University of Technical Education

University of Sunderland

Chapter 9

HO CHI MINH CITY 2009

OUTLINE
1- Place
2- Distribution channels
3- Points in the chain of
distribution
4- Selection of distribution channel
5- Physical distribution

1- Place
Distribution: process of getting
products to consumers.
Chain of distribution: the process
which enables the flow of goods
between the producer and the
consumer.
Distribution channel: the means of
getting the goods to the consumer.
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The five rights of distribution

The RIGHT product
In the RIGHT place
At the RIGHT time
In the RIGHT quantity
For the RIGHT price

2- Some basic functions contributing

to distribution channel
Transport
Stockholding and storage
Local knowledge
Promotion
Display

Factors affecting the nature

of the supply chain
Customer characteristic
Product characteristic
Company characteristics

Perishability

Number
Size
of organisation
Bulk

Geographic
Product
mix dispersion

Product
standardisation
Past
Purchasing
patterns
channel
mix
Service
support

Buyers
susceptibility
to
Past
channel
mix
requirement
different selling
experience
Unit
value
methods.

3- Points in the chain of distribution

Manufacture
Wholesaler
1

4
3

Retailer

Consumer
Next
Next

 Retailer
Wholesalers (offer a range of
products)
Distributors and dealer (offer
narrower product range)
Agents (earn a commission)
Franchisees (under the name
of a parent organisation)
Multiple stores (supermarkets)
Direct selling
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4- Selection of distribution channel

Manufacturer

Manufacturer

Manufacturer

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Wholesaler

Consumer

Retailer

Consumer

Retailer

Consumer

Channel design decisions

Customer
Product characteristics
Distribution characteristics
Channel chosen by competitors
The suppliers own
characteristics
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Channel decision
What types of distributor are to be used?
How many of each type will be used?
Who will carry our specific marketing
tasks?
How will performance of distributors be
evaluated?

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Supplier A

Supplier B

Supplier C

Supplier D

Intermediary
Intermediary

Customer A

Customer B

Customer C

Customer D

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5- Physical distribution
Transportation
Location of warehouses
Logistics management

13

Modes of transport
Road transport

14

Modes of transport
Rail transport

15

Modes of transport
Water transport

16

Modes of transport
Air
transport

17

Location of warehouse
Selecting the area (market
potential)
Choosing the site (local transport
facilities, its geographical
position)
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Logistic management
Customer benefits
Cost savings
Trends

19

Just in time (JIT)

Definition
JIT: an inventory control system which
delivers input to its production or distribution
site only at the rate and time it is needed.
Thus it reduces inventories whether it is
used within the firms in the distribution
system channel. It is a pull system which
replaces buffer inventories with channel
member cooperation.
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