In business, it is essential for management to understand the role and importance of marketing to his or her organization. Management utilizes marketing tools to satisfy the needs of customers, and to gain a better understanding of the product itself. The goal of this paper is to discuss and analyze the distribution practices of Land O Lakes butter. In review of the distribution practices, I will also attempt to show the importance of knowing and understanding the product you are marketing. Distribution Strategies A distribution strategy is in relation to how a company will distribute the product or services they are offering to the consumer.
The distribution of a product is essential to the organization. Making sure the product is at the right place at the right time. If the demand for the product is underestimated, the consumer will not be able to purchase the product, which will affect profits. There are two channels of distribution; indirect and direct. Indirect channels of distribution involve distributing the product to different outlets before it gets to the retailer or consumer, for example the product is sold to a manufacture, then to a wholesaler, and then on to the retailer.
Direct channels of distribution involve shipping the product directly from the manufacturer to the consumer. There are several types of distribution strategies. The most common types are intensive distribution, exclusive distribution, and selective distribution. Intensive distribution is more commonly used to distribute low priced or impulse purchases, for example soft drinks. Exclusive distribution involves limited distribution to a single outlet, for example cars. Selective Distribution is when an organization uses a select and small number of outlets to distribute his or her product.
Land O Lakes uses an indirect distribution channel and intensive distribution. Distribution Models A distribution model is the manner in which goods move from the manufacturer to the outlet where the consumer purchases them; in some marketplaces, it’s a very complex channel, including distributors, wholesaler, jobbers and brokers (Entrepreneur 2010). A distribution model is needed once you have determined how the product will be distributed. Land O Lakes uses the direct distribution model. he producer (farmer), the wholesaler, and then to the retailer, this is similar to that of the conventional distribution model, however, Land O Lakes owns and operates the manufacturing of the product. Distribution Chain A distribution chain refers to the means used to transfer the product or merchandise from the manufacturer to the end user. Land O Lakes is a cooperative, the coop states that it has about 3200 producer-members, 1000 member-cooperatives, and about 9000 employees who process and distribute products for about 300,000 agricultural producers (Land O Lakes, 2010)
JIT (Just in Time) Just in time marketing, also called JIT refers to the manufacturing operations of a company. It is intended to eliminate the wasteful, non value adding tasks and strives for continuous improvement in productivity (Businessihub, 2010). The JIT philosophy was developed in 1970’s by Taiichi Ohno, of Japan. Ohno, developed his philosophy while working with manufacturing plants of Toyota. The primary goal of JIT is to achieve maximum output on a timely basis. Land O Lakes has a similar program it uses to promote and maintain effectiveness. Push vs. Pull
Push vs. Pull marketing strategies are two different methods for promoting products and services to consumers. Push and Pull marketing is used to define marketing practices for getting the consumer to purchase a particular product or service. Push marketing refers to putting the product or service out to the end user. This can be done through various advertising, such as cold calling, emailing prospective customers, to using a popular website to promote the product. In retail, an example would be in department stores; a salesperson can push or recommend a particular product.
Pull marketing refers to an attempt to get the consumer to come and see what product or service your organization is offering. The consumer is enticed so to speak, by the promotions and advertising being presented. Land O Lakes used the pull method of marketing to promote the new butter spread with olive oil, with a commercial of an Olive painted with cow markings, and created the “Colive”. The promotion included a free coupon to try the spread. Wheel of Retailing Wheels of retailing is a hypothesis of M. P. McNair that explains the patterns of change in retailing.
It is new types of retailers who cut prices by lowering or eliminating customer services, once established, the retailer increases prices and customer services. During this process the retailer becomes vulnerable to the next low priced retailer. Types of Wholesalers The U. S. Bureau of the Census defines wholesalers as: The activities of those persons or establishments which sell to retailers and other merchants, and or to industrial, institutional, and commercial users, but who do not sell in large amounts to final consumers.
It is important for marketing managers to understand the role of the wholesaler. There are ten types of wholesalers. The merchant wholesaler owns the products he or she is selling. The general merchandise wholesalers are service wholesalers who carry a variety of non perishable items, such as hardware, cosmetics, furniture, and apparel. The single line wholesalers are also service wholesalers who carry a smaller line of merchandise than the general wholesaler; this type of wholesaler may just carry one item in particular.
The specialty wholesalers are a service wholesaler who carry a narrow range of products, but offers more service and information, such as Vitamin Cottage. The cash and carry wholesalers are the same as the service wholesalers except the customer must pay in cash. The drop shipper wholesaler own the products just like merchant sellers, however they do not handle stock or deliveries, and are mainly focused on selling, this type of wholesaler sells products in bulk and gets product orders from other wholesalers and business users.
The Truck wholesaler specializes in delivering products he or she stocks in their own trucks, an example of this type of wholesaler would be Mountain Man Candy. The last three types of wholesalers are Mail order wholesalers, Producers’ Cooperatives, and Rack jobbers (2010). Land O Lakes would be considered a producer’s cooperatives. A producer’s cooperative are wholesalers who operate almost as full service wholesalers, however the profits go to the cooperatives customer members (2010). Conclusion
In conclusion, over the past several years business models and strategies have become more advanced. Distribution is important to any organization, to understand how and when the product will get to the consumer. Efficiency is the key. When deciding how to distribute the product to the end user, the marketing manager has to take all aspects of the distribution process into consideration, as well as what the consumer wants. After all, the customer is the one to please, if you want the product to sell.
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