p2_6_deciding.ppt
- 1. Deciding on a Distribution Channel
- 2. Lesson Goals: • Learn different methods of distribution • Recognize continuous nature of marketing methods • Obtain information on additional resources • View distribution as an integral role in a business plan Deciding on a Distribution Channel
- 3. Distribution Channel The way a product reaches the consumer Two categories of distribution channels: • Direct • Indirect Deciding on a Distribution Channel
- 4. Direct Distribution (Sales) Producer of product sells directly to the consumer Advantages: • Less complicated • Less expensive • Eliminates cost of “middle man” • Allows for market research Deciding on a Distribution Channel
- 5. Direct Distribution (Sales) Disadvantages: • Producers may not be good marketers • Direct sales take time away from production • Producers may not be objective in sales • Allows for market research Deciding on a Distribution Channel
- 6. Direct Distribution (Sales) Examples • Person to Person • Display booths at events • Party-plan sales • In-home demos Deciding on a Distribution Channel
- 7. Additional Direct Distribution (Sales) Examples • Business trade shows • Temp space in shopping malls • Direct mail • Mail order • Telemarketing Deciding on a Distribution Channel
- 8. Indirect Distribution Utilizes Middlemen Who Sell Advantages: • Middlemen are sales professionals • Useful when zoning prevents home sales • Useful when location of home base is too far from consumers • Greater sales volume potential • Frees producer to focus on production Deciding on a Distribution Channel
- 9. Indirect Distribution Disadvantages: • Producer removed from consumers • More expensive than direct distribution • Less control over product Deciding on a Distribution Channel
- 10. Indirect Distribution Examples • Sales Representatives • Wholesalers, Distributors, Jobbers • Wholesale Trade Shows • Wholesale to Retailers • Consignment • Mail Order Deciding on a Distribution Channel
- 11. Indirect Distribution Channels Deciding on a Distribution Channel Wholesalers D Distributors Jobbers
- 12. Manufacturer or Sales Reps • Move merchandise • Call on retailers • Handle marketing within a territory • Get commission on orders Deciding on a Distribution Channel
- 13. Wholesale Trade Shows • Build long lasting relationships • Good packaging and nice display are critical • Quality business cards, brochures and/or free Sales literature and pre-determined pricing structure will help in attracting retail accounts Deciding on a Distribution Channel
- 14. Selling Wholesale to Retailers • Producer can make contact • Must know trade practices • Need written agreements • Cannot undercut retail price Deciding on a Distribution Channel
- 15. Consignment Contracting with Retailers to Display and Sell Product Advantages: • Exposure without overhead expenses of utility and space Disadvantages: . • Money tied up in inventory with possibility of damage • Merchandise may not be displayed to advantage • Merchandise may not be aggressively marketed Deciding on a Distribution Channel
- 16. Mail Order • Producers may develop their own catalogs, fliers, or indirect distribution • Buy ad space in an established catalog, magazine, tabloid, etc. Deciding on a Distribution Channel
- 17. Mail Order • Timing is important • Knowledge of postal regulations, FTC rules, and tax laws in each state where merchandise is exchanging hands • Need good mailing lists Deciding on a Distribution Channel
- 18. Securing Mailing Lists • Can be rented or purchased • Need clear description of customer profile • Check library for mailing list brokers • Check listings in trade journals Deciding on a Distribution Channel
- 19. When Evaluating Mail-Order Media, Ask About: • Demographics of readership (sex, age, ethnicity) • Regional publications • Number of ongoing advertisers • Circulation numbers Deciding on a Distribution Channel
- 20. Magazine Advertising Advantages: • Longer shelf life than other ad media • Often read cover to cover by different people • Associates your product with prestige of magazine • More sophisticated production process and better quality paper than newspapers and most catalogs Deciding on a Distribution Channel
- 21. Magazine Advertising Disadvantages: • Longer lead from ad placement time to published ad • High cost Deciding on a Distribution Channel
- 22. Questions When Considering Catalogs • Is there a fee to be included in the catalog or do you pay a percentage of the sales? • Is there minimum inventory that must be available? • What is your knowledge of laws and regulations? • Is merchandise warehoused by catalog company or does producer drop ship. Deciding on a Distribution Channel
- 23. Questions When Considering Catalogs • How is merchandise evaluated – actual product or photographs? • What is the pricing structure? • What is the time frame for catalog production and distribution? Deciding on a Distribution Channel
- 24. Additional Indirect Distribution Examples • TV Marketing • Computer Networks • Vending Machines / Rack Merchandising • Cooperatives • Franchises • Multilevel Marketing (MLM) Deciding on a Distribution Channel
- 25. Telemarketing A sales approach conducted entirely by phone. Deciding on a Distribution Channel
- 26. Television Marketing • Cable network channels • Infomercials Deciding on a Distribution Channel
- 27. Computer Networks Vast online information system that links businesses and potential customers all over the world. Deciding on a Distribution Channel
- 28. Internet Marketing • Web sites • Social Marketing • Internet Sales Deciding on a Distribution Channel
- 29. Vending Machines & Rack Merchandising Deciding on a Distribution Channel
- 30. Cooperative A business formed by a group of people to market their products together Deciding on a Distribution Channel
- 31. Franchises • Buying continuous direction and support from people who are experts in their field • Owned and managed by self-employed business people Deciding on a Distribution Channel
- 32. Franchise Agreements May Include • Using the franchisor’s name • Help in finding a location • Store design and outfitting Deciding on a Distribution Channel
- 33. Franchise Agreements May Include • Advertising • Acquiring Supplies • Management Training • Protected Territory Deciding on a Distribution Channel
- 34. Franchise Agreements May Include • Financing • Marketing and Promotion • Record Keeping Deciding on a Distribution Channel
- 35. Multi-Level / Network Marketing People sell at different levels in company hierarchy. Distributors recruit new people to join the program. The practice is sometimes called “sharing” business. Deciding on a Distribution Channel
- 36. Possible Distribution Channels • Direct Channel: Producer > Consumer • Single Channel (w/ middleman): Producer > Retailer > Consumer • Double Channel (w/ middleman): Producer > Wholesaler > Retailer > Consumer • Simultaneous Dual Channel: (Producer > Wholesaler > Retailer) and (Producer > Consumer) Deciding on a Distribution Channel
- 37. Making Choices Consider: • Opportunities available • Appropriate for your business • Delivery time frame • Packaging for shipment • Cost • Keep up to date Deciding on a Distribution Channel