Marketing Chapter 12: Distribution Channels

Chapter 12: Distribution Channels

• Nestlé ranks among the worst plastic polluters, according to Greenpeace.
• Nestlé is pursuing a five-pillar approach to address plastic concerns.
• By 2025, Nestlé wants all its plastic packaging to be recyclable or reusable.
• Nestlé has developed a new meatless burger.

The Importance of Distribution

• Good distribution is crucial for marketing success.
• A well-structured distribution strategy is vital for convincing retailers to carry a product's goods.
• The Instant Pot offers multiple meal-preparation functions.

Distribution Channels, Supply Chains, & Logistics Are Related

• Distribution channels are institutions that transfer goods' ownership and move them from production to consumption.

Supply Chain Management

• Firms use approaches to integrate suppliers, manufacturers, warehouses, stores, and transportation intermediaries as a seamless value chain.
• Merchandise is produced and distributed with the correct quantities, locations, and time.
• System-wide costs are minimized while meeting customer service requirements.

Logistics Management

• Logistics management involves planning, implementing, and controlling raw materials, in-process inventory, and finished goods flow from origin to consumption.

Distribution Components

• Supply Chain: Suppliers and their networks.
• Distribution Channels: Wholesalers and retailers.
• Producers: Outbound flow of products.
• Consumers.
• Logistics Management: Flow of materials and information.

Designing Distribution Channels

• Channel Structure: There are direct, indirect (using intermediaries), and multi-channel distributions.

Multichannel Distribution

• Catalogues and direct marketing, are used to reach different consumer segments.
• Distributors and sales forces are included in distribution processes.

Push vs. Pull Distribution Strategies

• Push: Manufacturers use listing allowances & contests to retailers to move their products.
• Pull: Manufacturers use advertising and social media to attract customers.

Distribution Intensity

• Intensive: Products are available in as many outlets as possible (e.g., Walmart).
• Selective: Products are distributed through a select number of outlets (e.g., Hudson's Bay).
• Exclusive: Products are distributed through only a few retailers (e.g., Tiffany & Co.).

Distribution Centres Versus Direct Store Delivery

• Retailers consider total cost and service levels when deciding between these two systems.

Getting Merchandise to Customers

• Customers have several options for acquiring goods, such as in-store pickup or shipping.

Inventory Management Through Just-in-Time Systems

• Just-in-Time (JIT) and Quick Response (QR) systems.

Benefits of JIT Systems

• Reduced lead time
• Increased product availability and lower inventory investment.

Data Warehouse and Electronic Data Interchange

• Purchase data is stored in a data warehouse.
• Electronic Data Interchange (EDI) facilitates computer-to-computer exchange of business documents which helps improve communication and reduce cycle time.

Vendor-Managed Inventory

• Manufacturers are responsible for maintaining retailers' inventory levels.

Logistics Management: Making Merchandise Flow

• Inbound transportation, receiving, checking, storing, and distribution to stores.
• Just-in-time (JIT) systems are often used.
• Distribution centers facilitate delivery of products to stores.

Distribution Channels Add Value

• Distribution centers play a vital role in adding value.
• Buying, selling, and facilitating exchange.
• Home Depot and Stanley Tool Company have a mutually beneficial partnership.

Channel Conflict

• Channels conflict when members disagree about common goals, roles, or rewards.
• Amazon and Procter & Gamble recognize that profitable partnership interests are complementary.

Vertical Vs. Horizontal Channel Conflict

• Vertical conflict occurs between different levels of the supply chain (e.g., manufacturer and retailer).
• Horizontal conflict occurs between competing retailers at the same level of the supply chain (e.g., retailers).

Types or Phases of Vertical Marketing Systems

• Administered
• Contractual
• Franchise
• Corporate

Canada's Largest Franchises

(This section lists top franchises in Canada, indicating their types and number of outlets.)

Managing Supply Chains Through Strategic Relationships

• Mutual trust
• Open communication
• Common goals
• Credible commitments

Logistics Management: Making Merchandise Flow:

• This section describes different steps in getting merchandise from production to the customer. (e.g., POS data)

Explore the fundamental concepts of distribution channels in marketing through this quiz. Delve into how companies like Nestlé address plastic pollution and the importance of an effective supply chain in delivering goods. Test your understanding of distribution strategies and logistics in the modern market.