Deciding On A Distribution Channel

Deciding on a Distribution Channel
Distribution Channel The way a product reaches the consumer
Two categories of distribution channels Direct Indirect
SLIDE 1
Direct Distribution (Sales) Producer of product sells directly to the consumer Advantages: Less complicated Less expensive Eliminates cost of middle man Allows for market research
SLIDE 2
Direct Distribution (Sales) Disadvantages: Producers may not be good marketers Direct sales take time away from production Producers may not be objective in sales Allows for market research
SLIDE 3
Direct Distribution (Sales) Examples Person to Person Display booths at events Party-plan sales In-home demos
SLIDE 4
Additional Direct Distribution (Sales) Examples Business trade shows Temp space in shopping malls Direct mail Mail order Telemarketing
SLIDE 5
Indirect Distribution Utilizes Middlemen Who Sell Advantages: Middlemen are sales professionals Useful when zoning prevents home sales Useful when location of home base is too far from consumers Greater sales volume potential Frees producer to focus on production
SLIDE 6
Indirect Distribution Disadvantages: Producer removed from consumers More expensive than direct distribution Less control over product
SLIDE 7
Indirect Distribution Examples Sales Representatives Wholesalers, Distributors, Jobbers Wholesale Trade Shows Wholesale to Retailers Consignment Mail Order
SLIDE 8
Indirect Distribution Channels Wholesalers Distributors Jobbers
SLIDE 9
Manufacturer or Sales Reps Move merchandise Call on retailers Handle marketing within a territory Get commission on orders
SLIDE 10
Wholesale Trade Shows Build long lasting relationships Good packaging and nice display are critical Quality business cards, brochures and/or free Sales literature and pre-determined pricing structure will help in attracting retail accounts
SLIDE 11
Selling Wholesale to Retailers Producer can make contact Must know trade practices Need written agreements Cannot undercut retail price
SLIDE 12
Consignment Contracting with Retailers to Display and Sell Product

Advantages: Exposure without overhead expenses of utility and space Disadvantages: .
Money tied up in inventory with possibility of damage Merchandise may not be displayed to advantage Merchandise may not be aggressively marketed
SLIDE 13
Mail Order Producers may develop their own catalogs, fliers, or indirect distribution Buy ad space in an established catalog, magazine, tabloid, etc.
SLIDE 14
Mail Order Timing is important Knowledge of postal regulations, FTC rules, and tax laws in each state where merchandise is exchanging hands Need good mailing lists
SLIDE 15
Securing Mailing Lists Can be rented or purchased Need clear description of customer profile Check library for mailing list brokers Check listings in trade journals
SLIDE 16
When Evaluating Mail-Order Media, Ask About: Demographics of readership (sex, age, ethnicity) Regional publications Number of ongoing advertisers Circulation numbers
SLIDE 17
Magazine Advertising Advantages:

Longer shelf life than other ad media Often read cover to cover by different people Associates your product with prestige of magazine More sophisticated production process and better quality paper than newspapers and most catalogs
SLIDE 18
Magazine Advertising Disadvantages: Longer lead from ad placement time to published ad High cost
SLIDE 19
Questions When Considering Catalogs

Is there a fee to be included in the catalog or do you pay a percentage of the sales? Is there minimum inventory that must be available? What is your knowledge of laws and regulations? Is merchandise warehoused by catalog company or does producer drop ship.
SLIDE 20
Questions When Considering Catalogs How is merchandise evaluated actual product or photographs? What is the pricing structure? What is the time frame for catalog production and distribution?
SLIDE 21
Additional Indirect Distribution Examples TV Marketing Computer Networks Vending Machines / Rack Merchandising Cooperatives Franchises Multilevel Marketing (MLM)
SLIDE 22
Telemarketing A sales approach conducted entirely by phone.
SLIDE 23
Television Marketing Cable network channels Infomercials
SLIDE 24
Computer Networks Vast online information system that links businesses and potential customers all over the world.
SLIDE 25
Internet Marketing Web sites Social Marketing Internet Sales
SLIDE 26
Vending Machines & Rack Merchandising
SLIDE 27
Cooperative A business formed by a group of people to market their products together
SLIDE 28
Franchises Buying continuous direction and support from people who are experts in their field Owned and managed by self-employed business people
SLIDE 29
Franchise Agreements May Include Using the franchisors name Help in finding a location Store design and outfitting
SLIDE 30
Franchise Agreements May Include Advertising Acquiring Supplies Management Training Protected Territory
SLIDE 31
Franchise Agreements May Include Financing Marketing and Promotion Record Keeping
SLIDE 32
Multi-Level / Network Marketing People sell at different levels in company hierarchy. Distributors recruit new people to join the program. The practice is sometimes called sharing business.
SLIDE 33
Possible Distribution Channels

Direct Channel: Producer > Consumer Single Channel (w/ middleman): Producer > Retailer > Consumer Double Channel (w/ middleman): Producer > Wholesaler > Retailer > Consumer Simultaneous Dual Channel: (Producer > Wholesaler > Retailer) and (Producer > Consumer)
SLIDE 34
Making Choices Consider: Opportunities available Appropriate for your business Delivery time frame Packaging for shipment Cost Keep up to date
SLIDE 35

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