Direct Distribution Systems

• Marketers face the critical task of efficiently moving goods and services from production to consumption.
• Distribution lacks a one-size-fits-all approach, with strategies tailored to make products accessible to customers when and where they desire, at minimal costs.

Direct Distribution Systems (DDS)

• Firms directly deliver goods and services to consumers, bypassing marketing intermediaries.
• DDS use various formats, like a dedicated sales team, retail locations, direct mail, catalogues, telemarketing, websites, and mobile devices.
• Personal selling involves trained sales professionals converting potential customers into actual consumers by explaining product benefits and addressing concerns.
• Direct mailing uses brochures to send offers, announcements, features, reminders, and special conditions to potential customers.
• Catalogue marketing involves sending printed full-line merchandise, specialty, and business catalogues to potential customers.
• Telemarketing involves firms using telephone and call centres for attracting prospects, selling, and providing services, like order taking and query resolution.

Indirect Distribution Systems (IDS)

• Firms rely on marketing intermediaries to reach and deliver goods/services to consumers.
• Various IDS are used across corporate enterprises and industrial sectors.
• One-Tier Distribution System: Firms uses only one marketing intermediary to reach consumers, acting as a one-degree channel distribution system with the structure: Manufacturing Firm > Marketing Intermediary > Consumer.
• Two-Tier Distribution System: Firms use two marketing intermediaries like wholesaler and retailer with the structure: Produce> Wholesaler> Retailer Consumer.
• Multi-Tier Distribution System: There are more than two marketing intermediaries involved with the structure: Produce> C&F Agents >Wholesaler Retailer>Consumer.

Multiple Channels System (MCS)

• Firms adopt more than one channel structure to reach consumers.
• Firms prefer multiple channels as consumers want to interact with multiple channels for better service and enables increased profitability as consumers have multiple touch points and purchase high-end products.

Multiple Channels System Action Plan

• Define MCS and its Value Proposition.
• Develop a MCS Channels Network Architecture.
• Redefine Value Delivery Ability to targeted markets.
• Reallocate Organizational Marketing and IT resources.

Factors Affecting the Choice of Distribution Channels Marketing Variables

• Nature of the market
• Number of potential customers
• Geographic concentration of the market
• Order size
• Customer value models
• Customer buying habits

Product Variables

• Unit sale value
• Bulk and weight
• Whether the product is perishable
• If there are technical products
• The breadth of the product line will impact how short/long the channel is
• The nature of the product

Firm's Variables

• Financial Soundness
• Desire for channel control
• Direct Distribution strengths
• Managerial Capabilities
• Cost of each channel

Marketing Intermediary Variables

• Contribution of middlemen in value addition
• Availability of desired middlemen
• Firm-marketing intermediary relationships dynamics

Distribution Management involves

• Arrangements to transfer product ownership.
• Arrangements to transport products from where it is manufactured to the point of consumption.
• Logistics focuses on product availability in the marketing channel at the right places and times.

Parties Involved in Distribution Management

• Company
• Intermediaries
• Final users

Parties Involved in Logistics

• Supplier
• Company
• Intermediaries
• Final users

Transportation

• The act of moving people/goods.
• Facilitates movement of raw materials/components from supplier to manufacturing, & finished goods to final consumers.
• Immediate response and on time delivery is key.
• Urgent delivery increases cost.
• Reliability is defined as the quality of service rendered in terms of speed

Modes of Transportation

Train

• Rail road is a popular and convenient means of transportation widely useed in foreign countries.
• Less costly for transporting products from supplier to customer, due to high volume and speed.
• In the Philippine setting, this mode of transportation is not very used due to its unreliable operation and limited destination.
• Examples include MRT or Mass Rapid Transit System, Bicol Express or PNR (Philippine National Railways), LRT or Light Rail Transit System.

Trucks and Vans

• Containerized Vans are controlled by the trucking industry mostly for the shipment of imported and exports goods from the pier and vice versa
• Some trucking companies are used for local deliveries of grocery products, fruits and vegetables.
• In the Philippine setting, is usually composed of a large number of for hire and private carriers usually owned by brokerage companies.

Ships

• Water Carriers or Vessels used locally for import/export, especially for island countries.
• Excellent for transporting large quantities of low-volume or bulk products.

Airplane (Air Cargo)

• For high-value products needing timely delivery for processing.
• Speed is a vital consideration for these systems.

Freight

• Goods carried by ships, trains, trucks, or airplanes.
• Also refers to the amount paid for carrying goods.

Terms

• Prepaid: Shipper owns or pays for the freight.
• Collect: Consignee owns or pays for the freight.
• Prepaid/Collect: Shipper pays a portion of the freight, with the consignee paying the balance.
• Free on Board (FOB) or Freight on Board indicates when liability and ownership of goods transfers from seller to buyer.
• FOB Origin: Supplier's liability ends when the shipping organization picks up the merchandise.
• FOB Destination: Supplier's liability ends only when the buyer receives the merchandise.

Explore direct distribution systems where companies bypass intermediaries to reach consumers. Understand formats like sales teams, retail, direct mail, catalogs, telemarketing, websites, and mobile devices. Learn the advantages and disadvantages of each approach.