Forces Affecting the Distribution Systems

Forces Affecting the Distribution Systems4YOU SHOULD BE ABLE TO:Identify and differentiate the economic and political forces that affect the channel of distribution.Describe the role of ethics in the channel of distribution.Explain the legal restrictions that affect the channel of distribution.Provide examples of technological advances that are impacting the ways in which products are distributed.FORCES AFFECTING THE DISTRIBUTION CHANNELECONOMIC FORCESupply and demandBasic commodities are typically acquired through a bidding procedureCo-op farmersEstablished market pricesPerceived valuePerceived quality + perceived services / EP costECONOMIC FORCE (CONT.)What is the difference between AP price and EP cost?Monopolistic competitionPOLITICAL FORCELobbyists –The NRAPrimary sources have the most influenceTypically used to influence produce availability, prices, and channel member behaviorETHICAL FORCEDefine ethical behaviorWhat is ethical?Codes of ethical behaviorExamplesLEGAL FORCESherman Act (1890)Meat safety legislationSinclair Lewis’ The JunglePure Food Act (1906)Meat Inspection Act (1907)USDA established in 1862Primarily focuses on meat, poultry, and eggsLEGAL FORCE (CONT.)Meat safety legislationPoultry Products Inspection Act (1957)Wholesome Meat Act (1967)Wholesome Poultry Products Act (1968)The Federal Food, Drug, and Cosmetic Act (1906)FDA administers this lawEvaluates contaminate levelsLEGAL FORCE (CONT.) Seafood safety legislationPUFI for a feeFDA has authority to examine seafood in interstate commerce.Federal Trade Commission (1914)Amended by the Wheeler-Lea Act (1938)Deals with advertising, deceptive promotions, monopolies, and conduct in the marketplaceLEGAL FORCE (CONT.)Clayton Act (1914) Used to control antitrust violationsTying agreementsExclusive dealingsPerishable Agricultural Commodities Act (1930)Control interstate commerceProhibits unfair practices in sale of produceLEGAL FORCE (CONT.)Agricultural Adjustment Act (1933) & Agricultural Marketing Agreement Act (1937)Ensure steady flow of perishable productsRobinson-Patman Act (1936)Known as the “small business protection act”Promotional discounts favoritism through a quantity limits provisionPredatory pricingGas station exampleLEGAL FORCE (CONT.)Hart Act (1966-1969)Packaging pictorial aspectsMisleading descriptions and illustrationsPackage label regulationsThe Internal Revenue Service (IRS)The Bureau of Alcohol, Tobacco, and Firearms (BATF)LEGAL FORCE (CONT.)Franchise lawContract lawAgency lawTitle to goodsConsignment salesWarranties and guaranteesPatents and copyrightsRebatesTECHNOLOGY FORCEGenetically engineered foodsProduct preservationValue-added foodsTransportationPackaging