Product and Distribution
Strategies
http://www.wileybusinessupdates.co
m
Chapter 12
Copyright 2017 John Wiley & Sons, Inc.
Learning Objectives
2
1
Explain production strategy.
5
Explain wholesaling.
6
Describe retailing.
7
Identify distribution channel decisions
Briefly describe the four stages of the
2
product life cycle.
Discuss production identification.
3
Outline the major components of an effective
production strategy.
and logistics.
4
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Strategy
3
Product – a bundle of physical, service, and symbolic
characteristics designed to satisfy consumer wants
Product Categories:
Convenience products- items the consumer seeks to purchase
frequently, immediately, and with little effort
Shopping products- typically purchased only after the buyer has
compared competing products in competing stores
Specialty products- items a purchaser is willing to make a special
effort to obtain
d. Unsought products are goods and services that consumers
either do not know about or know about but don’t think of
buying until a need arises.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Strategy
4
Buying a specialty
product takes extra
effort. The new
Acura NSX hybrid
sports car is sold in
a limited number of
dealerships.
Copyright (c) 2017 John Wiley & Sons, Inc.
Classifying Goods and Services
5
Copyright ©2017 John Wiley & Sons, Inc.
Classifying Business Goods
6
Capital versus Expense Items
Installations- major capital items such as new factories, heavy
equipment and machinery, and custom-made equipment
Accessory equipment- includes less expensive and shorter-lived
capital items than installations and involves fewer decision
makers
Component parts and materials- become part of a final product
Raw materials- farm and natural products used in producing
other final products
Supplies- expense items used in a firm’s daily operations that
do not become part of the final product
Copyright (c) 2017 John Wiley & Sons, Inc.
Classifying Services
7
Services are different from goods
Intangible
Perishable
Difficult to standardize
Service provider is the service
Copyright (c) 2017 John Wiley & Sons, Inc.
Marketing Strategy Implications
8
In B2B there is a greater emphasis on personal selling
for installations and many component parts and a
concentration on quality and customer service.
Producers of installations and component parts may
involve customers in new-product development.
Advertising is more commonly used to sell supplies
and accessory equipment.
Producers of supplies and accessory equipment place a
greater emphasis on competitive pricing strategies.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Lines and Product Mix
9
Product Line – a group of related products
marked by physical similarities or intended for
a similar market
Product mix – assortment of product lines and
individual goods and services a firm offers to
consumers and business users
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Lines and Product Mix
10
The Coca Cola
Company’s product mix
goes beyond its iconic
soft drinks to include
energy drinks, teas,
juices and healthy
beverage options.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Life Cycle
11
Product life cycle- four basic stages—introduction,
growth, maturity, and decline—through which a
successful product progresses
Copyright ©2017 John Wiley & Sons, Inc.
Stages of the Product Life Cycle
12
Introduction stage– firm promotes demand for its new
offering; informs the market about it; gives free samples to
entice consumers to make a trial purchase; and explains its
features, uses, and benefits.
Growth stage- sales climb quickly as new customers join
early users who are repurchasing the item. company begins to
earn profits on the new product
Maturity stage- industry sales eventually reach a saturation
level at which further expansion is difficult.
Decline stage- sales fall and profits decline.
Copyright (c) 2017 John Wiley & Sons, Inc.
Implications of the Product Life Cycle
13
Marketer’s objective is to extend the life cycle as
long as product is profitable.
Marketers’ goals:
Increasing customers’ frequency of use
Adding new users
Finding new uses for product
Changing package sizes, labels, and product designs
Copyright (c) 2017 John Wiley & Sons, Inc.
Stages in New Product Development
14
Expensive, time-consuming, and risky
Not properly developed and tested
Poorly packaged
Inadequate promotional support or distribution
Do not satisfy a customer need
Each step requires a “go or no-go” decision
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright ©2017 John Wiley & Sons, Inc.
Product Development Stages
15
Product Failures
TABLE 12.1
Examples of Projects That Failed
PRODUCT
16
WHY IT FLOPPED
Google Glass
The product, which didn’t work properly, was touted as a pair of high-tech glasses able to scan
surroundings and send information to the eye’s retina. However, its functionality was flawed due mainly
to the need for a larger battery to fully perform its intended functions. Some call the design distracting,
and the eyeglass, with a $1,500 price tag, was prone to break.
Amazon Fire
CEO Jeff Bezos is blamed for micromanaging the design of the fatally flawed Amazon Fire phone while
overspending on development, manufacturing, and marketing. Users criticized the device for its
“gimmicky” product features like 3D screen and facial recognition as bland and distracting. It also lacked
the variety of apps and service cohesion available with Apple’s competing products. Lastly, the Fire
phone was simply overpriced.
McDonald’s
Mighty Wings
Mighty Wings were “too spicy and too pricey,” according to an industry executive. Sold in packs of 3, 5,
or 10 wings starting at $2.99, it was clear that discounting was being used to sell the product. The
discounted price cut into profits for franchise owners. The wings never met sales goals for McDonald’s,
and they were discontinued.
Blackberry
Despite a functional keyboard and secure messaging and e-mail capabilities, Blackberry’s focus was on
battery performance but had limited use of carrier network resources. When the iPhone was introduced
as an exclusive to AT&T, it became an almost instant success. Blackberry tried to deliver the Storm, a
touch-screen smart phone for Verizon, which was initially the best-selling Verizon product ever, but it
was flawed. It just didn’t match the hardware or software features of the iPhone.
Sources: Sage McHugh, “8 Biggest Product Fails of 2014,” Alternet, http://www.alternet.org, accessed February 20, 2016; Pavithra Mohan, “Amazon Dismisses ’Dozens’
of Engineers Who Worked on Failed Fire Phone,” Fast Company, http://www.fastcompany.com, accessed February 20, 2016; Adam Hartung, “The Reason Why Google
Glass, Amazon Fire Phone and Segway All Failed,” Forbes, http://www.forbes.com, accessed February 20, 2016; Eric Zeman, “BlackBerry Doomed by First iPhone,
Storm Failure,” Information Week, http://www.informationweek.com, accessed February 20, 2016; John Brandon, “5 Big Tech Fails of 2015,” Inc., http://www.inc.com,
accessed February 20, 2016; Kia Kokalitcheva, “Ex-BlackBerry CEO Admits Why Its Most Important Device Failed,” Fortune, http://fortune.com accessed February 20,
2016.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Identification
17
Brand – name, term, sign, symbol, design, or some
combination that identifies the products of one firm
and differentiates them from competitors’ offerings
Brand name- part of the brand consisting of words
or letters included in a name used to identify and
distinguish the firm’s offerings from those of
competitors.
Trademark- brand that has been given legal
protection granted solely to the brand’s owner
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Identification
18
To be effective, brand
names must be easy for
consumers to
pronounce, recognize,
and remember.
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Categories
19
Manufacturer’s brand- brand offered and promoted by a
manufacturer. Examples: Tide, Cheerios, Windex, Fossil, and Nike.
Private or store brand- brand that is not linked to the manufacturer
but instead carries a wholesaler’s or retailer’s label. Examples:
Sears’ DieHard batteries and Walmart’s Ol’Roy dog food.
Family branding strategy- a single brand name used for several
related products. Examples: KitchenAid, Johnson & Johnson,
Hewlett-Packard, and Arm & Hammer.
Individual branding strategy- giving each product within a line a
different name. Examples: Procter & Gamble products Tide, Cheer,
and Dash
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Loyalty
20
Brand recognition- consumer is aware of the brand
but does not have a preference for it over other
brands
Brand preference- consumer chooses one firm’s
brand over a competitor’s
Brand insistence- consumer will seek out preferred
brand and accept no substitute for it (the ultimate
degree of brand loyalty)
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Loyalty
21
The retailer of
affordable, welldesigned contemporary
furniture enjoys brand
insistence—the
ultimate expression of
brand loyalty. For
devoted IKEA fans, no
other brand will do.
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Equity
22
Brand equity- added value that a respected
and successful name gives to a product
Brand awareness- product is the first one that
comes to mind when a product category is
mentioned
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright ©2017 John Wiley & Sons, Inc.
Valuable Brands
23
Packages and Labels
24
Packaging affects the durability, image, and convenience of an
item and is responsible for one of the biggest costs in many
consumer products.
Packing is important in product identification and play is an
important role in a firm’s overall product strategy.
Choosing the right package is especially important in
international marketing.
Packing must meet legal requirements of all countries in which
product is sold.
Universal Product Code- bar code read by optical scanner
Environmental impact of packaging– Sun Chips
Copyright (c) 2017 John Wiley & Sons, Inc.
Packages and Labels
25
Due to a growing
demand to produce
more environmentally
friendly packages,
manufacturers are
working harder to
create more compact
packaging that is made
from renewable
sources and is
recyclable.
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Strategy
26
Distribution channel: path through which
products—and legal ownership of them—flow
from producer to consumers or business users
Physical distribution: actual movement of
products from producer to consumers or
business users
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channels
27
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channels Using Marketing
Intermediaries
28
Direct Distribution
Direct contact between producer and customer.
Most common in B2B markets.
Often found in the marketing of relatively expensive, complex
products that may require demonstrations.
Internet is helping companies distribute directly to consumer
market.
Distribution Channels Using Marketing Intermediaries
Producers distribute products through wholesalers and retailers.
Inexpensive products sold to thousands of consumers in widely
scattered locations.
Lowers costs of goods to consumers by creating market utility
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright (c) 2017 John Wiley & Sons, Inc.
Marketing Intermediaries
29
Wholesaling
30
Wholesaler – distribution channel member that sells
primarily to retailers, other wholesalers, or business
users
Manufacturer-Owned Wholesaling Intermediaries
Owned by the manufacturer of the goods or products to
control distribution or customer service
Sales branch that stocks products and fills orders
from inventories
Sales office that takes orders but does not stock the
product
Copyright (c) 2017 John Wiley & Sons, Inc.
Retailers
31
Retailer – channel member that sells goods and
services to individuals for their own use rather than
for resale
Final link of the distribution channel
Two types:
Store
Nonstore
Copyright (c) 2017 John Wiley & Sons, Inc.
Nonstore Retailing
Direct response
retailing
Internet Retailing
Automatic
merchandising
Direct selling
Copyright (c) 2017 John Wiley & Sons, Inc.
32
Nonstore Retailing
33
Pampered Chef’s
direct sales force of
independent
consultants offers
high-quality,
multipurpose
kitchen tools and
in-home cooking
demonstrations.
Copyright (c) 2017 John Wiley & Sons, Inc.
Retail Stores
34
Copyright (c) 2017 John Wiley & Sons, Inc.
Wheel of Retailing
35
Copyright (c) 2017 John Wiley & Sons,
Inc.
How Retailers Compete
36
Identify a Target Market
Selecting a Product Strategy
Selecting a Customer Service Strategy
Selecting a Pricing Strategy
Choosing a Location
Building a Promotional Strategy
Creating a Store Atmosphere
Copyright (c) 2017 John Wiley & Sons, Inc.
How Retailers Compete
37
Peapod’s service
strategy of
selecting, packing,
and delivering
groceries has
helped attract and
retain customers.
Copyright (c) 2017 John Wiley & Sons, Inc.
Retail Locations
38
For a retailer, a good location can make the difference
between success and failure
Location depends upon the retailer’s size, financial
resources, product, competition, and target market.
Planned Shopping Center
Shopping Mall
Regional Mall
Lifestyle Mall
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channel Decisions and
Logistics
39
What specific channel will it use?
What will be the level of distribution intensity?
Selecting Distribution Channels
Complex, expensive, custom-made, or perishable products
move through shorter distribution channels involving few—
or no—intermediaries.
Standardized products or items with low unit values usually
pass through relatively long distribution channels.
Start-up companies often use direct channels because they
can’t persuade intermediaries to carry their products, or
because they want to extend their sales reach.
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Intensity
40
Intensive distribution – firm’s products in nearly
every available outlet; requires cooperation of many
intermediaries
Selective Distribution – manufacturer selects limited
number of retailers to distribute its product lines
Exclusive distribution – limits market coverage in a
specific geographic region
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Intensity
41
Expensive
specialty products
like Rolex watches
are typically part
of a limited market
coverage strategy
of exclusive
distribution.
Copyright (c) 2017 John Wiley & Sons, Inc.
Logistics and Physical Distribution
42
Supply chain – complete sequence of suppliers that contribute
to creating a good or service and delivering it to business
users and final consumers
Logistics – process of coordinating the flow of goods,
services, and information among members of the supply chain
Physical Distribution – the activities aimed at efficiently
moving finished goods from the production line to the
consumer or business buyer
Copyright (c) 2017 John Wiley & Sons, Inc.
Comparison of Transportation Modes
43
Copyright (c) 2017 John Wiley & Sons, Inc.
Customer Service
44
Customer service standards measure the quality of
service a firm provides for its customers
Warranties are a firm’s promises to repair a defective
product, refund money paid, or replace product if it
proves unsatisfactory
Internet retailers have worked to humanize their
customer interactions and deal with customer
concerns more effectively
Copyright (c) 2017 John Wiley & Sons, Inc.
Purchase answer to see full
attachment
Strategies
http://www.wileybusinessupdates.co
m
Chapter 12
Copyright 2017 John Wiley & Sons, Inc.
Learning Objectives
2
1
Explain production strategy.
5
Explain wholesaling.
6
Describe retailing.
7
Identify distribution channel decisions
Briefly describe the four stages of the
2
product life cycle.
Discuss production identification.
3
Outline the major components of an effective
production strategy.
and logistics.
4
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Strategy
3
Product – a bundle of physical, service, and symbolic
characteristics designed to satisfy consumer wants
Product Categories:
Convenience products- items the consumer seeks to purchase
frequently, immediately, and with little effort
Shopping products- typically purchased only after the buyer has
compared competing products in competing stores
Specialty products- items a purchaser is willing to make a special
effort to obtain
d. Unsought products are goods and services that consumers
either do not know about or know about but don’t think of
buying until a need arises.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Strategy
4
Buying a specialty
product takes extra
effort. The new
Acura NSX hybrid
sports car is sold in
a limited number of
dealerships.
Copyright (c) 2017 John Wiley & Sons, Inc.
Classifying Goods and Services
5
Copyright ©2017 John Wiley & Sons, Inc.
Classifying Business Goods
6
Capital versus Expense Items
Installations- major capital items such as new factories, heavy
equipment and machinery, and custom-made equipment
Accessory equipment- includes less expensive and shorter-lived
capital items than installations and involves fewer decision
makers
Component parts and materials- become part of a final product
Raw materials- farm and natural products used in producing
other final products
Supplies- expense items used in a firm’s daily operations that
do not become part of the final product
Copyright (c) 2017 John Wiley & Sons, Inc.
Classifying Services
7
Services are different from goods
Intangible
Perishable
Difficult to standardize
Service provider is the service
Copyright (c) 2017 John Wiley & Sons, Inc.
Marketing Strategy Implications
8
In B2B there is a greater emphasis on personal selling
for installations and many component parts and a
concentration on quality and customer service.
Producers of installations and component parts may
involve customers in new-product development.
Advertising is more commonly used to sell supplies
and accessory equipment.
Producers of supplies and accessory equipment place a
greater emphasis on competitive pricing strategies.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Lines and Product Mix
9
Product Line – a group of related products
marked by physical similarities or intended for
a similar market
Product mix – assortment of product lines and
individual goods and services a firm offers to
consumers and business users
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Lines and Product Mix
10
The Coca Cola
Company’s product mix
goes beyond its iconic
soft drinks to include
energy drinks, teas,
juices and healthy
beverage options.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Life Cycle
11
Product life cycle- four basic stages—introduction,
growth, maturity, and decline—through which a
successful product progresses
Copyright ©2017 John Wiley & Sons, Inc.
Stages of the Product Life Cycle
12
Introduction stage– firm promotes demand for its new
offering; informs the market about it; gives free samples to
entice consumers to make a trial purchase; and explains its
features, uses, and benefits.
Growth stage- sales climb quickly as new customers join
early users who are repurchasing the item. company begins to
earn profits on the new product
Maturity stage- industry sales eventually reach a saturation
level at which further expansion is difficult.
Decline stage- sales fall and profits decline.
Copyright (c) 2017 John Wiley & Sons, Inc.
Implications of the Product Life Cycle
13
Marketer’s objective is to extend the life cycle as
long as product is profitable.
Marketers’ goals:
Increasing customers’ frequency of use
Adding new users
Finding new uses for product
Changing package sizes, labels, and product designs
Copyright (c) 2017 John Wiley & Sons, Inc.
Stages in New Product Development
14
Expensive, time-consuming, and risky
Not properly developed and tested
Poorly packaged
Inadequate promotional support or distribution
Do not satisfy a customer need
Each step requires a “go or no-go” decision
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright ©2017 John Wiley & Sons, Inc.
Product Development Stages
15
Product Failures
TABLE 12.1
Examples of Projects That Failed
PRODUCT
16
WHY IT FLOPPED
Google Glass
The product, which didn’t work properly, was touted as a pair of high-tech glasses able to scan
surroundings and send information to the eye’s retina. However, its functionality was flawed due mainly
to the need for a larger battery to fully perform its intended functions. Some call the design distracting,
and the eyeglass, with a $1,500 price tag, was prone to break.
Amazon Fire
CEO Jeff Bezos is blamed for micromanaging the design of the fatally flawed Amazon Fire phone while
overspending on development, manufacturing, and marketing. Users criticized the device for its
“gimmicky” product features like 3D screen and facial recognition as bland and distracting. It also lacked
the variety of apps and service cohesion available with Apple’s competing products. Lastly, the Fire
phone was simply overpriced.
McDonald’s
Mighty Wings
Mighty Wings were “too spicy and too pricey,” according to an industry executive. Sold in packs of 3, 5,
or 10 wings starting at $2.99, it was clear that discounting was being used to sell the product. The
discounted price cut into profits for franchise owners. The wings never met sales goals for McDonald’s,
and they were discontinued.
Blackberry
Despite a functional keyboard and secure messaging and e-mail capabilities, Blackberry’s focus was on
battery performance but had limited use of carrier network resources. When the iPhone was introduced
as an exclusive to AT&T, it became an almost instant success. Blackberry tried to deliver the Storm, a
touch-screen smart phone for Verizon, which was initially the best-selling Verizon product ever, but it
was flawed. It just didn’t match the hardware or software features of the iPhone.
Sources: Sage McHugh, “8 Biggest Product Fails of 2014,” Alternet, http://www.alternet.org, accessed February 20, 2016; Pavithra Mohan, “Amazon Dismisses ’Dozens’
of Engineers Who Worked on Failed Fire Phone,” Fast Company, http://www.fastcompany.com, accessed February 20, 2016; Adam Hartung, “The Reason Why Google
Glass, Amazon Fire Phone and Segway All Failed,” Forbes, http://www.forbes.com, accessed February 20, 2016; Eric Zeman, “BlackBerry Doomed by First iPhone,
Storm Failure,” Information Week, http://www.informationweek.com, accessed February 20, 2016; John Brandon, “5 Big Tech Fails of 2015,” Inc., http://www.inc.com,
accessed February 20, 2016; Kia Kokalitcheva, “Ex-BlackBerry CEO Admits Why Its Most Important Device Failed,” Fortune, http://fortune.com accessed February 20,
2016.
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Identification
17
Brand – name, term, sign, symbol, design, or some
combination that identifies the products of one firm
and differentiates them from competitors’ offerings
Brand name- part of the brand consisting of words
or letters included in a name used to identify and
distinguish the firm’s offerings from those of
competitors.
Trademark- brand that has been given legal
protection granted solely to the brand’s owner
Copyright (c) 2017 John Wiley & Sons, Inc.
Product Identification
18
To be effective, brand
names must be easy for
consumers to
pronounce, recognize,
and remember.
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Categories
19
Manufacturer’s brand- brand offered and promoted by a
manufacturer. Examples: Tide, Cheerios, Windex, Fossil, and Nike.
Private or store brand- brand that is not linked to the manufacturer
but instead carries a wholesaler’s or retailer’s label. Examples:
Sears’ DieHard batteries and Walmart’s Ol’Roy dog food.
Family branding strategy- a single brand name used for several
related products. Examples: KitchenAid, Johnson & Johnson,
Hewlett-Packard, and Arm & Hammer.
Individual branding strategy- giving each product within a line a
different name. Examples: Procter & Gamble products Tide, Cheer,
and Dash
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Loyalty
20
Brand recognition- consumer is aware of the brand
but does not have a preference for it over other
brands
Brand preference- consumer chooses one firm’s
brand over a competitor’s
Brand insistence- consumer will seek out preferred
brand and accept no substitute for it (the ultimate
degree of brand loyalty)
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Loyalty
21
The retailer of
affordable, welldesigned contemporary
furniture enjoys brand
insistence—the
ultimate expression of
brand loyalty. For
devoted IKEA fans, no
other brand will do.
Copyright (c) 2017 John Wiley & Sons, Inc.
Brand Equity
22
Brand equity- added value that a respected
and successful name gives to a product
Brand awareness- product is the first one that
comes to mind when a product category is
mentioned
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright ©2017 John Wiley & Sons, Inc.
Valuable Brands
23
Packages and Labels
24
Packaging affects the durability, image, and convenience of an
item and is responsible for one of the biggest costs in many
consumer products.
Packing is important in product identification and play is an
important role in a firm’s overall product strategy.
Choosing the right package is especially important in
international marketing.
Packing must meet legal requirements of all countries in which
product is sold.
Universal Product Code- bar code read by optical scanner
Environmental impact of packaging– Sun Chips
Copyright (c) 2017 John Wiley & Sons, Inc.
Packages and Labels
25
Due to a growing
demand to produce
more environmentally
friendly packages,
manufacturers are
working harder to
create more compact
packaging that is made
from renewable
sources and is
recyclable.
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Strategy
26
Distribution channel: path through which
products—and legal ownership of them—flow
from producer to consumers or business users
Physical distribution: actual movement of
products from producer to consumers or
business users
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channels
27
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channels Using Marketing
Intermediaries
28
Direct Distribution
Direct contact between producer and customer.
Most common in B2B markets.
Often found in the marketing of relatively expensive, complex
products that may require demonstrations.
Internet is helping companies distribute directly to consumer
market.
Distribution Channels Using Marketing Intermediaries
Producers distribute products through wholesalers and retailers.
Inexpensive products sold to thousands of consumers in widely
scattered locations.
Lowers costs of goods to consumers by creating market utility
Copyright (c) 2017 John Wiley & Sons, Inc.
Copyright (c) 2017 John Wiley & Sons, Inc.
Marketing Intermediaries
29
Wholesaling
30
Wholesaler – distribution channel member that sells
primarily to retailers, other wholesalers, or business
users
Manufacturer-Owned Wholesaling Intermediaries
Owned by the manufacturer of the goods or products to
control distribution or customer service
Sales branch that stocks products and fills orders
from inventories
Sales office that takes orders but does not stock the
product
Copyright (c) 2017 John Wiley & Sons, Inc.
Retailers
31
Retailer – channel member that sells goods and
services to individuals for their own use rather than
for resale
Final link of the distribution channel
Two types:
Store
Nonstore
Copyright (c) 2017 John Wiley & Sons, Inc.
Nonstore Retailing
Direct response
retailing
Internet Retailing
Automatic
merchandising
Direct selling
Copyright (c) 2017 John Wiley & Sons, Inc.
32
Nonstore Retailing
33
Pampered Chef’s
direct sales force of
independent
consultants offers
high-quality,
multipurpose
kitchen tools and
in-home cooking
demonstrations.
Copyright (c) 2017 John Wiley & Sons, Inc.
Retail Stores
34
Copyright (c) 2017 John Wiley & Sons, Inc.
Wheel of Retailing
35
Copyright (c) 2017 John Wiley & Sons,
Inc.
How Retailers Compete
36
Identify a Target Market
Selecting a Product Strategy
Selecting a Customer Service Strategy
Selecting a Pricing Strategy
Choosing a Location
Building a Promotional Strategy
Creating a Store Atmosphere
Copyright (c) 2017 John Wiley & Sons, Inc.
How Retailers Compete
37
Peapod’s service
strategy of
selecting, packing,
and delivering
groceries has
helped attract and
retain customers.
Copyright (c) 2017 John Wiley & Sons, Inc.
Retail Locations
38
For a retailer, a good location can make the difference
between success and failure
Location depends upon the retailer’s size, financial
resources, product, competition, and target market.
Planned Shopping Center
Shopping Mall
Regional Mall
Lifestyle Mall
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Channel Decisions and
Logistics
39
What specific channel will it use?
What will be the level of distribution intensity?
Selecting Distribution Channels
Complex, expensive, custom-made, or perishable products
move through shorter distribution channels involving few—
or no—intermediaries.
Standardized products or items with low unit values usually
pass through relatively long distribution channels.
Start-up companies often use direct channels because they
can’t persuade intermediaries to carry their products, or
because they want to extend their sales reach.
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Intensity
40
Intensive distribution – firm’s products in nearly
every available outlet; requires cooperation of many
intermediaries
Selective Distribution – manufacturer selects limited
number of retailers to distribute its product lines
Exclusive distribution – limits market coverage in a
specific geographic region
Copyright (c) 2017 John Wiley & Sons, Inc.
Distribution Intensity
41
Expensive
specialty products
like Rolex watches
are typically part
of a limited market
coverage strategy
of exclusive
distribution.
Copyright (c) 2017 John Wiley & Sons, Inc.
Logistics and Physical Distribution
42
Supply chain – complete sequence of suppliers that contribute
to creating a good or service and delivering it to business
users and final consumers
Logistics – process of coordinating the flow of goods,
services, and information among members of the supply chain
Physical Distribution – the activities aimed at efficiently
moving finished goods from the production line to the
consumer or business buyer
Copyright (c) 2017 John Wiley & Sons, Inc.
Comparison of Transportation Modes
43
Copyright (c) 2017 John Wiley & Sons, Inc.
Customer Service
44
Customer service standards measure the quality of
service a firm provides for its customers
Warranties are a firm’s promises to repair a defective
product, refund money paid, or replace product if it
proves unsatisfactory
Internet retailers have worked to humanize their
customer interactions and deal with customer
concerns more effectively
Copyright (c) 2017 John Wiley & Sons, Inc.
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