DISTRIBUTION and various other

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DISTRIBUTION(and various other)

• Marketing for Engineers
• ELE 4EMT

George Alexander G.Alexander_at_latrobe.edu.au http/
/www.latrobe.edu.au/eemanage/
18 April, 2007 Lecture 12
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Coles Takeover current status

• Two main bidders
• KKR private equity consortium have bid for 100
  of existing operation, 16.47 per share, subject
  to due diligence.
• Wesfarmers, along with private equity partners,
  has made a similar bid, but could be in the form
  of Wesfarmers shares (in part at least).
• Wesfarmers wants to own Target and Officeworks
  outright and take a 50 share in the other Coles
  divisions.
• Woolworths has signed an expression of interest
• Wesfarmers concerned at any leakage of valuable
  information to Woolworths.
• Coles claims secret email leaks The Age
  17/04/07

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Due Diligence

• kpmg.com.au
• Acquisition due diligence assesses the risks and
  opportunities of a proposed transaction.
• It helps to reduce the risk of post-transaction
  unpleasant surprises.
• Valuation of the target and therefore the
  purchase price.
• It involves a very detailed examination of all
  aspects of the target companys operation such as
• financial position
• outstanding commitments and agreements
• prospects for efficiency improvements and
  synergies
• future business prospects
• data room, real and virtual
• subject to confidentiality agreements

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Interest rate and RiskAlan Kohler Eureka
Report, 2 April 2007

• Fincorp wasnt even worth the risk
• Fincorp offered 10.25 but unsecured
• Kohlers Law
• If risking total loss, real return should be 100
  in 5 years and then some.
• Means 15 per annum above inflation
• And only invest in this if you can afford to lose
  the lot. It should form only a small part of your
  savings.
• Term deposits are guaranteed at 6.3 currently.

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But first a video ABC Inside Business 15/04/07

• Montague Fresh

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Marketing Mix - Place

• PLACE relates to distribution.
• Distribution involves all aspects of getting
  products (or services) to the consumer in the
  right location at the right time.
• A channel of distribution is the complete
  sequence of marketing organisations involved in
  bringing the product from the producer to the
  consumer.
• It often involves such intermediaries such as
  wholesalers and retailers.

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Traditional Distribution Channel
Manufacturer
Wholesaler
Retailer
Consumer
Product Flow
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Why have an intermediary?

• Manufacturers do not want to deal with many
  customers, involving small orders and many
  shipments.
• Similarly, it is not efficient for customers
  retailers or consumers to deal with many
  manufacturers or to deal in very large
  quantities.
• Reduces transactions.

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The role of the intermediary

• Breaking bulk - buys in bulk from the
  manufacturer, stores, and dispatches on request
  to the next stage in the channel.
• Reduces the cost of distribution for
  manufacturers and consumers.
• Accumulating bulk buys small quantities of
  product from many small producers to be sold in
  bulk to large buyers.

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Supply Chain Management

• Distribution is a key component of Supply Chain
  Management.
• Manufacturers often strike strategic alliances
  with specialist companies like
• TNT/Ceva Logistics, DHL, LinFox, FedEx, Toll
  Holdings, Australia Post
• Is viewed as a critical factor in achieving
  operational efficiencies by such companies as
• Fosters, Coles, Woolworths i.e. high volume
  consumer goods.

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Australia Post The Age 10/04/07

• Joint venture in with China Post Sai Cheng
  predicting growth of more than 40 this year.
• 5 logistics centres set up in China last year
• China Post has existing infrastructure and
  networks. Australia Post has the IT expertise.
• Australia Post also has a joint venture with
  Qantas Australian Air Express.

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Competitive Edge

• A competitive edge can often be established by
  adopting novel distribution techniques.
• This can be effective in
• differentiating the product/service from the rest
  of the pack
• Reducing costs

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Some examples?
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Some examples?

• Car servicing and cleaning
• Cosmetics
• Tupperware
• Dell computers
• Medical services blood pressure, cholesterol
  checks
• Online shopping/home deliveries
• TV TimeLife etc
• eBay
• Internet in general Amazon.com
• Music/movie downloads

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References

• Zikmund, W. G. dAmico M. Marketing (1996, 5th
  Edition), West Publishing Company.

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Thanks for your attention