Routes Taken to Distribute Products
◦Product,
◦Price,
◦Place,
◦Promotion
What the “P” of Price is to Revenue
management, the “P” of Place is to
Distribution
To make a place decision,
marketers must decide on a
channel of distribution.
The path a product takes from
its producer or manufacturer to
the final user.
A distribution channel - set of
independent organizations involved in
the process of making a product or
service available to the consumer or
business user
Used to move the customer towards the
product or the product to the customer
Organic development of an industry
Intermediary
•Merchant intermediaries take title of
goods and services.
•Agent intermediaries do not.
•Middleman business involved in sales
transactions that move products from the
manufacturer to the final user.
Parties Involved in Distribution
wholesaler
Wholesalers A business that obtains goods from manufacturers
and resells them to organizational users, other
wholesalers, and retailers, also called distributors.
Rack Jobbers rack jobber
One who manages inventory and merchandising for
retailers by counting stock, filling the shelves when
needed, and maintaining store displays.
Drop Shippers drop shipper
One who owns the goods he or she sells, but does
not physically handle the actual products.
Parties Involved in Distribution
retailer
Retailers A business that buys goods from wholesalers or
directly from manufacturers and resells them to
consumers.
Brick-and-Mortar brick-and-mortar retailer
Retailer A traditional retailer who sells goods to customers
from a physical store.
E-Tailing e-tailing
Online retailing that involves retailers selling products
over the Internet to customers.
Parties Involved in Distribution
Descriptions
for Rack
Jobbers,
Drop
Shippers,
Brick-and-
Mortar, and
E-Tailers.
Parties Involved in Distribution
Descriptions for
Rack Jobbers,
Drop Shippers,
Brick-and-
Mortar, and E-
Tailers.
agent
Two Types of One who acts as an intermediary by bringing buyers
Agents and sellers together.
Manufacturers’
Representative
Brokers
Channels of Distribution
direct distribution
Channels of A channel of distribution that occurs when the
Distribution producer sells goods or services directly to the
customer with no intermediaries.
Direct
indirect distribution
Distribution A channel of distribution that involves one or more
intermediaries.
Indirect
Distribution
Comparing Distribution Channels for
Consumer Products and for
Industrial Products
Examples of Channels of Distribution
Cross out
the members
that do not
belong in a
particular
channel.
Distribution Planning
A producer uses multiple channels when its product is
for both consumer and industrial markets.
Manufacturers and producers weigh the control they
have over distribution versus costs and profitability.
A manufacturer must decide how much control it wants
over the sales function.
Main Components of
Distribution Planning
Levels of Distribution Intensity
Exclusive distribution
A business that obtains goods from manufacturers
and resells them to organizational users, other
wholesalers, and retailers, also called distributors.
Selective distribution
Distribution in which a limited number of outlets in a
given geographic area sell a manufacturer’s product.
Intensive distribution
Distribution that involves the use of all suitable
outlets to sell a product.
Describe Each Type of Distribution
Locations for hotel brand distribution
◦ Franchising
◦ Ownership
◦ Management contracts
The sales staff and system
◦ Group sales or volume accounts
◦ Reservations and transient sales
◦ National sales offices
◦ Representation firms, consortia
Pushing the product “down” through the
distribution channel TO the customer
◦ Incentives to travel agents and intermediaries
Pulling the customer “up” through the
distribution to the channel
◦ Traditional media/private sales/CRM
History of travel
Selling through wholesalers and retailers usually
is much more efficient and cost effective than
direct sales
Fragmentation of the travel purchase and travel
inventory, transportation (idea of “lift”), hotels,
attractions, meeting facilities, restaurants, and
so on.
E-commerce involves buying and selling
processes supported by electronic
means, primarily the Internet
E-marketing is company efforts to
communicate about, promote, and sell
products and other services over the
Intranet; also web or Internet Marketing
Not easy to separate but different issues
B2C (business to consumer)
◦ Branded websites
B2B (business to business)
◦ Passkey
C2B (consumer to business)
◦ User groups
C2C (consumer to consumer)
◦ Blogs; review sites are blends of above
