CHAPTER 13 Product and Distribution Strategies

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CHAPTER 13 Product and Distribution Strategies
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TYPES OF DISTRIBUTION CHANNELS

• A. Direct Selling
• - direct sales between buyer seller
• Ex. Mary Kay, Tupperware, Baskets
• B. Marketing Intermediaries Figure 15.1

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DUAL DISTRIBUTION

• Use of 2 or more distribution channels to reach
  the same target market.

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REVERSE CHANNELS

• Backward movement of goods from user to the
  producer
• Ex. recycling

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Functions of Intermediaries

• Create
• TIME UTILITY
• PLACE UTILITY
• OWNERSHIP UTILITY

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Types of Wholesaling Intermediaries

• 1. Manufacturer-Owned Facilities
• - sales branches offices
• 2. Independent Wholesaling Intermediaries
• - account for majority of wholesaling
  establishments wholesale sales in U.S.
• Merchant wholesalers take title to goods they
  handle
• Agents Brokers may or may not take
  possession of goods but they never take title

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• 3. Retailer-Owned Facilities
• - independent retailers may band together to form
  buying groups to get cost savings thru quantity
  purchases

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Factors Affecting Channel Strategy Decisions

• 1. MARKET FACTORS
• whether product is intended for the consumer
  (long) or the business (short) market
• 2. PRODUCT FACTORS
• perishable or complex products(short channels)
• generally the more standardized the product, the
  longer the channel

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• 3. PRODUCER FACTORS
• companies w/ adequate financial, managerial
  marketing resources are less compelled to utilize
  intermediaries in marketing their products
• 4. COMPETITIVE FACTORS
• inadequate promotion of products may require
  manufacturers to develop unique distribution
  channels

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Distribution Intensity

• 1. INTENSIVE DISTRIBUTION
• - used for convenience goods
• Ex. Gum, soda, candy, cigarettes
• 2. SELECTIVE DISTRIBUTION
• - a firm chooses only a limited number of
  retailers in a market area to handle its product
  line
• Ex. Nike

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• 3. EXCLUSIVE DISTRIBUTION
• - extreme form of selective distribution
• - most often used for specialty goods

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Modes of Transportation

• Truck
• Railroad
• Pipeline
• Air
• Water Carriers

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Consumer vs. Business Product

• Consumer used by ultimate consumer
• Business used directly or indirectly by business

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3 Consumer Products

• Consumers purchase frequently
• Purchase with little effort
• Ex. Gum, candy, milk

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Consumer Products
Shopping

• Consumer compares competing items
• Ex. Appliances

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Consumer Products
Specialty

• Customers willing to make special effort to
  find product
• Ex. Lexus, Mercedes, Corvette

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5 Business Products
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Characteristics Of Services

• 1. Are intangible products
• 2. The service provider is the service
• 3. Cannot easily be standardized

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Product Life Cycle
Maturity
Decline
Growth
Introduction
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Extending The Product Life Cycle

• Increase the frequency of use
• Ex. Milk
• Add new users
• Ex. Global
• Find new uses for the product
• Ex. Baking Soda, WD40
• Change package sizes, labels, and product
  designs
• Ex. Pringles, Chips

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Brand Categories
National Brand
Generic Brand
Private Brand
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Brand Degrees Of Loyalty
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Packaging Labeling Goals
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Functions Of Labeling
Attract Attention
Convey Benefits
Describe Contents
Indicate, price, uses
Provide Information
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Breakeven Point

• BEP Total Fixed Cost
• Selling Price - Variable Cost

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Pricing Strategies
Skim Pricing
Competitive Pricing
Penetration Pricing