Channel flow and Retailing

The distribution mix

The success of any product depends on its distribution mix: the combination of distribution channels of the firm uses to get products to end-users. Intermediaries help to distribute a producer's goods: wholesalers sell products to other businesses, which resell them the final consumers. Retailers sell products directly to consumers.

Among the eight distribution channels, the first four are aimed at getting products to consumers, the fifth is for consumers or business customers, and the last three are aimed at getting products to business customers.
Channel 1 involves direct sales to consumers
Channel 2 includes a retailer
Channel 3 in involves both a retailer in a wholesaler
Channel 4 includes an agent or broker
Channel 5 includes only an aged between the producer and consumer
Channel 6, which is used extensively for e-commerce, involves a direct sale to an industrial user
Channel 7 entails selling to business users through wholesalers
Channel 8 includes retail superstores they get products from producers or wholesalers (or both) for reselling to business customers

Consumer Channel

Industrial channel

Retailing

U.S. retail operations fall under two classifications. 
Product line retailers featuring broad product lines include department stores in supermarkets. Small specialty stores are clearly defined market segments by offering full product lines in their rope product fields. Bargain retailers carry wide range is a products income in many forms, including discount houses, catalog showrooms, factory outlets, warehouse clubs (or wholesale clubs), and convenience stores.

Nonstore retailing includes direct response retailing, in which firms make direct contact with customers to inform them about products and take sales orders. Mail order (or catalog marketing) is a form of direct response retailing, as is telemarketing. Electronic retailing uses communications networks that allow sellers to connect to consumers computers. Internet retail shopping includes electronic storefronts where customers can examine the stores products, place orders, and make payments electronically. Customers can also visit cyber malls -- a collection of virtual storefronts representing a variety of product lines on the Internet.

Physical Distribution

Physical distribution refers to all the activities needed to move products from producers to consumers, so that products are available when and where customers want them at reasonable cost. Physical distribution activities include providing customer services, warehousing, and transportation of products. Warehouses provide storage for products and may be either public or private. Transportation operations physically move products from suppliers to customers. Trains, railroads, planes, water carriers (boats and barges), and pipelines are major transportation modes used in the distribution process.

Promotions

Although the ultimate goal of promotion is to increase sales, other roles include communicating information, positioning a product, adding value, and controlling sales volume. In deciding on the appropriate promotional mix -- the best combination of promotional tools (for example advertising, personal selling, public relations) -- marketers must consider the good or service being offered, characteristics of the target audience and the buyer's decision process, and of course the promotional mix budget.

Advertising media includes television, newspapers, direct mail, radio, magazines, outdoor advertising, and the Internet, as well as other channels such as Yellow Pages, movies, special events, and door-to-door selling. The combination of media that a company chooses is called its media mix.

Personal Selling

Personal selling tasks include order processing, creative selling (activities that helped persuade buyers), and missionary selling (activity that promoted firms and products). Point-of-purchase (POP) displays are intended to grab attention and help customers find products in stores. Purchasing incentives include samples (which let customers try products without having to buy them) and premiums (rewards for buying products). At trade shows, seller's rent booths to display products to customers who have an interest in buying. Contests are intended to increase sales by stimulating buyers interest in a product.

Importance Terms

intermediary -- individual or firm that helps to distribute a product
wholesaler -- intermediary who sells products to other businesses for resale to final consumers
retailer -- intermediary who sells products directly to consumers
distribution channel -- network of interdependent companies to which a product passes from producer to end-user
direct channel -- distribution channel in which a product travels from producer to consumer without intermediaries
sales agent/broker -- independent intermediary who usually represents many manufacturers and sells to wholesalers or retailers
industrial (business) distribution -- network of channel members involved in the flow of manufactured goods to industrial customers
merchant wholesaler -- independent wholesaler who takes legal possession of goods produced by a variety of manufacturers and then resells them to other businesses
e-intermediary -- Internet distribution channel member that assists in moving products through to customers or that collects information about various sellers to be presented in convenient format for Internet customers
department store -- large product line retailer characterized by organization into specialized departments
supermarket -- large product line retailer offering a variety of food and food related items in specialized departments
specialty store -- small retail store carrying one product line or category of related products
bargain retailer -- retailer carrying a wide range of products at bargain prices
discount house -- bargain retailer that generates large sales volume by offering goods at substantial price reductions
catalog showroom -- bargain retailer in which customers place orders for catalog items to be picked up on premises where houses
factory outlet -- bargain retailer added by the manufacturer whose products bid to sells
warehouse club (or wholesale club) -- bargain retailer offering large discounts on brand-name merchandise to customers who have paid annual membership fees
convenience store -- retail store offering easy accessibility, extended hours, and fast service
direct response retailing -- nonstore retailing by direct interaction with customers to inform them of products and to receive sales orders
mail order (or catalog marketing) -- form of nonstore retailing in which customers place orders for catalog merchandise received to the mail
telemarketing -- nonstore retailing in which the telephone is used to sell directly to consumers
electronic retailing -- nonstore retailing in which information about the sellers products and services is connected to consumers computers, allowing consumers to receive the information and purchased the products in the home
e-catalog -- nonstore retailing in which the Internet is used to display products
electronic storefront -- commercial web site in which customers gather information about products, buying opportunities, placing orders, and paying for purchases
cybermall -- collection of virtual storefronts (business web sites) representing a variety of products and product lines on the Internet
interactive marketing -- nonstore retailing that uses a Web site to provide real-time sales and customer service
video marketing -- nonstore retailing to consumers via standard and cable television
physical distribution -- activities needed to move the product efficiently from manufacturer to consumer
warehousing -- physical distribution operation concerned with the storage of goods
private warehouse -- warehouse owned by and providing storage for single company
public warehouse -- independently owned and operated warehouse stores goods for many firms
order fulfillment -- all activities involved in completing a sales transaction, beginning with making the sale and ending with on-time delivery to the customer
promotion -- aspect of the marketing mix concerned with the most effective techniques for selling a product
positioning -- process of establishing identifiable product image in the minds of consumers
promotional mix -- combination of tools used to promote products
advertising -- promotional tool consisting of paid, not personal communications used by an identified sponsored to inform an audience about a product
advertising media -- variety of communication devices for carrying a seller's message to potential customers
direct-mail -- advertising medium in which messages are mailed directly to consumers homes or places of business
media mix -- combination of advertising media chosen to carry message about a product
personal selling -- promotional tool in which a salesperson communicates one-on-one with potential customers
order processing -- personal selling task in which salespeople receive orders and see to their handling and delivery
creative selling -- personal selling task in which salespeople tried to persuade buyers to purchase products by providing information about their benefits
missionary selling -- personal selling tasks and which salespeople promote their firms and products rather than try to close sales
sales promotion -- short-term promotional activity designed to stimulate consumer buying or cooperation from distributors and sales agents
coupon -- sales promotion technique and what a certificate is issued entitling the buyer to reduced price
point-of-purchase (POP) display -- sales promotion technique in which product displays are located in certain areas to stimulate purchase
premium -- sales promotion technique and which offers are free or reduced price items are used to stimulate purchases
trade show -- sales promotion technique in which various members of an industry gather to display, demonstrate, and sell products
publicity -- promotional tool in which information about a company or product is transmitted by general mass media
public relations -- company influenced publicity directed at building goodwill with the public or dealing with unfavorable events