4P: Place

Distribution

A set of separate organizations that help transfer ownership of a product from producer to the consumer or the business user.

retailer

a business whose sales come primarily from selling goods or services to final consumers for their personal, non-business use

wholesaler

a business engaged primarily in selling goods and services to those buying for resale (like retailers or other wholesalers) or business use.

supply chain

the sequence of processes involved in the production and distribution of a commodity

demand chain

• planning starts by identifying the needs of target customers

• the company responds by organizing a chain of resources and activities with the goal of creating customer value

value delivery network

a network composed of the company, suppliers, distributors, and ultimately, customers who partner with each other to improve the performance of the entire system

supply chain - upstream

a set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product and services

supply chain - downstream

a set of interdependent organizations that help make a product or service available to customers

channel level and length

a layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer

the number of channel levels indicates the length of a channel

direct channel

a marketing channel that has no intermediary levels

indirect channel

a marketing channel that contains one or more intermediary levels

key functions of wholesalers & retailer

• gather info about consumers

• develop promotion strategy

• contact and find buyers

• negotiate price

• financing

• physical distribution

benefits of direct distribution

• more control

• closer customer contact

• eliminate double margins

benefits of indirect distribution

• more rapid penetration and broader coverage

• benefit of specialization (core competencies)

• variable rather than fixed cost structure

• bulk breaking

• reduces the number of channel transaction

producer benefits

wants to make lots and lots of a relatively small number of products

wholesaler & retailer benefits

buy large quantities and break them down into the smaller quantities and broader assortments

multi-channel distribution system

a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

benefits of distribution

• Help producers reach customers

• Give customers more choices

• More efficient because of specialization

• Meet the gaps between supply and demand by performing a series of functions

channel conflict

disagreements among marketing channel members on goals, roles, and rewards – who should do what and for what rewards

vertical marketing system (VMS)

corporate VMS

combines successive stages of production and distribution under single ownership

contractual VMS (e.g., franchise)

independent firms at different levels of production and distribution join together through contracts

administered VMS

coordinates successive stages of production and distribution through the size and power of one of the parties.

horizontal marketing system

a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. (target and starbucks)

intensive distribution

in as many outlets as possible

selective distribution

not all outlets, but more than just one or two

exclusive distribution

in one or a very small number of dealers / outlet types

shopper marketing

focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale

ex) design in-store ads encouraging customers to “stock up” on medicine and tissues before the flu season hit

showrooming

consumers armed with smartphones visit stores to see an item, compare prices online while in the store, and then request price matches or simply buy the item online at a lower price

omni-channel retailing

creating a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping. (same design, price)

new forms of retailing

pop-up shops, flash sales sites (time-limited sales events)

mega-retailers

• where sales are much greater than those of their suppliers

• shifts the balance of power between producers and retailer

growing importance of retail technology

no checkout, RFID inventory tracking, AR and VR in retailing, etc.

green marketing

• greening up their stores and operations

• promoting more environmentally responsible products

• launching programs to help customers be more responsible and working with channel partners to reduce their environmental impact

self-service

• serves customers who are willing to perform their own locate-compare-select process

• typically used by retailers selling convenience goods

limited service

• more sales assistance because they carry more shopping goods about which customers need information

• Sears, where some departments provide service

full service

• high-end specialty stores

• assist customers in every phase of the shopping process

specialty store (product line retailing)

• flourishing

• narrow product line with deep assortments

• apparel stores, sporting-good stores, furniture stores, florists, bookstores, etc

category killer (product line retailing)

• giant specialty store with very deep assortment

• best buy, home depot

department store

• store carrying several product lines (generally clothing, household goods, and furniture) with each line managed as a separate department

supermarket

• large, low-margin, high-volume store designed to meet wide range of needs for grocery and household products

convenience store

• small store near residential areas, carrying a limited line of high turnover convenience products

off-price retailers

owned and operated by a manufacturer, and typically carries surplus or discontinued goods

corporate chains

two or more outlets that are commonly owned

voluntary chain & retailer cooperative

groups of independent retailers who come together to engage in joint purchasing and joint promotional efforts (e.g., Ace Hardware)

franchisor

a manufacturer, wholesaler, or service organization

franchisees

independent businesspeople who buy the right to own and operate one or more units in the franchise system