Why Is Distribution Important to Marketing?
Distibution or distribution function is determining the best methods and procedures to be used so prospective customers are able to locate, obtain, and use the products and services of an organization. Distribution is also a part of the marketing mix. Distribution is important to marketing because it is the most complex and challenging part of marketing. Large percentages (about 50%) of marketing budgets are spent on the activities involved in distribution.
Relationship Between Customer Service and Distribution
The better a company is at distribution, usually the better the customer service and satisfaction becomes. When distribution works well, consumers are not really aware of its importance, but it is the opposite when distribution doesn't work well. Dissatisfied customers results from poor distribution. Supply and demand and economic utilty are big elements of distribution. The most important parts of economic utility to satisfy customers are time and place utility. Distribution has a good relationship with the consumer when the consumer can locate and purchase the products and services easily.
Distribution Channels
A channel of distribution is made up of the organizations and individuals who participate in the movement and exchage of products and services from the producer to the final consumer. The channel can be simple involving the producer and final consumer, or it can be complex by involving many businesses. There are differences between what producers develop and what consumers need, so the channels of distribution allow for adjustments to be made, so that available products meet the costomers' needs.
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Nature of Channel-member Relationship/Types of Intermediary
The relationship between the manufacturer to consumer and manufacturer to industrial users is direct. Any other channel members such as wholesalers and retailers have indirect relationships and they are examples of the types of intermediary. The types are agents, wholesalers, retailer, and industrial distributors. An flowchart for example could be manufacturer to agents to wholesaler to retailer to consumer.
Roles and Types of Retailers
The final business organization in an indirect channel of distribution for consumer products is a retailer. The role for retailers is to offer products and services to consumers, support marketing activities of wholesalers and manufacturers, finance inventory by paying the manufacturer or wholsaler. Having a large inventory with a variety of product choices is important because of an inventory shrinkage which is a loss of products due to theft, fraud, negligence, or error.
Types of Retailers
-Specialty or limited line retailers offer products form one category of merchandise or closely related items.
-Mixed merchanside retailers offer products from serveral different categories.
-Service retailers have services as their primary offering with a limited number of products for sale that complement the services.
-Non-store retailing involves selling directly to the consumer at home rather than requiring the consumer to travel to the store.
Other Retailer Vocabulary
-Franchising is a business relationship in which the developer of a business idea sells other the rights to the business idea and the use of the business name. The franchiser or owner develops a basic business plan and operating procedures. Franchisees or other people purchase the rights to open and operate the businesses according to the standard plans and operating procedures. Franchisers collect franchise fees for the business idea and assistance. An example of a successful franchise would be Pizza Hut.
-Atomospherics are the elements of the shopping environment that are appealing to customers, attract them to a store, and encourage them to buy.
Types of Retailers
-Specialty or limited line retailers offer products form one category of merchandise or closely related items.
-Mixed merchanside retailers offer products from serveral different categories.
-Service retailers have services as their primary offering with a limited number of products for sale that complement the services.
-Non-store retailing involves selling directly to the consumer at home rather than requiring the consumer to travel to the store.
Other Retailer Vocabulary
-Franchising is a business relationship in which the developer of a business idea sells other the rights to the business idea and the use of the business name. The franchiser or owner develops a basic business plan and operating procedures. Franchisees or other people purchase the rights to open and operate the businesses according to the standard plans and operating procedures. Franchisers collect franchise fees for the business idea and assistance. An example of a successful franchise would be Pizza Hut.
-Atomospherics are the elements of the shopping environment that are appealing to customers, attract them to a store, and encourage them to buy.
Roles and Types of Wholesalers
Wholesalers are companies that assist with distribution activities between businesses. The role for wholesalers is to provide needed marketing functions as products and services move through the channel of distribution between producers and other businesses. Wholesaling is needed because it is almost impossible for a retailer to work well with each producer. Typical activities of wholesaling include buying, selling, tranporting, storing, and financing. Wholesalers have many benefits.
Types of Wholesalers
-Full-service wholesalers or merchant wholesalers take title to the products they sell and provide a full range of distribution activities.
-Limited-service wholesalers or specialized wholesalers may not provide services such as research, credit, or promotional support.
-Agents and brokers are independent businesses that provide specialized exchage functions such as locating supplies, selling, financing, or arranging shipments.
-Wholesale member clubs are businesses that offer a variety of consumer products to members through a warehouse outlet.
Types of Wholesalers
-Full-service wholesalers or merchant wholesalers take title to the products they sell and provide a full range of distribution activities.
-Limited-service wholesalers or specialized wholesalers may not provide services such as research, credit, or promotional support.
-Agents and brokers are independent businesses that provide specialized exchage functions such as locating supplies, selling, financing, or arranging shipments.
-Wholesale member clubs are businesses that offer a variety of consumer products to members through a warehouse outlet.
Physical Distribution
Distribution involves more than shipping. Physical distribution (also known as logistics) is the process of efficiently and effectively moving products and materials through the distribution channel. Main activities involved are transportation, storage, and product handling. Information processing is important to make sure there are accurate records maintained throughout the process. The most common products are transported by railroad, trucks, ships and boats, airplanes, pipelines, and by combining methods. A warehouse is a building designed to store large amounts of raw materials or finished product until they can be used or sold. Information processing such as order processing and inventory control is also important.
Transportation Systems
-Railroads are useful for carrying large quantities of heavy and bulky items such as raw materials, industrial equipment, and large shipments of consumer products from the factory to retailers. The overall price is high to ship one or more carload although the cost is low for a large quantity. Problems include availability and amount of time for the process.
-Trucks are the most flexible transportation methods because they handle small or large shipments, goods that are durable or require speical packaging, and products that are going long distances at a rapid service. Special handling equipment is often included.
-Ships and boats transportl large amounts of products sold internationally by water at a much lower price than airplanes. The major problem is the speed of delivery. It takes serveral weeks after a product is loaded on a ship before it is finally delievered to the customer. Also, damages can be an issue with bad weather, and it must be combined with other transportation systems.
-Airplanes are for delievering products rapidly, but it comes with a higher price. Cargo planes are better than commercial planes because of the additional storage space. Generally, airplanes are used in special or emergency deliveries becasue of the high prices.
-Pipelines are used for transporting gas, oil, water, and small coal and wood particles mixed together into a slurry with water. It transportes large volumes over long distances. They are difficult to construct and maintain, but they can be relatively inexpensive method once they are built.
-Combining methods is popular for many businesses because several methods are utilized for each method's strengths. Differenct companies like FedEx, UPS, and the U.S. Postal Service have many transportation methods.
-Trucks are the most flexible transportation methods because they handle small or large shipments, goods that are durable or require speical packaging, and products that are going long distances at a rapid service. Special handling equipment is often included.
-Ships and boats transportl large amounts of products sold internationally by water at a much lower price than airplanes. The major problem is the speed of delivery. It takes serveral weeks after a product is loaded on a ship before it is finally delievered to the customer. Also, damages can be an issue with bad weather, and it must be combined with other transportation systems.
-Airplanes are for delievering products rapidly, but it comes with a higher price. Cargo planes are better than commercial planes because of the additional storage space. Generally, airplanes are used in special or emergency deliveries becasue of the high prices.
-Pipelines are used for transporting gas, oil, water, and small coal and wood particles mixed together into a slurry with water. It transportes large volumes over long distances. They are difficult to construct and maintain, but they can be relatively inexpensive method once they are built.
-Combining methods is popular for many businesses because several methods are utilized for each method's strengths. Differenct companies like FedEx, UPS, and the U.S. Postal Service have many transportation methods.
Pizza Hut Franchise
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Analysis of Edu-Games Distribution Unit
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