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After studying this chapter, you will be able to 1. Explain the role of marketing intermediaries in contemporary business and list the eight primary functions that intermediaries can perform 2. Identify the major types of wholesalers and summarize four trends shaping the future of wholesaling 3. Identify the major retailing formats and summarize six trends shaping the future of retailing 4. Explain the strategic decisions that manufacturers must make when choosing distribution channels 5. Identi…

Distribution Strategy

Firm's overall plan for moving products to intermediaries and final customers

Marketing intermediaries

Businesspeople and organizations that assist in moving and marketing goods and services between producers and consumers


Intermediaries that sell products to other intermediaries for resale or to organizations for internal use


Intermediaries that sell goods and services to individuals for their own personal use

How Intermediaries Simplify Commerce

Intermediaries actually reduce the price customers pay for many goods and services, because they reduce the number of contacts between producers and consumers that would otherwise be necessary. They also create place, time, and posses-sion utility.

Independent wholesalers that take legal title to goods they distribute

merchant wholesalers

Merchant wholesalers that provide a wide variety of services to their customers, such as storage, delivery, and marketing support

full- service merchant wholesalers

Merchant wholesalers that sell products to organizational customers for internal operations or the production of other goods, rather than to retailers for resale


Independent wholesalers that do not take title to the goods they distribute but may or may not take possession of those goods

agents and brokers

The replacement of intermediaries by producers, customers, or other intermediaries when those other parties can perform channel functions more effectively or efficiently


Evolutionary process by which stores that feature low prices gradually upgrade until they no longer appeal to price- sensitive shoppers and are replaced by a new generation of leaner, low- price competitors

wheel of retailing

Large stores that carry a variety of products in multiple categories, such as clothing, housewares, gifts, bedding, and furniture

department stores

Stores that carries only a particular type of goods, often with deep selection in those specific categories

specialty stores

Retailers that sell a variety of everyday goods below the market price by keeping their overhead low

discount stores

Stores that sell designer labels and other fashionable products at steep discounts

off-price retailers

Companies that use e- commerce technologies to sell over the Internet; includes Internet- only retailers and the online arm of store- based retailers

online retailers

The application of Internet technologies to wholesaling and retailing


Coordinated efforts to reach consumers through more than one retail channel

multichannel retailing

The addition of entertainment or education aspects to the retail experience

retail theater

Combination of intermediaries and channels a producer uses to reach target customers

distribution mix

intensive distribution Market coverage strategy that tries to place a product in as many outlets as possible

intensive distribution Market coverage strategy that tries to place a product in as many outlets as possible

Market coverage strategy that uses a limited number of carefully chosen outlets to distribute products

selective distribution

Market coverage strategy that gives intermediaries exclusive rights to sell a product in a specific geographic area

exclusive distribution

channel conflict Disagreement or tension between two or more members in a distribution channel, such as competition between channel partners trying to reach the same group of customers

channel conflict Disagreement or tension between two or more members in a distribution channel, such as competition between channel partners trying to reach the same group of customers

Arrangements by which channel partners coordinate their activities under the leadership of one of the partners

marketing systems

All the activities required to move finished products from the producer to the consumer

physical distribution

The planning, movement, and flow of goods and related information throughout the supply chain


Steps in the Physical Distribution Process

The phases of a distribution system should mesh as smoothly as the cogs in a machine. The objective of the process is to provide a target level of customer service at the lowest over-all cost.

Functions involved in receiving and filling customers' orders

order processing

Facility for storing inventory


Advanced warehouse facilities that specialize in collecting and shipping merchandise

distribution centers

Movement of goods within a firm's warehouse terminal, factory, or store

materials handling

The coordinated use of multiple modes of transportation, particularly with containers that can be shipped by truck, rail, and sea

intermodal transportation

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