Importance/ short history of Distribution

08 May 2017
11:52
Intro: need of distribution channels
Before WW II
o No supermarkets: every item had its own shop
Butcher
Baker
Fishmonger
o Peace and tranquillity: people would like to spend more
So that was the perfect moment to build big supermarkets
Retail revolution after WW II (Belgium: 60s)
o Peace and tranquillity: people would like to spend more
So that was the perfect moment to build big supermarkets
o In Belgium: they were not welcome (the shops weren't allowed to have
more than 5 employees
The Belgian government did this to protect the small shops.
Belgian stores are nothing compared to stores in France and
Germany
Power balance shift in 70s
o Oil crisis ==> private labels born
o After oil crisis and the birth of the private labels: the power was in
the hands of retailers
Digital era 90s: first sites + online shop
o Every store started having a website
o First player with online shop: Walmart
Massive evolution
o Almost anything is done online ==> retailers are afraid
Online will kill retail?
o Will retailers be necessary in the future.

Distribution is more than retail

 The longer the distribution level and the more channels there are, the
more the product will cost

Campina uses the third distribution level.

o They buy milk form farmers
o Then purify it
o And then sell it to the retailers

Distribution System/ channel

08 May 2017
12:16
Distribution = PLACE
Controlling the sales of goods/services to consumers ( the
communication/promotion !!!!)

Distribution: some definitions

Distribution system: the system of organisations to cross the bridge
between the manufacturer and the consumer (eg. Campina)

Distribution channel: the organisation(s) between the manufacturer and

the consumer; they spread the goods so the final consumer can find these
goods
Point of Distribution
08 May 2017
12:26

Point of distribution: shop/retail/ location where goods are sold

directly to final consumers
o 80% of what you buy in the shop is decided in the shop itself

Very important
aka POS (= point of sales)
Where the product is sold
Experience marketing
If they can offer something worthwhile you are more willing to
go to the shop.
Way to counter the online shopping trend
Shelf management
Every centimetre is being fought for.
Different companies are fighting each other for a good
position in the shelves
a shop is more than just a service-hatch, its
an institute with power
Shops can seduce you
Birth of retail marketing as a study field
Experience is the magic word to conquer the online evolution

Distribution Management
08 May 2017
12:26
Distribution management = the analysis, planning, execution and evaluation of
activities which are aimed at delivering the

Target audience
The right products
At the right time
At a good price setting

Product launch can fail for different reasons, but poor distribution can
definitely be a reason

Distribution management can be a difficult matter

 Not sharing profits
Able to sell large numbers
Database of customers
Less stock

Only have to talk to the retailer

Not a lot of staff needed

Function of Distribution
08 May 2017
12:38
Bridge the gap between the manufacturer and the consumer

Bridge differences in
Quantity (avoid shortage)
o Make sure whatever you sell is in stock and in the shelves
Time (avoid waiting time)
o Self-scan to avoid waiting time.
Knowledge (create brand awareness and knowledge)
o Make people try new things so they will eventually buy it.
Assortment (offer wide variety of choice)
o Offer wide variety so people can choose
Place (avoid loss of time, irritation)
o Close to the people
Means of payment (avoid irritation, loss of turnover)
o Make sure people can use the payment method they are used to

Distribution chain: Direct vs. Indirect

08 May 2017
12:42

Selling directly to consumer

o A lot of work but you have all the profits
Selling indirectly
o Less work, but less profits and more expensive for customer

Distribution chain
As you can see: very complex

Different for every player in the field

LIDL: no fruit/vegetable auction => straight from the farmers
ALDI: auction every day
Delhaize: auction every day
Different negotiations: credit, transport,
o Every store has a different negotiation
Direct and indirect can be combined
Balance of power in the distribution Chain
08 May 2017
12:57

Every single level has power

o Consumer can make producer drop price
o But if the producer makes it product very exclusive the consumer
will pay a lot of money.

Power of rewarding:
Discount conditions, shelf space

Examples of tricks
o (initial) slotting fee
Initial pric
o Pay-2-stay
Pay to stay for longer than 3 months
 o Pay-4-place
Pay for the place you get in the shelf and how many of your
product is in the shelf
o Incentive to stock new products
Exclusive packaging, free gifts
o Different packaging
o Larger, special events, freemiums

Punishment:
Slow down or exclude from supply
Reduce profit margins
No marketing support
Unilever excluded from the delhaize assortiment

Power of expertise:
Know-how or specific knowledge
With your knowhow you can pressurize the shops to sell you product
o Eg. Kraft Foods-Mondelez in retailers Brussels: Mignonette versus
Oreo (senior versus young target market) depending on the area
Eg. knowledge on halal products

Power of identification:
Brand awareness + brand knowledge + brand loyalty
Producers: become top of mind, become unforgettable
<=> Retailers can promote their own private labels

Moral power/moral pressure:

Relationship manufacturer-distributor is of utmost importance
Lifelong connection/ personal connection
Based on gentlemans agreement/friendship