Distribution activities provide time and place functions. Distribution activities can also facilitate exchange in providing possession utility. Logistics activities also often assist in the provision of form utility.
Manufacturers provide form utility, but other kinds of utility often must be created by members of the distribution channel. A retailer, for example, provides possession utility by offering financing options. Even form utility is often completed by members of the distribution channel. The finished assembly and adjustment of a bicycle, for example, might be done by the retailer. Brand names and part numbers to match the brand name can be sprayed on spark plugs by a third-party warehouse, which then packages the product in brand labeled boxes. Canned food products can be shipped in "brights", or cans without labels. Labels are then added at a warehouse, depending on whether the can will be sold as a manufacturer brand, a store brand, or a generic.
The major role of distribution channels is to make products available in the right place at the right time in the right quantities at the right price.
dual- / multi-channel distribution
Direct Marketing Channels
Don't intermediaries just add to the final cost of products? Shouldn't a direct channel be the most efficient form of distribution? How can intermediaries increase exchange efficiencies?
SELECTING A DISTRIBUTION CHANNEL
PUSH vs. PULL STRATEGIES
Channel Push Strategy
Channel Pull Strategy
CHANNEL CONFLICT, COOPERATION, AND POWER
Strategic alliances are used increasingly to replace vertical integration.
LOGISTICS AND PHYSICAL DISTRIBUTION
Physical distribution is the process of managing the outbound flow of materials, products, and information from the producer to the final buyer.
This process might involve the functions of:
The primary goal is to minimize costs while maximizing customer service.
Logistics functions are used to coordinate both the inbound flow of raw materials and the outbound flow of finished product. The term "physical distribution" generally used only to mean those activities associated with moving finished product to the final buyer. An understanding of logistics functions is very important to successful marketing, because distribution functions not only add cost to the finished product, but also affect the costs of producing the product and the ability to make the product that is most desired by the final consumer.
Supply chain management is a term that has been used in recent years to refer to the relationships among entities in the entire logistics system to reduce costs and increase efficiencies.
Logistics has to do with the flow of materials; the output of logistics functions is customer service.
Customer service, from a logistics perspective, is concerned with cost trade-offs. E.g., what is the cost of a stockout or of a lost sale? What is the cost of losing a customer because we didn't have the right product at the right place at the right time? How dramatic would be the increase in our costs, however, if we attempted to ensure that we would never run out of product?
The best mode of transportation depends on the tradeoffs between:
Note that speed and cost are generally the most important tradeoffs.
edited 11 JUL 05