DISTRIBUTION A VITAL PROCESS IN BUSINESS WORLD
PRESENTED BY: GROUP 5 5
PHAM NHU HUE
2157010244
PHAM TRAN VAN QUANG
2157010384
DINH THI NGOC HONG
2157020241
INTRODUCING VU THI MINH NGUYET
OUR TEAM
2157010296
DO THI THU AN
2157010191
NGUYEN BAO DO
2157010228
BUI THI VAN HA
2157010232
INTRODUCTION TO
DISTRIBUTION
Definition & History
01 LIST
OF
THE DISTRIBUTION MIX
Middlemen & Channels 02 CONTENT
TYPES OF MIDDLEMEN
Wholesalers 03
WHAT IS
DISTRIBUTION?
Distribution refers to the
process of moving a
product or service from
the producer to the
consumer
Như Huế
LET’S DIVING INTO
THE WORLD OF
DISTRIBUTION
ESPRIT’S STORY
Esprit de Corp, an apparel company,
decided to open their own retail stores
globally. Esprit’s strategic shift in
distribution with the challenges and
opportunities
THE EVOLUTION
IN THE PAST
Goods were produced and sold locally.
Producers sold their goods directly to
consumers
CIVILIZATIONS GREW
The need for more complex distribution
systems arose
Traders and merchants started to play
an essential role
INDUSTRIAL REVOLUTION
The face of distribution changed
dramatically
THE EVOLUTION
IN THE EARLY 20TH CENTURY
Further advancements in warehousing
and trucking transformed distribution
once more
TODAY
Distribution has become an
intricate process involving
numerous activites
MODERN
DISTRIBUTION
SYSTEM
MISCONCEPTIONS
OF DISTRIBUTION
ONLY SHIPPING?
Encompasses a range of tasks
NOT AFFECTING
SALES?
A key part of the marketing
mix and impact sales
THE
DISTRIBUTION MIX
MIDDLEMEN
WHO IS A
MIDDLEMAN?
Middlemen specialize in performing
crucial activities involved in the
purchase and sale of goods in their
flow from producers to the ultimate
buyers.
They typically do not produce
anything but possess extensive
knowledge of the market, thereby
charging a commission or a fee for
their services.
Their position is between the producers and ultimate buyers.
FUNCTIONS OF
MIDDLEMEN
Providing a sales force:
middlemen help the
producers to visit many
customers for products.
FUNCTIONS OF
MIDDLEMEN
Providing market
information: Middlemen are
in an ideal position to tell
producers which products
are currently popular and to
relate other useful
marketing information.
FUNCTIONS OF
MIDDLEMEN
Providing promotional
support: Middlemen often
help a producer by advertising
certain product lines to boost
their own sales.
FUNCTIONS OF
MIDDLEMEN
Sorting, standardizing, and
dividing: Middlemen break
large shipments from
producers into more
convenient units, sorting
bulk quantities into smaller
packages and grading
products for quality and
uniformity.
FUNCTIONS OF
MIDDLEMEN
Carrying stock: Most
middlemen maintain an
inventory of merchandise,
which they buy from a
manufacturer in the hope of
eventually selling it to the
retailer.
FUNCTIONS OF
MIDDLEMEN
Delivering the product: By
shortening the distance
between producer and
buyer, the middlemen may
speed up delivery.
FUNCTIONS OF
MIDDLEMEN
Assuming risks: By dealing
with a few middlemen
rather than a host of
ultimate buyers, the
producer reduces chances
of bad debt losses.
FUNCTIONS OF
MIDDLEMEN
Providing financing:
Sometimes a middleman
that is much larger than the
producers it represents can
provide them with loans.
FUNCTIONS OF
MIDDLEMEN
Buying: Middlemen relieve
the ultimate user of part of
the buying responsibility.
IMPORTANCE OF
MIDDLEMEN
Middlemen ensure that
there is a seamless flow
of goods in the market by
matching supply and
demand.
IMPORTANCE OF
MIDDLEMEN
Middlemen provide
feedback to the producers
about the market, thus
influencing the decisions
made by the
manufacturers.
IMPORTANCE OF
MIDDLEMEN
Buyers, on the other hand,
gain from the services
offered by middlemen, such
as promotion and delivery.
DISADVANTAGES
OF MIDDLEMEN
As goods exchange hands
from one middleman to the
other, their prices inflate.
DISADVANTAGES
OF MIDDLEMEN
Consumers ultimately must
bear the price of having
intermediaries in the channel.
CHANNEL
ALTERNATIVES
Ngọc Hồng
CHANNEL
ALTERNATIVES
DEFINITION
Channel alternatives refers to different
methods or routes through which a
company can distribute its products or
services to customers.
Channel alternatives ~ Distribution channels/Marketing channels
Ngọc Hồng
CATEGORY
Ngọc Hồng
CATEGORY
CHANNELS FOR CONSUMER GOODS
CHANNELS FOR INDUSTRIAL GOODS
CHANNELS FOR SERVICES
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → CONSUMER
Most direct
Eg. Etsy
Marketplace for handmade goods, vintage items, craft supplies
Sell products directly to consumers on an e-commercial site
Website: Etsy.com
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → RETAILER → CONSUMER
Indirect
Walmart sells products to the consumers
Eg. Nestle
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → WHOLESALER → RETAILER → CONSUMER
Indirect way
Most common channel
Most advantageous alternative for small producers
Eg. Parle G (biscuits company)
1500 wholesalers - 425,000 retailers
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → AGENT/BROKER → WHOLESALER → RETAILER → CONSUMER
Both agents and brokers don’t possess goods
Simplify buying and selling process
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → AGENT/BROKER → WHOLESALER → RETAILER → CONSUMER
Agent
Represents two or more manufacturers’ complementary lines
on a continuous basis
Compensated by commission
Ngọc Hồng
CHANNELS FOR CONSUMER GOODS
PRODUCER → AGENT/BROKER → WHOLESALER → RETAILER → CONSUMER
Broker
Most commonly found in the food, real estate, and insurance
industries
Represent several manufacturers of noncompeting products on
a commission basis
Eg. Unilever
Ngọc Hồng
CHANNELS FOR INDUSTRIAL GOODS
INDUSTRIAL GOODS - products that are used by businesses or
organizations in the production of goods or the provision of services.
PRODUCER → CONSUMER
The most common channel
Direct distribution
Some producers may need middlemen: wholesalers,
retailers, agents/brokers
Ngọc Hồng
CHANNELS FOR INDUSTRIAL GOODS
PRODUCER → AGENT/BROKER OR WHOLESALER → CONSUMER
The more fragments in the
industry, the more reliance on
middlemen
Eg: Paint companies work with
agents or wholesalers to distribute
easily.
Ngọc Hồng
CHANNELS FOR SERVICES
PRODUCER → CONSUMER
Most services are distributed directly to the customers
Eg: hair stylists/manicurists
Ngọc Hồng
CHANNELS FOR SERVICES
PRODUCER → AGENT/BROKER → CONSUMER
Some services companies
also need to coordinate
with agents/brokers.
Eg: Travel companies,
Insureance companies
Ngọc Hồng
CHANNEL ALTERNATIVES
Ngọc Hồng
CHANNEL
SELECTION
Presented: Thu An
WHAT IS THE STANDPOINT ABOUT DECIDING ON A DISTRIBUTION MIX?
WHAT IS THE STANDPOINT ABOUT DECIDING ON A DISTRIBUTION MIX?
Choosing from among the many alternatives
TLY T O
L D IRE C
CE R SEL EN ?
P RO DU D DL EM
D A N M I
SHOUL OR RE LY O
USE RS
END
SHOU
LD MO
CHAN RE TH
NEL B AN ON
E EMP E
LOYED
?
CH M ID D LE MEN
WHI
BE SEL EC TED?
SHOULD
ON BE
R IB UTI
D DIST ?
O U L TIM E
SH O V ER
V ISE D
RE
RELATED TO THE PRODUCT AND
THE MARKET
RELATED COMPANY:
ITS STRENGTHS, WEAKNESSES, AND OBJECTIVES
COST CONTROL
SHORT CHAIN
CONTROL
COST
LONG CHAIN
COST
CONTROL
FACTORS
WHEN CHOOSING FROM
AMONG THE ALTERNATIVES
INTENSIVE DISTRIBUTION
TYPE OF
DISTRIBUTION SELECTIVE DISTRIBUTION
STRATEGIES
EXCLUSIVE DISTRIBUTION
1. PRODUCT-RELATED
FACTORS
INTENSIVE DISTRIBUTION
TYPE OF 2. BUYER-RELATED
DISTRIBUTION SELECTIVE DISTRIBUTION FACTORS
STRATEGIES
EXCLUSIVE DISTRIBUTION 3. COMPANY-RELATED
FACTORS
PRODUCT-RELATED FACTORS
P/X TOOTHPASTE
CONVENIENCE GOOD
P/X TOOTHPASTE
INTENSIVE
DISTRIBUTION
CONVENIENCE GOOD
INTENSIVE
DISTRIBUTION
APPROACH TO DISTRIBUTION THAT
INVOLVES PLACING THE PRODUCT
IN NEARLY EVERY AVAILABLE
OUTLET.
INTENSIVE
DISTRIBUTION
APPROACH TO DISTRIBUTION THAT
Cover outlets without middlemen INVOLVES PLACING THE PRODUCT
IN NEARLY EVERY AVAILABLE
OUTLET.
Largest and best-financed
SELECTIVE
DISTRIBUTION
SELECTIVE
DISTRIBUTION
APPROACH TO DISTRIBUTION THAT RELIES
ON A LIMITED NUMBER OF OUTLETS
FEWER OUTLETS
SELECTIVE
DISTRIBUTION
APPROACH TO DISTRIBUTION THAT RELIES
ON A LIMITED NUMBER OF OUTLETS
EXCLUSIVE
DISTRIBUTION
EXPENSIVE SPECIALTY
EXCLUSIVE
DISTRIBUTION
APPROACH TO DISTRIBUTION IN WHICH
MIDDLEMEN ARE GIVEN THE EXCLUSIVE
RIGHT TO SELL A PRODUCT WITHIN A GIVEN
GEOGRAPHIC AREA
BUYER-RELATED FACTORS
CHANNEL SELECTION DECISIONS
THE LOCATION OF CUSTOMERS’ APPROACH
THE CUSTOMERS TO SHOPPING
DIRECT
CHANNEL
OF
DISTRIBUTION
CHANNEL SELECTION DECISIONS
THE LOCATION OF CUSTOMERS’ APPROACH
THE CUSTOMERS TO SHOPPING
TRENDS & BEHAVIOR
COMPANY-RELATED FACTORS
HIRE A LARGE ENOUGH
SALES FORCE
BUYING TRUCKS
SMALL/NEW
COMPANIES
CALL ON A HOST OF
RETAIL OUTLETS
BUILDING LARGE
WAREHOUSES
HIRE A LARGE ENOUGH
SALES FORCE
BUYING TRUCKS
SMALL/NEW
MIDDLEMAN
COMPANIES
CALL ON A HOST OF
RETAIL OUTLETS
BUILDING LARGE
WAREHOUSES
MULTIPLE CHANNELS
REACH
DIFFERENT
TARGET MARKETS
CHANNEL
CONFLICT
DEFINITION
TYPES
SOURCES
CONSEQUENCES
SOLUTIONS
Minh Nguyet
Minh Nguyet
DEFINITION
Channel conflict refers to any dispute, disagreement or
other similar issues that may occur between two or more
channel partners.
01 HORIZONTAL CONFLICT
TYPES OF
CHANNEL CONFLICT
02 VERTICAL CONFLICT
03 MULTI - CHANNEL CONFLICT
Minh Nguyet
Minh Nguyet
Horizontal conflict
It occurs when channel members on the same level
disagree or conflict with each other
Example:
Distributor 1 Distributor 2 Distributor 3
Minh Nguyet
Vertical conflict
It occurs when distribution channel members at different
levels struggle.
Example:
Manufacturer Distributor Retailer
Minh Nguyet
Multi-channel conflict
The channel partners involved in a particular distribution
channel encounter an issue with the other channel
Example:
store E-commerce
Competing goal
Lack of communication
SOURCES OF
Different marketing or
CHANNEL strategic approaches
CONFLICT
Resistance to change
Minh Nguyet
Competing goal
SUPPLIER RESELLER
Wants reseller to: Wants to:
Accept lower gross margins Achieve higher gross margins
Hold more inventory per unit
Spend more to support the Decrease inventory
product line Reduce expenses
Get by without allowances Receive higher allowances
Minh Nguyet
Competing goal
Lack of communication
SOURCES OF
Different marketing or
CHANNEL strategic approaches
CONFLICT
Resistance to change
Minh Nguyet
CONSEQUENCES SALE DETERIORATION
PRICE WARS CUSTOMER’S DISSATIFATION
REGULAR COMMUNICATION
CHANNEL CONFLICT
HOW TO MANAGE
Regular feedback
Frequent interations
FOSTER COLLABORATION IN PLANNING
Create a shared vision and goals
Collaborate on strategies, marketing
campaigns, and product launches
ESTABLISH CONSISTENT POLICIES
Outline guidelines for pricing,
promotions, territories, and conflict
resolution
Establishing a fair and transparent
framework
TYPES OF
MIDDLEMEN
PRESENTED BY BẢO ĐÔ
WHOLESALERS
DEFINITION
Firms that sell products to other firms that
buy them for resale or for industrial use.
Wholesalers are not manufacturers.
AN OVERVIEW
The wholesale industry is highly competitive.
Sometimes they have to face big challenges
suddenly arise.
The technology, E-commerce and digital
platforms were becoming more important
for their business operations.
WHAT PERCENTAGES OF ALL WHOLESALERS DEAL IN VARIOUS KINDS OF MERCHANDISE
==> Apply digital transformation, focus on sustainability, and
foster collaborative partnerships.
MERCHANT WHOLESALERS
Independent wholesalers that
take legal title to products.
“Rack jobbers”
AGENTS AND BROKERS
AGENTS Wholesalers that do not take title
to products but that receive a
commission for selling products.
Some agents we normally see are
Travel Agent, Insurance Agent, or
Sports Agent…
Agents that specialize in a BROKERS
particular commodity
Helping companies to secure a
favorable price
Real estate brokers, insurance
brokers, and securities brokers,...
all are paid a commission for
arranging transactions
PRODUCER-OWNED
WHOLESALERS
WHOLESALER BUSINESSES
BRANCH SALES
OFFICE OFFICE
Vân Hà
DEFINITION
wholesaler operation, owned wholesaler operation, owned
by the producer that carries by the producer that carries no
stock and sells products stock but takes orders
ADVANTAGES
A high degree of control over the Lower operational costs
entire distribution process Various locations to diversify
Tailor marketing and sales their market reach
strategies and build stronger Adjust their sales strategies
customer connections swiftly
Respond quickly to changes in Less inventory risks
customer demand and market
trends
DISADVANTAGES
Higher operational costs Less control over product
Overstocking or understocking availability
issues A reduced ability to engage
Susceptible to market fluctuations directly with customers
Struggle to adapt to regional
preferences and nuances
Increased shipping costs.
KEY DIFFERENCES
The presence of inventory,
control and customer
interaction, cost structure,
and market reach
CONCLUSION
The choice between two
types depends on producer’s
financial resources, business
objectives and inventory
management capabilities.
THANKS FOR
LISTENING
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