CHAPTER 7

Distribution
Strategies

GROUP2- HRDM32
 The team

GALOSO GASTARDO GUEVARA GUILLERA

KHIEZZIN ROSE KAREN KRISTINE JESSICA NICKA MAE
 The team

IBAÑEZ IGNACIO LACAP LINGAHAN

KIMBERLY HANNA ANGELICA IRA ERICA
 The team

LUISTRO LUMANOG MANJARES MENDEZ

KEATLEBURN ANDREI ANN EUNICE MARK ADAM
 The team

MERCADO MIGUEL MIRANDA

LALAINE CHARISSE MAY KYLA ELISAH MAE
Contents
01 02 03
The Importance of Functions of Distribution Channels
Distribution Channels

04 05 06
Channel members Channel Strategy Types &
Factors affecting
Distribution Strategy
The Importance of
Distribution
Strategy
 IMPORTANCE OF DISTRIBUTION STRATEGY
WHAT IS DISTRIBUTION
STRATEGY? Most producers use intermediaries to bring
Distribution strategy helps to their products to market. They try to develop
improve the way customers a distribution channel (marketing channel) to
interact with your business, do this.
leading to customer
satisfaction and repeat
business. It can also help you
A distribution channel is a set of
streamline your business to interdependent organizations that help make
make it more efficient. a product available for use or consumption
Through a more efficient by the consumer or business user.
business and improved
customer satisfaction, this Channel intermediaries are firms or
strategy can lead to higher individuals such as wholesalers, agents,
profits. brokers, or retailers who help move a product
from the producer to the consumer or
business user.
Functions of
Distribution
Channels
 FUNCTIONS OF •Provide a number of logistics or
DISTRIBUTION physical distribution functions that
CHANNELS increase the efficiency of the flow of
•Perform a number goods from producer to customer.
of functions that
make possible the •Create efficiencies by reducing the
flow of goods from number of transactions necessary for
the producer to the goods to flow from many different
customer. manufacturers to large numbers of
customers.
 CHANNELS

TIME PLACE OWNERSHIP

UTILITY

They make products available when, where,

and in the sizes and quantities that customers
want.
 1. BREAKING BULK
Wholesalers and retailers purchase large quantities
of goods from manufacturers but sell only one or a
few at a time to many different customers.

DISTRIBUTION
CHANNELS
OCCURS IN 2. CREATING ASSORTMENTS
TWO WAYS -Channel intermediaries reduce the number of
transactions.
-Providing a variety of products in one location.
 Channel Intermediaries
PHYSICAL DISTRIBUTION
FUNCTIONS •perform a number of facilitating functions,
functions that make
the purchase process easier for customers
•TRANSPORTATION and manufacturers.

•STORAGE OF GOODS •provide customer services such as offering

credit to buyers and accepting customer
returns.
CHANNEL
MEMBERS

perform a risk-taking function.

perform a variety of communication and

transaction functions.
can provide two-way communication for
manufacturers.
can be invaluable sources of information on
consumer complaints, changing tastes, and
new competitors in the market.
Channels
 CHANNELS

A number of alternate 'channels' of distribution may be

available:

Selling direct, such as via mail order, Internet and

telephone sales
Agent, who typically sells direct on behalf of the producer
Distributor (also called wholesaler), who sells to retailers
Retailer (also called dealer or reseller), who sells to end
customers
Advertisement typically used for consumption goods

REPORTER : GUEVARA
 CHANNELS

Distribution channels come in two different forms:

direct and indirect.

Indirect distribution, as the names would suggest, occurs

when a producer uses a wholesaler or retailer to sell their
products, while direct distribution refers to a direct
transaction between the manufacturer and the consumer.

REPORTER : GUEVARA
 CHANNELS

REPORTER : GUEVARA
 CHANNELS

REPORTER : GUEVARA
Channel
Members
 CHANNEL MEMBERS

Experts involved in the process of getting products or

services to the end-users. Channel members,
sometimes called intermediaries or middlemen, work
together to complete the various tasks it takes to get a
product from production through to sale.

REPORTER : GUILLERA
 DISTRIBUTORS

WHOLESALERS
TYPES OF
CHANNELS
RETAILERS
MEMBERS

AGENTS AND BROKERS

REPORTER : GUILLERA
 WHOLESALING

is all activities involved in selling products to those

buying for resale or business use. Wholesaling
intermediaries are firms that handle the flow of
products from the manufacturer to the retailer or
business user.

REPORTER : IBAÑEZ
 SELLING AND
PROMOTING

BUYING AND ASSORTMENT

BUILDING
WHOLESALING
CHANNEL
BULK BREAKING
FUNCTIONS

WAREHOUSES
REPORTER : IBAÑEZ
 TRANSPORTATION

FINANCING & RISK BEARING

WHOLESALING
CHANNEL
MARKET INFORMATION
FUNCTIONS

MANAGEMENT
SERVICES & ADVICE
REPORTER : IBAÑEZ
 Do business with many different
manufacturers and many
Independent different customers. Because
intermediaries they are not owned or
controlled by any manufacturer,
they make it possible for many
manufacturers to serve
customers throughout the world
while keeping prices low.
 Merchant
Wholesalers

- are independent intermediaries that buy goods

from manufacturers and sell to retailers and other
business-to-business customers.
 Merchant
Wholesalers

- are independent intermediaries that buy goods

from manufacturers and sell to retailers and other
business-to-business customers.
 Types of Merchant Wholesalers

Full-service wholesalers
they may perform a broad range of services
for their customers, such as stocking
inventories, operating warehouses, supplying
credit, employing sales people to assist
customers, and delivering goods to customers.
 Types of Merchant Wholesalers

Limited-service wholesalers
who offer fewer services to their customers
and suppliers, emerged in order to reduce the
costs of service.
cash-and-carry wholesalers,
truck jobbers,
drop shippers,
rack jobbers.
 Merchandise
Agents or Brokers

Second major type of independent intermediary

Provide services in exchange for commissions
Agents normally represent buyers or sellers on an
ongoing basis, whereas brokers are employed by
clients for a short period of time.
 Manufacturer-Owned
Intermediaries

Set up by manufacturers in order to have separate

business units that perform all of the functions of
independent intermediaries, while at the same time
maintaining complete control over the channel.
Sales branches
carry inventory and
provide sales and
Sales offices
service to
do not carry
customers in a
inventory but provide
specific geographic Manufacturers’
selling functions for
area showrooms
the manufacturer in a
specific geographic permanently
area. display products
for customers to
visit.
 Vertical Marketing
Systems (VMS)
distribution channel structure in which
producers, wholesalers, and retailers act
as a unified system. One channel
member owns the others, has contracts
with them, or has so much power that
they all cooperate.

Conventional Distribution
Channel
consists of one or more
independent producers, The VMS can be dominated by the producer,
wholesalers, and retailers. wholesaler, or retailer. There are three major types of
vertical marketing systems: corporate, contractual,
and administered
 CORPORATE VMS
A corporate vertical marketing
system is a concept whereby a
single business acts as the
distributor, supplier, and
producer of its supplies.
 EXAMPLE OF CORPORATE
VERTICAL MARKETING SYSTEM
An example of a corporate
vertical marketing system is
Zara. Zara manufactures their
products and sells them through
authorized dealers.
 MAIN BENEFIT OF
CORPORATE VMS
Enables companies to control
and coordinate different stages
of product production and
distribution
 CONSTRACTUAL VMS

contractual VMS, producers,

wholesalers and retailers work
together for the same profit and
goals while remaining separate
 EXAMPLES OF
CONSTRACTUAL VMS
KFC, Pizza Hut, Dominos, and
Mcdonald's are the two most
common examples of
Contractual VMS.
 ADMINISTERED VERTICAL
MARKETING SYSTEM
Administered VMS, a dominant member of the
channel, such as a manufacturer or a large
retailer, uses its power and influence to
coordinate and direct the activities of the other
channel members, such as wholesalers and
smaller retailers.
 Developing and
Managing a
Distribution Strategy
A distribution strategy defines how you are going to create and
satisfy demand for your products.
A distribution strategy defines how you are going to move products
from point of creation to points of consumption in an efficient and
cost-effective manner.
A distribution strategy also defines how you are going to develop
and maintain customer loyalty.
But first and foremost, a distribution strategy must be in sync with
how customers want to shop and buy.
Today's customers shop and buy very differently than ever before.
For product-focused companies, establishing the most appropriate
distribution strategies is a major key to success, defined as
maximizing sales and profits. Unfortunately, many of these
companies often fail to establish or maintain the most effective
distribution strategies. Problems that have been identified include:

Unwillingness to establish different distribution channels for

different products Fear of utilizing multiple channels, especially
including direct or semi-direct sales, due to concerns about
erosion of distributor loyalty or inter-channel cannibalization.
Failure to periodically re-visit and update distribution strategies

Lack of creativity and resistance to change

To be fair, there can be sound reasons for these perceived

weaknesses. More typically, however, they are due to failings
such as simple inertia, lack of understanding of the ultimate
customers and their preferences, or a failure to acknowledge
the importance of a distribution strategy and invest sufficient
resources in understanding it.
Meanwhile, improvements in supply chain management
technologies must also be factored into choice of distribution
partners.
Company can improve its distribution strategies by:

Mapping their products to the end-user

Determining customers’ channel preferences and
comparing these preferences with actual availability
Recommending new channels, and examining competitors’
strategies and comparing them and their effectiveness with
their own.
Channel
Strategy
Marketers face several strategic decisions in choosing
channels and marketing intermediaries for their products.

Selecting a specific channel is the most basic of these

decisions.

Marketers must also resolve questions about the level of

distribution intensity, the desirability of vertical marketing
systems, and the performance of current intermediaries.
 Marketing Channel
Selection

Marketing channel selection can be

facilitated by analyzing market,
product, producer, and competitive
factors.
Distribution Intensity

refers to the number of intermediaries through

which a manufacturer distributes its goods. The
decision about distribution intensity should
ensure adequate market coverage for a
product.
Intensive Distribution

An intensive distribution strategy seeks to distribute

a product through all available channels in an area.
Usually, an intensive distribution strategy suits items
with wide appeal across broad groups of consumers,
such as convenience goods.
Distribution of a product through only a limited number
of channels.
This arrangement helps to control price cutting.
By limiting the number of retailers, marketers can reduce
total marketing costs while establishing strong working
relationships within the channel.

Selective
Distribution
Distribution of a product through one wholesaler or retailer in a
specific geographical area.
The automobile industry provides a good example of exclusive
distribution.
Though marketers may sacrifice some market coverage with
exclusive distribution, they often develop and maintain an image of
quality and prestige for the product.

Exclusive
Distribution
 Types of
Distribution
Strategy
 3 Types of
Distribution
Strategy

Exclusive Intensive Selective

Distribution Distribution Distribution
Exclusive distribution This strategy involves With this approach,
restricts the sale of a making a product available acompany selects specific
product to a limited number in as many retails outlets as retailers our outlets to
of retailers or outlets. possible. distribute its products.
Factors affecting
Distribution
Strategy
 location of business

location of target
market
FACTORS reaching the target
AFFECTING market
DISTRIBUTION
STRATEGIES warehousing

transportation and
logistics
Thank you!
CHAPTER 7