Course Hero Logo

Marketing Lesson 10.pdf - PLACE CONCEPT Distributions...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 out of 19 pages.

Unformatted text preview: PLACE CONCEPT Distributions Channel Management ALLPPT.com _ Free PowerPoint Templates, Diagrams and Charts OBJECTIVES: At the end of the lesson the students will be able to ● Define what is meant by the term Distribution Channels; ● Discuss the Structure and Functions of the Distribution Channels; ● Explain the nature of Supply Chain Management PLACE refers to distribution or the methods and location you use for your products or services to be easily accessible to the target customers. Distribution Channel – consists of the physical access point where the product is provided to customers and the methods of transporting or storing goods before making Logistics – the overall process of managing how them available for clients. resources are acquired, stored and transported to their final destination. Structure of the Distribution Channel ❖ Business-to-Business (B2B) Distribution - occurs between a producer and industrial users of raw materials needed for the manufacture of finished products. ❖ Business-to-Consumer (B2C) Distribution - occurs between the producer and the final user. Functions of Distribution Channels ❏ Information - One of the most important functions of the distribution channel is that it carries and transfers the information about the company, brand, product’s features, and other important things. ❏ Price Stability - Most of the time middlemen absorb an increase in the price of the products and maintain to charge the customers the same old price due to the intra-middlemen competition. ❏ Promotion - Middlemen design their own sales incentive program,intended at building customer traffic for their business. ❏ Financing - Middlemen finance manufacturer’s operations by providing needed working capital through advance payments. ❏ Title - Sometimes, distributors have to take risk of buying a company’s product without knowing whether the product would sell or not. This enables them to take ownership of the goods, which enables them to meet customer demands the moment it arises. ❏ Matching Demand and Supply - Distributors assemble goods from many different producers giving consumers a wider choice of products and making purchases easier. ❏ Standardizing Transactions - Distributors create a system to regulate the flow of goods from the manufacturers to the consumers. ❏ Matching buyers and sellers - Middlemen provide an avenue where the sellers are able to meet the requirements and buyers. As the middlemen are nearer to the buyers they can provide manufacturers an insight on consumer preferences. Types of Distribution Channels Direct Distribution Channel Producer - Consumer when the manufacturers sell their products directly to the end customers. It doesn’t involve many channels and intermediaries, because the route is short. Indirect Distribution Channel Producer - Retailer Consumer when the manufacturer or the company employs middlemen or third-party personals to sells its products to the consumer. We can categorize the indirect distribution channel into three categories depending upon the number of channels involved. Categories of Indirect Distribution Channels One Level Channels Producer - Wholesaler/Distributor Consumer means that only one channel is involved. For instance, the company sells its product to the retailers, and then retailer to the end customer. Or the manufacturing company has its retail shop, and sell its products to the end consumers. It’s also the example of a one-level channel. The automobile company sells its cars to the dealers. Two-level Channels Producer - Wholesaler/Distributor Retailers Consumer mean when two channels/intermediaries/middlemen are involved between the company and the customers. It starts when the manufacturer sells its product to the wholesaler, wholesaler to the retailer, and then retailer to the end customer. Companies follow the two-level channels when they have to cover the vast and larger customer market. Three Level Channels Producer Consumer - Agent/Broker Wholesaler Retailers mean where three channels/intermediaries/middlemen are involved. It usually occurs when manufacturing companies employ agents and brokers to contact wholesalers, wholesalers to retailers, and then retailers to end consumers. Considerations in the Choice of Distribution Channels and Intermediaries Offer the best coverage of the target market - This requires knowing the density or the number of stores in a specific area/location. 3 Degrees of Distribution Density Intensive Distribution - means that the company tries to place its products/services in as many outlets as possible thus, ensuring the widest dissemination for the firm’s products/services. Exclusive Distribution - means that only one outlet carries the company’s products in a particular location. It is usually chosen for specialty products or services. Selective Distribution - means that the company picks a few retail outlets in a particular place to distribute its products. Best satisfy the buying requirements of the target market - this means that the channel and intermediaries need to satisfy at least some of the needs of the consumers when buying the firm’s products such as - information, convenience, variety and attendant service. Most Lucrative - this means that the channel or intermediaries chosen should be profitable. Channel cost should be low to allow the distributor to gain revenue. Supply chain management (SCM) ➢ ➢ is the centralized management of the flow of goods and services and includes all processes that transform raw materials into final products; This enables companies to cut excess costs and deliver products to the consumer faster. Purpose of Supply Chain Management 1. Shared efficiency - Manufacturers, wholesalers, and retailers work together on a supply chain system in order to guarantee efficiency. Efficiency in getting goods to the right place at the right time minimizes inventory costs and meets customer demand. 2. Optimized transportation and logistics - Vendors and resellers develop a system of managing logistics and transporting goods to make the company’s products available to the consumer at the fastest and lowest cost. 3. Quality Improvement - In a collaborative supply chain, a system exists for retailers to communicate consumer feedbacks with the wholesalers and manufacturers. This feedback enable the manufacturer to address defects and deficiencies and to focus on constant improvement of the goods they produce. 4. Long-term Stability - A strong demand forecasts permit all channel members to react to production or buying variations. Shared interest in meeting customer needs also cause each participant to communicate on optimizing the distribution system. Logistics Management ➢ refers to the overall process of managing how resources are acquired, stored, and transported to their final destination. ➢ it involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility Logistics Management in business the focus is twofold: inbound logistics for internal functions and outbound logistics for the external flow from the point of origin to the point of consumption. Logistic Management Strategies on Inventory ❖ FIFO Method means that you aim to sell or consume the products that arrive first in your store or warehouse. What are the benefits of following the FIFO method? ● it allows you to avoid the problem of deadstock Dead stock refers to the inventory that doesn't sell and doesn't have a high likelihood of selling in the future ❖ FEFO Method is an organised approach to dealing with perishable products or those with a specific expiry date that begins at your warehouse and ends at your store. It’s the expiry or sell-by date of a product that triggers this process. What are the benefits of following the FEFO method? ● it allows you to guarantee product quality ● it also allows you to avoid dead stock ● it helps reduce cost ❖ Last-In, First-Out (LIFO) Method assumes that the last unit to arrive in inventory or more recent is sold first. In other words, the older inventory, which was cheaper, would be sold later. In an inflationary environment, the current COGS would be higher under LIFO because the new inventory would be more expensive. REFERENCES: ▪ Serrano, A.O.C. (2017). Principles of Marketing. Rm. 215 ICP Building, Cabildo St., Intramuros, Manila: Unlimited Books Library Services & Publishing, Inc. ▪ Online Sources: ✔ ✔ ✔ ...
View Full Document

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture