WEEK 3

OBJECTIVES
 Discuss the structure of distribution
channels, the functions of distribution
channels, and the nature of supply
chain management.
 Differentiate retailing from
wholesaling.
 Discuss the types of retail operations
and nonstore retailing,
Can you imagine a
world without global
products?
DISTRIBUTION CHANNELS
 Distribution channels or
marketing intermediaries consist
of interdependent organizations
that help make products
available for use or consumption
by the final consumers
 A GREAT PRODUCT NEEDS A
GOOD MARKETING CHANNEL.
Manufacturers that do not have a distributor sell directly to customers.
Manufacturers that have a distributor do not need to worry about dealing with
customers, as this is taken care of by the distributor.
The following are the Functions of Marketing
Intermediaries that especially benefit the
manufacturers.
 Information Provider – Marketing Intermediaries gather and process
information that is vital to understanding the market better. They can
provide consumer insights to the manufacturer that can help in
offering better products.
 Product promotion - Marketing intermediaries, specifically retailers,
conduct promotions and marketing efforts in order to encourage
customers to patronize certain products. This creates excitement
and interest among consumers, which may later on translate into
increased sales of the manufacturer’s goods.
 Physical distribution - Marketing intermediaries take care of physical
distribution and packaging goods for transport and at-home storage
Meanwhile, below are the functions of marketing
intermediaries that especially benefit consumers.
 Matching Demands and Supplies – Customers find
almost everything they need at a certain stores,
whether it is a supermarket, a department store, or a
bookstore.
 Merchandising – Marketing Intermediaries take care of
physically arranging goods so it will be convenient for
the customers to shop for what they need.
 Sales Promotion – Customers enjoy sales promotions
and other marketing efforts from time to time, which
may focus on just a few products or all of the products
in the retail.
CHANNEL LEVELS
 Distribution channels may have
several layer is called a channel
level. The number of
intermediary levels indicates the
lengths of the channel.
 Direct Marketing Channel
 Indirect Marketing Channel
DIRECT MARKETING CHANNEL

A Direct Marketing Channel

has no intermediary levels
because the company sells
directly to consumers.
Indirect Marketing Channel

An Indirect
Marketing
Channel
involves one or
more
intermediaries.
SUPPLY CHAIN MANAGEMENT
 Supply Chain Management is the
management of upstream and downstream
value-added flows of materials, final goods,
and related information among suppliers, the
company resellers, and final consumers.
 This involves MARKETING LOGISTICS or
planning, implementing, and controlling the
physical flow of goods, services, and related
information from points of origin to points of
consumption to meet customer requirements
at a profit (Kotler and Armstrong, 2014)
CUSTOMER-CENTERED LOGISTICS
 Customer-centered logistics starts with the marketplace
and ends with the factory or even with the suppliers.
 It does not only concern OUTBOUND LOGISTICS (moving
products from the manufacturer to the distributors,
retailers, and then to consumers) INBOUND LOGISTICS
(moving materials from suppliers to the manufacturer),
and REVERSE LOGISTICS (reusing, recycling, refurbishing
or disposing of broken, unwanted, or excess products
returned by customers or distributors), but the movement
and relationship of entities in the supply chain
MAJOR LOGISTICS FUNCTIONS
1. WAREHOUSING
 Companies must consider the appropriate warehouse in
storing products. The location and the number of
warehouse units needed are also important factors to
consider.
 A company must likewise decide whether to use the
warehouse for storing goods for a medium to a long period
of storage or for distributing and moving goods only.
2. INVENTORY MANAGEMENT
 Proper inventory management guarantees that
companies have enough stocks of goods to meet the
demand for a certain period of time.
 When an item is unavailable, a store losses the opportunity
to make a sale.
3. TRANSPORTATION
 There are different types of transportation used in
moving goods and delivering services. Trucks,
trains, water transports, pipelines, air transports,
and the internet can be used to send goods to
the different layers of the distribution channel.
 INTERMODAL TRANSPORTATION – combines two or
more modes of transportation to move goods
from one point to another.
RETAILING
Retailing includes all activities
involved in selling products or
services to final consumers for
their personal or household
use.
 RETAILER’S MARKETING MIX
DECISIONS
 Product Decision – Retailers must carefully select the
assortment of products in their stores because items that will
not sell well will occupy shelf space without contributing to
sales.
 Price Decision - The retailer’s price must suit its positioning,
target market, competition, and economic factors.
 Place Decision – The key in retailing is location.
 Promotions Decision – Retailers may use advertising, public
relations, sales promotions, and personal selling to create
awareness and reach consumers, and to promote their
products.
TYPES OF RETAIL OPERATIONS
1. AMOUNT OF SERVICE
 Self-Service
Retailers – where customers pick up the
items themselves and proceed to the counter to
pay.
 Limited-Service Retailers – provide more sales
assistance as they offer more shopping goods that
customers need information on.
 Full-Service
Retailers – assist customers in every phase
of the shopping process.
2. PRODUCT LINES
 SPECIALTY STORES – carry narrow product lines with deep assortments
within those lines.
 DEPARTMENT STORES – carry a wide variety of product lines. They
usually carry products for men, women and children, and home and
kitchen furnishing.
 SUPERMARKETS – are large, low-cost and high volume stores designed
to serve the customers’ need for groceries and household products.
 CONVENIENCE STORES – are relatively small stores that open 24/7 and
carry high turnover convenience goods and ready-t-eat food.
 SUPERSTORES – are much bigger than regular supermarkets and carry
a large assortment of groceries, nonfood items, and services.
 SERVICE RETAILERS – are stores whose main products are services such
as salons, spas, hospitals, banks, airlines, cinemas and the like.
3. RELATIVE PRICES
 DISCOUNT STORES - carry standard merchandise with
lower price margins and higher volumes.
 OFF-PRICE RETAILERS - carry items at regular
wholesale prices and accept lower margins to keep
prices down.
 WAREHOUSE CLUBS – offer discounted grocery items,
appliances, clothing, and other goods to members
who pay annual membership fees. They also carry
imported goods that are not available in other retail
stores.
GREEN RETAILING
 Some retailers nowadays adapt environmentally
sustainable practices. They promote
environmentally friendly and organic products,
create programs to encourage consumers to
take part in their advocacy, and adopt greener
practices in their stores by using energy-efficient
lights and appliances.
WHOLESALING
Wholesaling includes all the
activities involved in selling goods
and services for resale or business
use, or for further processing.
Wholesalers buy mostly from
manufacturers and distribute to
retailers, industrial consumers, and
other wholesalers.
TYPES OF WHOLESALERS
1. MERCHANT WHOLESALERS – Buy and take ownership
of the products from manufacturers, store, resell,
and deliver the products in huge quantities to
retailers.
 Full-service merchant wholesalers deal with large
sales volume and provide a full line of services to
their customers.
 Limited-service wholesalers offer fewer services
due to the high costs of providing the other
services.
2. BROKERS AND AGENTS
Brokers facilitate buying and selling and
assist in negotiations between buyers and
sellers; thereby they do not carry inventory.
Agents represent either buyers or sellers on a
more permanent basis, such as the
manufacturers’ agents or sales
representative
3. Branches and Offices – are common
ways by which companies can sell their
products. By selling their products
themselves through their branches/offices,
manufacturers can control their inventories,
and improve their marketing and selling
practices.
Thank You ☺