CHAPTER 10: PLACE OF DISTRIBUTION INTENSITY OF CHANNEL DISTRIBUTION

1. Exclusive Distribution - limited number of middlemen

Distribution Planning is systematic decision-making used in a geographic area. They are assigned to specific
regarding the physical transfer of goods and services brand.
from the manufacturer to the final user. 2. Selective Distribution - The middlemen shall choose
a location for selling.
• Transportation, transfers the finished goods from the 3. Intensive Distribution - The middlemen can distribute
producer and manufacturer to the ultimate buyer the product using this type of intensity to capture the
• Inventory Management, the process of keeping the whole market.
product safe and maintaining its stock to avoid shortage 4. Dual Channels of Distribution - The middleman can
of supply. either use exclusive, selective, or intensive to obtain
• Customer Transactions, follow-ups on customers, faster service and high-profit
feedback, and satisfaction level after buying the product.
Physical Distribution covers the broad range of full
Channel Distribution is made up of people or activities in connection with the efficient delivery of raw
organizations involved in the distribution process. materials, semi-finished products to designated places,
Channel Members: times and in proper conditions.
1. Manufacturers - makers or producers of the - Distributors must see to it that they obtain legality
final product. in delivering those items.
2. Service Providers - provide intangible products `
3. Wholesalers - the activity of selling products to Physical Distribution may involve:
retailers, organizational users, and selling for 1. Customer Service - satisfy the customer to its max.
resale/ they provide bulk quantity of products to Lvl
resale. 2. Shipping - transfer a product from one place to other
4. Retailers - sell goods in small quantities direct to normally a far place.
consumers 3. Warehousing - store the raw materials, semi
5. Marketing Specialists - an expert in the field of processed goods to produce a finished product.
marketing 4. Inventory Control - Provide sufficient supply of raw
6. Consumers - final and ultimate users of the materials at the right quantity, time and quality.
product. 5. Packaging - product presentable before the physical
appearance (taste, color, size, weight, and shape)
Middlemen - the person who acts as go between the 6. Receiving Materials Handling - proper manage of
producer and consumer. ( refers to: wholesalers, the materials for the final product.
retailers, and marketing specialists)

BASIC TYPES OF CHANNEL DISTRIBUTION Transportation

- transport the available goods into the customer custody.
• Direct Channel of Distribution - transfers or - proper distribution of products for customer satisfaction
movements of goods and services from manufacture to and continuous patronage.
the final user without the intervention of an independent
middleman. Five basic transportation forms:
- has limited target market 1. Railroads
- This is the channel (intermediaries) chosen when 2. Motor Carriers
the firm wants to control the entire marketing 3. Waterways
program. 4. Pipelines
5. Airways
• Indirect Channel of Distribution - transfer or
movements of tangible goods and intangible services
from manufacturer (producer) to independent Transportation Services are companies and organization
intermediaries to customer. are marketing specialists that predominantly handle the
- Utilized by firms who wants to expand their shipments of small and moderate packages to avoid
market (users) delay
- Increase sales, volumes and growth
3 kinds of services companies are government parcel 3. Bonded Warehousing is where imported or taxable
post, private parcel (UPS) and express (FedEx). merchandise of the organization is stored and can be
released for sale only after the taxes are paid. The items
• Government Parcel Post - documents send in the cannot be released without sufficient payment of
custody of the local or national level to avoid loss and appropriate the taxpayer or the customer.
delay
• Containerization - goods in sturdy containers that can 4. Field Warehousing is where a receipt is issued by a
be loaded safely on trains, trucks, ships, or planes. public warehouse for goods or tangible products stored
• Freight Forwarding - they pick up merchandise, in public warehouse or in transit to consumers and
finished goods, and arrange for delivery at buyers’ door. services as collateral for a loan either in the bank or any
financial institution that provides borrowings.
INVENTORY MANAGEMENT
Provides continuous flow of goods to match the
RETAILING
quantity and quality of goods kept in proper
- Business activities involved with the sales of goods
inventory as closely as possible.
and services to the final and ultimate user of products
for personal, family or household use.
TWO CONCEPTS IN INVENTORY MANAGEMENT
1. JUST IN TIME (JIT) INVENTORY SYSTEM or
QUICK RESPONSE (QR) INVENTORY TYPES OF RETAILERS
SYSTEM - It reduces the amount of inventory it I. Method of Ownership
keeps on hand by ordering more frequently and in
lower quantity of raw materials even the 1. Independent Retailer - Operates only one outlet
semi-processed goods. because of limited and the market. Ex. personal service,
- to immediately act in accordance with a convenient location and close resources such as the
the required units of materials that are manpower, machine, materials, method.
needed in the production of goods.
2. ELECTRONIC DATA INTERCHANGE (EDI) 2. Retail Chain - Involves common ownership of multiple
- It reduces markdowns by maintaining outlets through its dealership, with a centralized
sufficient supply and reduces inventory systematic purchasing process and efficient
carrying cost by helping to speed the flow decision-making, specific markets, and a well-known
of information and merchandise to the company name as well as the organization.
organization.
3. Retail Franchising - Contractual arrangement between
WAREHOUSING a franchisor and a retail franchisee.
- Involves physical facilities used primarily for
the storage of goods and maintenance of 4. Leased Department - a retail store that is rented to an
supply. outside party. The organization can attract other
- enterprises to maximize the place by providing enough
1. Private Warehouses are owned, managed, and incentives to the lessee especially if the building is new
operated by firms that store and distribute their own and unoccupied.
products. There are no other parties involved. The owner
is the user of the facility so they control the whole 5. Consumer Cooperative - A retail firm owned and
operation of the warehouses. managed by consumer members who invest and share
profits. The members can decide what products to be
2. Public Warehouses provide storage, safekeeping of sold and what incentives are to be given to the consumer
the inventory, and related physical distribution services to which are the members of the organization such as
any interested firm or individual on a rental basis either cooperatives.
daily, weekly, or monthly manner.
II. Store Strategy Mix attain satisfaction by providing convenience and safety
to the customers.
1. Convenience Store - Food store that is located along
passersby with a long hours, products are needed mostly 3. Direct Marketing - Exposing the consumer to a good
by the consumer but with limited items. or service via a non-personal medium and orders by
phone or telemarketing or through intemet using email.
2. Conventional Supermarket - Food store with a wide
range of product items and related products with STORE LOCATION is looking for a better place selling a
affordable prices, self-service and one stop grocery certain product. Factors to be considered:
shopping for customer. 1. Accessibility to the market
2. Free from danger
3. Superstore - Sells food and non-food items like office 3. Convenience to the suppliers
supplies, apparel, beverages, bakeshop products and
small household appliances. Basic forms of store locations:
1. Isolated Store - Retail outlet which are located on a
4. Combination Store - Combines food or grocery and street where there are no adjacent stores that draws
general merchandise sales. customer traffic.

5. Specialty Store - Provides one service line or line of 2. Unplanned Business District - Two or more stores are
goods to attract same line of customers. located close to one another which sometimes produces
healthy competition by attracting more customers.
6. Variety Store - Sells a wide and variety of assorted
inexpensive and popularly priced merchandise that are 3. Planned Shopping Centre - Centrally owned or
tailored for consumers' needs and wants. managed facilities operated as an entity for the
customers with large parking area to accommodate
7. Department Store - Sells a general line of apparel, more customers and with balanced tenancy.
linens, furniture, home furnishing and appliances etc..
a. Traditional department stores - organization with SCRAMBLED MERCHANDISING
high name recognition, fashion effective leader - It takes place when a retailer put together, goods
and often dominates the stores around the and services that are unre to each other or the
vicinity. original business of the retailer that captures the
different ns segments.
b. Full-line discount store - merchandise
assortment and variations, self-service with
shopping department with affordable prices WHOLESALING
- the process of buying, carrying and
8. Retail Catalogue Showroom - Customers shop at a merchandising its subsequent resale to
warehouse-type store. There are limited displays and no organizational customers, retailers and other
actual or physical representation of the customers. wholesalers but not the sale of significant
quantity to final consumers.
III. Non-store operations

1. Vending Machines - Coin or card operated machine

which dispenses goods or services. It eliminates the
needs for hired sales personnel, allows 24-hour sales
operation and can be placed outside of the store even
without monitoring.

2. Direct Selling - Includes personal contact with

consumers in their homes and telephone solicitations to