Channels of distribution

Distribution

BMI3C

CHANNELS OF DISTRIBUTION  All businesses need to distribute their product

either 

to a place where a consumer can find it

 OR 

directly to the consumer

 IF the consumer has the product, the

marketer has been SUCCESSFUL

Components of Distribution  There are two components to distribution  

selecting, developing, and managing distribution channels physically distributing goods through those channels

Channels of distribution  …are the paths of ownership that goods

follow as they pass from the producer to the consumer  Channel selection 

deciding what path a product should take to reach the target consumer

 Logistics 

arranging for the product to move efficiently, safely, cheaply, and quickly

Possible Channels

Distribution Policies  Intensive  Selective  Exclusive  Integrated

Intensive Distribution  

Used if the product is sold everywhere Ex: Coca-cola is found in schools, bus stations, parks, malls, arenas, cafeterias, grocery stores, drugstores, retail outlets, planes, trains, movie theatres, restaurants, etc.

Selective Distribution   

Try to control the distribution of their product May seek to avoid conflicts in positioning/brand image If a retailer orders a manufacturer’s product, by law the manufacturer cannot refuse to sell the product to the store without a valid reason

Exclusive Distribution 





The manufacturer has made a deal with one or two retailers in a particular area to sell the manufacturer’s product exclusively This allows the product to have a prestige image and allows the manufacturer to dictate some of the retail strategies. Ex: High fashion clothing, famous-name watches, luxury giftware

Integrated Distribution 



In this case a manufacturer, distributor, or retailer owns both distribution outlets and manufacturing facilities for a product Ex: IKEA, Lee Valley tools – own and operate their own manufacturing & retail stores

Questions  Pick an item you have on you right now 

What distribution channels do you think it took to get to you?

 Think of an example for each of the four types

of distribution strategy  How do you think e-commerce has affected distribution – especially Exclusive distribution?  Find three examples of products that use both traditional and e-commerce distributions.

Questions  List as many sources/places from which you

could buy a product (any product).  Mini case. Working in groups of 3, create a new product. Tell me about the product and who it is targeted towards. Finally, choose a distribution strategy(ies )for your product. Present your idea to Mr. Brunton.