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Encyclopedia > Distribution (business)
Marketing
Key concepts

Product / Price / Promotion
Placement / Service / Retail
Brand management
Marketing effectiveness
Market research
Marketing strategy
Marketing management
Market dominance
Image File history File links Emblem-important. ... Next big thing redirects here. ... This article does not cite any references or sources. ... Wikibooks has more about this subject: Marketing Scale model of a Wheaties cereal box at a pep rally Promotion is one of the four key aspects of the marketing mix. ... This article is about a term used in economics. ... Drawing of a self-service store. ... The discipline of brand management was started at Procter & Gamble PLC as a result of a famous memo by Neil H. McElroy. ... Marketing Effectiveness is the function of improving how marketers go to market with the goal of optimizing their marketing spend to achieve even better results for both the short-term and long-term. ... Market research is the process of systematic gathering, recording and analyzing of data about customers, competitors and the market. ... A marketing strategy[1] [2] is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. ... Wikibooks has more about this subject: Marketing Marketing management is a business discipline focused on the practical application of marketing techniques and the management of a firms marketing resources and activities. ... Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive offerings. ...

Promotional content

Advertising / Branding
Direct marketing / Personal Sales
Product placement / Public relations
Publicity / Sales promotion
Underwriting // Advert redirects here. ... For other uses, see Brand (disambiguation). ... Wikibooks has more about this subject: Marketing Direct marketing is a discipline within marketing that involves contacting individual customers (business-to-business or consumer) directly and obtaining their responses and transactions for the purpose of developing and prolonging mutually profitable customer relationships. ... Sales are the activities involved in providing products or services in return for money or other compensation. ... Wikibooks [[wikibooks:|]] has more about this subject: Marketing Product placement advertisements are promotional ads placed by marketers using real commercial products and services in media, where the presence of a particular brand is the result of an economic exchange. ... // Dictionary. ... Wikibooks has more about this subject: Marketing Look up publicity in Wiktionary, the free dictionary. ... Wikibooks has more about this subject: Marketing Sales promotion is one of the four aspects of promotional mix. ... An underwriting spot is an announcement made on public broadcasting outlets, especially in the United States, in exchange for funding. ...

Promotional media

Printing / Publication / Broadcasting
Out-of-home / Internet marketing
Point of sale / Novelty items
Digital marketing / In-game
Word of mouth
For other uses, see Print. ... Look up publication in Wiktionary, the free dictionary. ... Broadcasting is the distribution of audio and/or video signals which transmit programs to an audience. ... Out-of-home advertising (also referred to as OOH) is essentially all type of advertising that reaches the consumer while he or she is outside the home. ... Wikibooks [[wikibooks:|]] has more about this subject: Marketing Internet marketing, also referred to as online marketing, Internet advertising, eMarketing (or e-Marketing), is the marketing of products or services over the Internet. ... This article or section does not cite its references or sources. ... Promotional items or promotional products refers to articles of merchandise that are used in marketing and communication programs. ... Digital Marketing refers to the practice of marketing services, products and other items using digital tools and techniques that have appeared relatively recently since the rise of the Internet as a mainstream communications platform. ... In-game advertising (IGA) refers to the use of computer and video games as a medium in which to deliver advertising. ... Word-of-mouth marketing is a term used in the marketing and advertising industry to describe activities that companies undertake to generate personal recommendations as well as referrals for brand names, products and services. ...

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Marketing

Distribution (or placement) is one of the four aspects of marketing. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured, it may be warehoused or shipped to the next echelon in the supply chain, typically either a distributor, retailer or consumer. Image File history File links Wikibooks-logo-en. ... Next big thing redirects here. ... middle_man is a program created by Krunch Software with the sole purpose of Enhancing your AIM experience. The AOL Instant Messenger plug-in enhances and extends funtionality of AIM to its users. ... A supply chain, logistics network, or supply network is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. ...


The other three parts of the marketing mix are product management, pricing, and promotion. The marketing mix is generally accepted as the use and specification of the 4 Ps describing the strategic position of a product in the marketplace. ... This article or section does not adequately cite its references or sources. ... This article does not cite any references or sources. ... Wikibooks has more about this subject: Marketing Scale model of a Wheaties cereal box at a pep rally Promotion is one of the four key aspects of the marketing mix. ...

Contents

The distribution channel

Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.


Channels

A number of alternate 'channels' of distribution may be available:

  • Selling direct, such as via mail order, Internet and telephone sales

'*''Italic text'Agent, who typically sells direct on behalf of the producer

  • Distributor (also called wholesaler), who sells to retailers
  • Retailer (also called dealer or reseller), who sells to end customers
  • Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. Look up dealer in Wiktionary, the free dictionary. ... A reseller is a company or individual that purchases goods or services with the intention of onselling them rather than consuming or using them. ...


There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas. Franchising (from the French for honesty or freedom[1]) is a method of doing business wherein a franchisor authorizes proven methods of doing business to a franchisee in exchange for a recurring payment, fees and a percentage of sales or profits. ...


Channel members

Distribution channels can thus havoke a number of levels. Kotler defined the simplest level, that of direct contact with no intermediaries involved, as the 'zero-level' channel.


The next level, the 'one-level' channel, features just one intermediary; in consumer goods a retailer, for industrial goods a distributor. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels.


In large markets (such as larger countries) a second level, a wholesaler for example, is now mainly used to extend distribution to the large number of small, neighborhood retailers.


In Japan the chain of distribution is often complex and further levels are used, even for the simplest of consumer goods.


In Bangladesh Telecom Operators are using different Chains of Distribution, especially 'second level'.


In IT and Telecom industry levels are named "tiers". A one tier channel means that vendors IT product manufacturers (or software publishers) work directly with the dealers. A one tier / two tier channel means that vendors work directly with dealers and with distributors who sell to dealers. Information and communication technology spending in 2005 Information technology (IT), as defined by the Information Technology Association of America (ITAA), is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware. ...


The internal market

Many of the marketing principles and techniques which are applied to the external customers of an organization can be just as effectively applied to each subsidiary's, or each department's, 'internal' customers.


In some parts of certain organizations this may in fact be formalized, as goods are transferred between separate parts of the organization at a `transfer price'. To all intents and purposes, with the possible exception of the pricing mechanism itself, this process can and should be viewed as a normal buyer-seller relationship. The fact that this is a captive market, resulting in a `monopoly price', should not discourage the participants from employing marketing techniques.


Less obvious, but just as practical, is the use of `marketing' by service and administrative departments; to optimize their contribution to their `customers' (the rest of the organization in general, and those parts of it which deal directly with them in particular). In all of this, the lessons of the non-profit organizations, in dealing with their clients, offer a very useful parallel.


Channel Decisions

  • Channel strategy
  • Product (or service)<>Cost<>Consumer location

Channel management

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. In practice, if the producer is large enough, the use of intermediaries (particularly at the agent and wholesaler level) can sometimes cost more than going direct.


Many of the theoretical arguments about channels therefore revolve around cost. On the other hand, most of the practical decisions are concerned with control of the consumer. The small company has no alternative but to use intermediaries, often several layers of them, but large companies 'do' have the choice.


However, many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if he has any aspirations to be market-oriented, his job should really be extended to managing, albeit very indirectly, all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:

  • Channel membership
  • Channel motivation
  • Monitoring and managing channels

Channel membership

  1. Intensive distribution - Where the majority of resellers stock the `product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident.
  2. Selective distribution - This is the normal pattern (in both consumer and industrial markets) where `suitable' resellers stock the product.
  3. Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the `product'.

Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors' sales personnel, so that they are tempted to push the product. At the other end of the spectrum is the almost symbiotic relationship that the all too rare supplier in the computer field develops with its agents; where the agent's personnel, support as well as sales, are trained to almost the same standard as the supplier's own staff.


Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.


In practice, many organizations use a mix of different channels; in particular, they may complement a direct salesforce, calling on the larger accounts, with agents, covering the smaller customers and prospects.


Vertical marketing

This relatively recent development integrates the channel with the original supplier - producer, wholesalers and retailers working in one unified system. This may arise because one member of the chain owns the other elements (often called `corporate systems integration'); a supplier owning its own retail outlets, this being 'forward' integration. It is perhaps more likely that a retailer will own its own suppliers, this being 'backward' integration. (For example, MFI, the furniture retailer, owns Hygena which makes its kitchen and bedroom units.) The integration can also be by franchise (such as that offered by McDonald's hamburgers and Benetton clothes) or simple co-operation (in the way that Marks & Spencer co-operates with its suppliers).


Alternative approaches are 'contractual systems', often led by a wholesale or retail co-operative, and `administered marketing systems' where one (dominant) member of the distribution chain uses its position to co-ordinate the other members' activities. This has traditionally been the form led by manufacturers.


The intention of vertical marketing is to give all those involved (and particularly the supplier at one end, and the retailer at the other) 'control' over the distribution chain. This removes one set of variables from the marketing equations.


Other research indicates that vertical integration is a strategy which is best pursued at the mature stage of the market (or product). At earlier stages it can actually reduce profits. It is arguable that it also diverts attention from the real business of the organization. Suppliers rarely excel in retail operations and, in theory, retailers should focus on their sales outlets rather than on manufacturing facilities ( Marks & Spencer, for example, very deliberately provides considerable amounts of technical assistance to its suppliers, but does not own them).


Horizontal marketing

A rather less frequent example of new approaches to channels is where two or more non-competing organizations agree on a joint venture - a joint marketing operation - because it is beyond the capacity of each individual organization alone. In general, this is less likely to revolve around marketing synergy.


References

  • Louis W. Stern et al, 'Marketing Channels', (Prentice-Hall, 7th ed.,2006)
  • Richard E. Wilson, 'A Blueprint for Designing Marketing Channels', (www.chicagostrategy.com)
  • P. Kotler, 'Marketing Management' (Prentice-Hall, 7th ed., 1991)
  • G. Lancaster and L. Massingham, 'Essentials of Marketing' (McGraw-Hill, 1988)
  • Julian Dent, "Distribution Channels: Understanding and Managing Channels to Market" (Kogan Page, 2008)

See also

Next big thing redirects here. ... A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. ... Wikibooks has more about this subject: Marketing Marketing management is a business discipline focused on the practical application of marketing techniques and the management of a firms marketing resources and activities. ... The marketing mix is generally accepted as the use and specification of the 4 Ps describing the strategic position of a product in the marketplace. ... Look up Logistics in Wiktionary, the free dictionary. ... Liquid Logistics is a special category of logistics that relates to liquid products, and is utilized extensively in the Supply Chain for Liquids discipline. ... Predictive analytics encompasses a variety of techniques from statistics and data mining that process current and historical data in order to make “predictions” about future events. ... A sealed pack of diced pork from Tesco. ... A supply chain, logistics network, or supply network is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. ... Good Distribution Practice or GDP deals with the guidelines for the proper distribution of medicinal products for human use. ... Wikibooks has more about this subject: Marketing All commodity volume (value) (ACV) represents the total annual sales volume of retailers that can be aggregated from individual store-level up to larger Geographical sets. ...

Specific types of distribution

A Film distributor is an independent company, a subsidiary company or occasionally an individual, which acts as the final agent between a film production company or some intermediary agent, and a film exhibitor, to the end of securing placement of the producers film on the exhibitors screen. ... A record distributor is a company (usually a Record_label) which works with smaller labels to promote and distribute their records, either in their home market or overseas. ... Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ... 11kV/400V-230V transformer in an older suburb of Wellington, New Zealand Electricity distribution is the penultimate stage in the delivery (before retail) of electricity to end users. ... Liquid Logistics is a special category of logistics that relates to liquid products, and is utilized extensively in the Supply Chain for Liquids discipline. ...

External links

  • U.S. Census Bureau Monthly Wholesale Trade data
  • The Routes to Market Association

  Results from FactBites:
 
Distribution (business) - Wikipedia, the free encyclopedia (1834 words)
'Distribution' is one of the four aspects of marketing.
A distribution business is the middleman between the manufacturer and retailer or (usually) in commercial or industrial the business customer.
Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if he has any aspirations to be market-oriented, his job should really be extended to managing, albeit very indirectly, all the processes involved in that chain, until the product or service arrives with the end-user.
  More results at FactBites »

 
 

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