and refilling

Examples can include an array of products from Examples can include an array of products from pop, ice cream, hot meals to perfume!pop, ice cream, hot meals to perfume!

Can be owned by the manufacturer thereby Can be owned by the manufacturer thereby eliminating competition (ie: vending machines in eliminating competition (ie: vending machines in schools)… what company owns ours??schools)… what company owns ours??

The InternetThe Internet

E-Commerce – using the internet to sell E-Commerce – using the internet to sell products, using web as the retail outletproducts, using web as the retail outletSelect items to purchase – shopping from the Select items to purchase – shopping from the comfort of your own home at any timecomfort of your own home at any timeEliminate intermediaries therefore your products Eliminate intermediaries therefore your products are often cheaperare often cheaperCannot taste, touch or feel the product before Cannot taste, touch or feel the product before purchasing – no sensory connectionpurchasing – no sensory connectionLoss of social experienceLoss of social experienceIs social networking making us less social??Is social networking making us less social??

CataloguesCatalogues

Use catalogues to increase size of their markets Use catalogues to increase size of their markets (ie: Canadian Tire, IKEA, Sears)(ie: Canadian Tire, IKEA, Sears)Most expensive channel – expensive to prepare, Most expensive channel – expensive to prepare, to product and mailto product and mailManufacturers, importers and wholesalers use Manufacturers, importers and wholesalers use catalogues to sell directly to both industrial and catalogues to sell directly to both industrial and non industrial customersnon industrial customersEliminates intermediariesEliminates intermediariesE-commerce is believed to eventually replace E-commerce is believed to eventually replace catalogues – less costly, environmentally catalogues – less costly, environmentally friendly, customer friendly, etc.friendly, customer friendly, etc.

TelemarketingTelemarketing

To sell products or services over the To sell products or services over the phonephone

Sales campaign will only last a few daysSales campaign will only last a few days

Marketers compose a list for research Marketers compose a list for research based on internet searches/interests, etc.. based on internet searches/interests, etc.. Ie: Moving company calls people with For Ie: Moving company calls people with For

Sale signs or through filling out response Sale signs or through filling out response cards, surveys, etccards, surveys, etc