MAR 3023961

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MAR 3023-961

• Basic Marketing
• Fall 2003St. Petersburg
• PDistribution
• Rich Gonzalez University of South Florida
• October 29, 2003

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URLs

• www.walmart.com
• www.afcsushi.com/
• www.wwatching.net/cgi-bin/pgsrvr.cgi/cgi_stubs/eni
  gma/vending

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Agenda October 29, 2003

• Assignment AUpdate
• Andrea ScottDescribe Advertisements
  Participation
• Wal-Mart Article/Discussion
• Retailing (finish)
• Class Exercise
• For November 5

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Assignment A

• Any problems, questions?
• Responses?

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For Today October 29

• Chapter 15 Distribution Channels
• Wal-Mart, Driving Workers and Supermarkets
  Crazy, Steven Greenhouse, N.Y. Times, October 19,
  2003
• www.nytimes.com/2003/10/19/weekinreview/19GREE.htm
  l
• What are some reasons that Wal-Mart is so
  powerful? (Based on Chapter 16 and Chapter 15
  concepts.

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For November 5

• Chapter 7 Marketing Research
• (Video Case 7.2, Fischer-Price, p. VC-9)

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Last Time

• Retailing
• Neiman Marcus
• Service Levels
• State of Retailing In Economy

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Revenues (billions)
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Wal-MartLast 10 Years (58.24)
WMT
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2002 RevenuesRetailers 7T4

• 246 Wal-Mart
• 36 Sears
• 31 Kmart
• 40 Target
• 32 J.C. Penney
• 15 Federated Dept. Stores
• 58 Home Depot
• 3 Neiman Marcus
• (revenues in billions)

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Why Is Wal-Mart So Powerful?

• What are some power indicators?

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Elements of the Marketing Mix within an
Environmental Framework
Competitive
Distribution
Product
Political-Legal
Target Market
Social-Cultural
Price
Promotion
Technological
Economic
What factors have affected Wal-Mart?
What factors have been affected by Wal-Mart?
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Class Exercise

• 4 Teams (A, B, C, D) 1 Scribe, One Reporter
• Deliverable 1 Page 1 Side Printed Names of
  Team Members
• 1 Side3 Reasons for Wal-Mart Power
  Performance per Chapters 16 (Retailing) and 15
  (Distribution) and NYT article.
• 1. Reason/Concept and brief explanation
• 2. Reason/Concept and brief explanation
• 3. Reason/Concept and brief explanation

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Discussion Reasons For Wal-Mart Power

• Low Cost Operation
• Pricing Strategy Low Prices Always
• Distribution Structure Multiple Dist. Ctrs.
• Takeover of Market Share In Rural Areas
  Supplying Almost Everything

Class Discussion
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Discussion Reasons For Wal-Mart Power

• Technology Satellite/POS/
• Hi-Morale Rate/Management Of People

Class Discussion
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Discussion Reasons For Wal-Mart Power
Class Discussion
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Wal Mart Power

• 32 Sales Share Disp. Diapers
• 4750 Stores
• 1397 Supercenters
• 50 M Sales Per Store
• 80 M Sales Per Supercenter
• 2.5 Sales Of U.S. GDP
• 110 M Visitors
• 82 Households Purchased

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Edited When Distributed By Wal-Mart
Why?
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Wal Mart Power--Outlook

• 40 Supercenters in California (5 Yrs.)
• 1000 Supercenters in U.S. (5 Yrs.)
• 35 Sales Share U.S. Food
• 25 Sales Share U.S. Drugs

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Why?

• Why is Wal-Mart not opening its first Supercenter
  in California until February 2004?

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Andrea Scott

• Doctoral CandidateAdvertisement Description
  Pre-Test

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Mantras

• 1--The purpose of a business is to create a
  customer.
• 2--It is the customer who determines what a
  product/service is.
• 3--Know your customer(s).
• 4Brand is is the interface between the marketer
  and the customer.

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Chap 15 Begin
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Distribution
One of the 4 Ps
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Distribution Channel
An organized system of marketing institutions and
their interrelationships that promotes the
physical flow of goods and services, along with
title that confers ownership, from producer to
consumer or business user.
Think finished products.
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Supply Chain
The complete sequence of suppliers that
contribute to the creation and delivery of a
product or service.
Think from point of raw materials to production
activities.
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Marketing Intermediary
A business firm, either wholesaler or retailer,
that operates between producers and consumers or
business users, also called a middleman.
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Wholesaler
A marketing intermediary that takes title to
goods and then distributes them further also
called a jobber or distributor.
Several types of wholesalers.
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Retailer
The final marketing intermediary that takes title
to goods, from a wholesaler or from the
manufacturer, then makes goods available for
display, sale and delivery to buyers and
consumers.
Several types of retailers.
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Direct Channel
A distribution channel that moves goods directly
from a producer to an ultimate user.
Does GM use a direct channel?
Does Coca Cola use a direct channel?
Does Microsoft use a direct channel?
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Industrial Distributor
A marketing intermediary in a business channel.
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Dual Distribution
A network that moves products to a firms target
market through more than one distribution channel.
Seems to be increasing? Starbucks
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Reverse Channel
A path that carries used goods from consumers
back to a manufacturer.
This involves a concept called reverse
logistics.
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Alternative Distribution Channels
Consumer Goods
Producer
Consumer
Producer
Retailer
Consumer
Producer
Wholesaler
Retailer
Consumer
Producer
Agent/ Broker
Wholesaler
Retailer
Consumer
Which is best?
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Alternative Distribution Channels
Business Goods
Producer
Business User
Producer
Business User
Agent/ Broker
Producer
Wholesaler
Business User
Producer
Agent/ Broker
Wholesaler
Business User
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Alternative Distribution Channels
Services
Service Provider
Consumer or Business User
Service Provider
Consumer or Business User
Agent/ Broker
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Transaction Economies through Wholesaling
Intermediaries
Manufacturer
Customer
Manufacturer
Customer
Manufacturer
Customer
Manufacturer
Customer
Manufacturer
20 Contacts
Can each firm stay close to the customer?
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Transaction Economies through Wholesaling
Intermediaries
Manufacturer
Customer
Manufacturer
Wholesaling Intermediary
Customer
Manufacturer
Customer
Manufacturer
Customer
Manufacturer
9 Contacts
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Major Types of Wholesaling Intermediaries
Wholesaling Intermediaries
Manufacturer- Owned Facilities
Independent Wholesaling Intermediaries
Retailer-Owned Cooperatives Buying Offices
Classification Based on Ownership
Merchant Wholesalers (take title)
Agents and Brokers (do not take title)
Classification Based on Title Flows
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Merchant Wholesaler
An independently owned wholesaling intermediary
that takes title to the goods that it handles.
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Types of Merchant Wholesalers
Limited-Function
Full-Function
Rack Jobber
Truck Wholesaler
Drop Shipper
Mail-Order Wholesaler
Cash-and-Carry Wholesaler
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Rack Jobber
A full-function merchant wholesaler that markets
specialized lines of merchandise to retail stores.
You see these reps in the grocery stores!
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Cash-and-Carry Wholesaler
A limited-function merchant wholesaler that
performs most wholesaling functions except
financing and delivery.
No Frills
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Broker
An agent wholesaling intermediary that does not
take title to or possession of goods in the
course of its primary function--to bring together
buyers and sellers.
No inventory risk.
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Selling Agent
An agent wholesaling intermediary responsible for
the entire marketing program of another firms
product line.
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Manufacturers Agent
An agent wholesaling intermediary that represents
a number of manufacturers of related but
non-competing products, receiving a commission on
each sale.
Manufacturers reps.
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Distribution Intensity
The number of intermediaries through which a
manufacturer distributes it goods.
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Categories of Distribution Intensity
Intensive Distribution
Selective Distribution
Exclusive Distribution
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Intensive Distribution
A channel policy in which a manufacturer of a
convenience product attempts to saturate the
market.
Where can you buy Coke? Milk?
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Selective Distribution
A channel policy in which a firm chooses only a
limited number of retailers to handle its product
line.
Certain clothing brands, cosmetics.
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2 Distribution Examples

• AFCSushi

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Specialty Store
A retailer that typically handles only part of a
single product line.
Think length of product line---Batteries Plus.
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Specialty Store in a Store

• Sushi Bar
• www.afcsushi.com

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Exclusive Distribution
A channel policy in which a firm grants exclusive
rights to a single wholesaler or retailer to sell
its products in a particular geographic area.
Certain automobiles, luxury items.
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• Marketing Channels

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Channel Captain
A dominant and controlling member of a
distribution channel.
This is an important concept. Not contractual.
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Slotting Allowance
A fee paid by a manufacturer to a retailer to
assure shelf space for its products.
In big grocery stores, shelf space is a precious
asset.
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Vertical Marketing System
A planned channel system designed to improve
distribution efficiency by integrating various
functions throughout the distribution chain.
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Corporate Marketing System
A VMS in which a single owner runs organizations
at each stage in its distribution channel.
Sherwin-Williams is and example.
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Administered Marketing System
A VMS that achieves channel coordination when a
dominant channel member exercises its power.
Who is the perfect example here? Why?
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Contractual Marketing System
A VMS that coordinates channel activities through
formal agreements among channel members.
Independent Grocers Assoc., True Value
Cooperative...
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Chap 15 End
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Atmospherics
The combination of physical characteristics and
amenities that contribute to a store image which
are experienced by customers.
How is it to walk into the new International Mall
in Tampa?