Business Management

Day 6 – September 22nd 2016

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Business Management – Let’s recap!

Finance &
1. Change
Accounting

2. Culture
Business
Organization
Operations 3. Ethics
&
Environment

1. Globalization
1. Innovation
Human
Marketing
Resources
2. Strategy
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And we come to the last P - PLACE

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The PLACE component of the Marketing Mix

The PLACE element of the marketing mix has to do with getting the
goods from the producer to the consumer.

Distribution Channel

A distribution channel in marketing refers to the path or route through

which goods and services travel to get from the place of production
or manufacture to the final users.

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B2B versus B2B distribution
Business-to-business (B2B)
distribution occurs between a
producer and industrial users of raw
materials needed for the
manufacture of finished products.
For example, a logging company
needs a distribution system to
connect it with the lumber
manufacturer who makes wood for
buildings and furniture
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Business-to-customer (B2C)
distribution occurs between the
producer and the final user. For
instance, the lumber manufacturer
sells lumber to the furniture maker,
who then makes the furniture and sells
it to retail stores, who then sell it to the
final customer.
Main Differences of B2B
(please refer to detailed article on Classroom)

• Sales Cycle is longer

• Fewer Identifiable Buyers - Based on statistics from the 2008 US

Census, B2C decision makers outnumber B2B decision makers 28 to 1.

• Motivation to buy (Marketing Approach) - Consumers frequently

buy based on emotion or impulse, but B2B buyers tend to be more
logical, often using detailed decision criteria

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But …

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4 Types of Distribution Channels

Selling through
Direct selling;
intermediaries;

Dual Reverse
distribution; and channels

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Direct Selling

• Direct selling is the marketing and selling of products directly to consumers away
from a fixed retail location. Peddling is the oldest form of direct selling.

• Modern direct selling includes sales made through the party plan, one-on-one
demonstrations, personal contact arrangements as well as internet sales.

• A textbook definition is: "The direct personal presentation, demonstration, and

sale of products and services to consumers, usually in their homes or at their
jobs.”

Producer Client

(0 intermediaries)

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Direct Selling

According to Direct Selling

News, the largest direct
selling companies
globally, by revenue in
2015 were:

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Intermediaries

A marketing channel where intermediaries such as wholesalers and retailers are

utilized to make a product available to the customer is called an indirect
channel.

The most indirect channel you can use

Producer Seller Wholesaler Retailer Client

(3 intermediaries)

… is used when there are many small manufacturers and many small retailers
and an agent is used to help coordinate a large supply of the product.

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Dual Distribution

• Dual distribution describes a wide variety of marketing arrangements by which

the manufacturer or wholesalers uses more than one channel simultaneously
to reach the end user.

• They may sell directly to the end users as well as sell to other companies for
resale. Using two or more channels to attract the same target market can
sometimes lead to channel conflict.

• An example of dual distribution is business format franchising, where the

franchisors, license the operation of some of its units to franchisees while
simultaneously owning and operating some units themselves.

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 Reverse distribution channels

• If you've read about the

other three channels, you
would have noticed that
they have one thing in
common -- the flow. Each
one flows from producer
to intermediary (if there is
one) to consumer.

• Reverse Distribution
consists in the Collection
of damaged, outdated,
or unsold goods and
bringing them back to
the supplier or
manufacturer. Also called
reverse logistics.

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4 ways that the reverse flow channel can be used:

• Reuse products – Many products like containers, drum or metallic

equipment can be reused by other consumers or companies.

• Refurbish products – Computers, furniture can be refurbished. A useless

computer body can be used and you can repair the parts which are useless
and use the other old parts which are working.

• Recycle products – Above paper and plastic are the best examples of
recycling. In fact, there are many business men who become rich via recycling.

• Disposing – Aa disposed object and can be recycled into organic waste via
the reverse flow channel.

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