Marketing II Session 6 23 04 2015

Marketing II / Session 6 23. 04. 2015 Martin Samek martin. samek@lbs. ac. at

Place Lauder Business School Marketing II/ Session 6 2

Place - Distribution • Sellers prefer to produce large quantities of a limited number of goods • Buyers prefer smaller quantities of a wider variety of goods • Distribution deals with realigning the discrepancies between quantities and selections • Breaking bulk: making goods available in smaller batches 3 Lauder Business School Marketing II / Session 6

Distribution Channels A network of inter-connected firms that provide sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing those goods, as efficiently and profitably as possible. Actors in the chain: • Manufacturing firms • Distributors or wholesalers • Retailers • Consumers 4 Lauder Business School Marketing II / Session 6

Activities in Distribution Chains • Customer oriented: ordering, handling, shipping, etc. • Product-oriented: storage & display, etc. • Marketing-centric: promotion, etc. • Financial-oriented • Logistics 5 Lauder Business School Marketing II / Session 6

Transportation Logistics “time is money” • • 6 Lauder Business School Marketing II / Session 6

Manufacturer to Consumer 7 Lauder Business School Marketing II / Session 6

Manufacturer through Channel 8 Lauder Business School Marketing II / Session 6

Forms of Distribution Channels 9 Lauder Business School Marketing II / Session 6

Channels and Supply Chain • Suppliers: upstream actors Supply chain management • Channel members: downstream actors that help a company reach consumers 10 Lauder Business School Marketing II / Session 6

Intensity of Distribution (1) Intensive: widely distributed Drugstores, supermarkets, discount stores, convenience stores, etc. Usually for simple, inexpensive, easily transported products like Snack food, shampoo, newspapers, etc. Pull strategy: promote directly to end consumers to pull through channel 11 Lauder Business School Marketing II / Session 6

Intensity of Distribution (2) Selective: less widely distributed complex and/or expensive products that require assistance - Cars, computers, appliances, etc. Push strategy: promote to distribution partners to push goods to consumer Exclusive: extreme case of selectivity Manufacturers have the most control May become monopolistic Lauder Business School Marketing II / Session 6 12

Pull vs. Push strategy Incentives offered to consumers to pull products through the channel • • Advertise to consumers Distribute widely Offer price and/or quantity discounts Offer inexpensive trials or free samples Offer coupons and/or rebates Offer financing Offer loyalty programs/points Pull Incentives offered to distribution partners to push products through the channel Manufacturer Wholesaler • • Retailer Consumers Push • • Advertise to partners (and consumers) Distribute more selectively Employ a sales force Offer incentives to sales force Offer price and/or quantity discounts Offer financing Offer allowances for marketing activities 13 Lauder Business School Marketing II / Session 6