Distribution – the idea

1. Marketing

Lecture 6. Distribution

2. Distribution – the idea

Distribution includes planning,
organizing and controlling the
movement of finished goods
from the production place to the
final point of sale.

3. Distribution - definition

Distribution is a set of actions
and decisions that are
associated with the provision of
the product in place, time and
form corresponding to the needs
of the buyers.

4. Distribution barriers

Distribution includes all activities
related to overcoming spatial,
temporal, quantitative and
assortment differences between
the sphere of production and the
sphere of consumption.

5. Tha spatial distance

The spatial distance exists due
to the fact that the place of
production does not coincide
with the sites of consumption.

6. Time distance

Time distance appears due to
differences between the time at
which the product is made and
the time when the consumer
wants to buy it.

7. Assortment difference

Assortment difference stems
from the fact that the companies
offering their products in the
market specializing in the
production of a small number of
them, and the consumer,
making purchases, wants to be
able to select and buy products
from different manufacturers.

8. Quantitive distance

The quantitative dimension of
the distance between the sphere
of production and the sphere of
consumption is related to the
fact that the products are usually
produced in large quantities,
while the buyers in order to
satisfy their needs are buying
smaller quantities of this product

9. Pre-trade distribution functions

The Pre-trade functions include the
collection and transmission of market
information needed for planning and
organizing sales and promotional
information about the offer and the
benefits that it provides to potential
buyers, searching and reporting
offers of sale, establishing business
contacts, negotiating the terms of the
transaction.

10. The transaction function

The transaction functions include
entering into purchase agreements
posing a legal basis for the passage
of ownership of the products
shipped. A manifestation of the
implementation of these functions
are made as to the type, length,
width and channel structure, division
of labor and the type of relationship
among the participants.

11. Logistic functions

Logistic functions include order
processing, transportation, storage
maintenance, stocks, sales
processing, assortment
transformation of production into
commercial products to
intermediaries and final customers.
Logistics - physical distribution.

12. Post-trade functions

Post-trade functions include the
implementation of the rights of
purchasers of the warranty and
guarantee to provide customers
a variety of services, installation,
repair, delivery, etc. The main
objective is to keep in touch with
clients and shaping their loyalty.

13. Distribution channels

A distribution channel is the
chain of businesses or
intermediaries through which a
good or service passes until it
reaches the end consumer.

14. Traditional channels

15. Integrated (vertical) systems

In the vertical system, distinct
pieces in the distribution
channel, typically producers,
wholesalers and retail outlets,
work together as a unit to deliver
products to end users. Vertical
systems help to reduce conflicts
to the mutual benefit of all
parties.

16. The corporate channel

The corporate system
streamlines the process by
bringing all of the elements of
the distribution channel, from
manufacturing to the stores,
under the ownership of a single
business.

17. Contractual channel

Under contractual systems, the
pieces of the distribution channel
continue to operate as individual
entities. The businesses enter into
contractual relationships with other
elements in the distribution channel
with their respective obligations and
benefits. This approach allows all of
the participants to leverage
economies of scale that enable more
competitive pricing.

18. Administered channel

In the administered systems one
member of the distribution
channel wields enough power to
effectively control the activities
of the other members of the
distribution channel.

19. Slajd 19

20. Intensive distribution

Intensive distribution is to offer
products in all possible points of
sale at the appropriate level of
the distribution channel, within a
market that is geographically
separated.

21. Selective distribution

Selective distribution is to offer
products at the appropriate level
of the distribution channel by a
limited number of
intermediaries.

22. Exclusive distribution

Exclusive distribution (formerly
exclusive) is to offer products at
one or at most a few
intermediaries, acting at the
appropriate level of the
distribution channel, spatially
within an isolated market.

23. Franchising

Franchising is a contractual
relationship between a licensor
(franchisor) and a licensee
(franchisee) that allows the
business owner to use the
licensor’s brand and method of
doing business to distribute
products or services to
consumers.