Distribution

2011 Semester - 2

Marketing channel concepts

Reasons for growing importance of channels: Information technology & E commerce Sustainable Competitive Advantage Power of Retailers Distribution costs

Marketing channel defined

Manufactures focus: movement of products thru various intermediaries to ultimately reach the customer. Intermediaries consider flow of title to the goods, safeguard of risks, operate a profitable enterprise as the key role of marketing channel. Customers view the marketing channel as lot of intermediaries between them and the manufacturer.

Marketing channel defined

The external contractual organization that management operates to achieve its distribution objective.

Distribution as a strategic mix

Marketing mix

Product strategy

Pricing strategy

Promotion strategy

Distribution strategy

Channel strategy

Logistics

Distribution in the new scenario

we are now re inventing our distribution system in order to strengthen our competitive advantage CMD -HUL DELL BATA WESTERN UNION CATERPILLAR

Distribution
Channel strategy and logistics management are closely related. Channel strategy is a much broader and more basic component than logistics . Channel strategy meets the organization's distribution objectives. Logistics is more narrowly focused on providing product availability at the right time and place.

Channel flows
Product flow Manufacturer Negotiation Manufacturer ownership Manufacturer Information Manufacturer Promotion Manufacturer

Transportation Co.

Transportation

Advt.agency

Wholesaler

wholesaler

wholesaler

wholesaler

wholesaler

Retailers

Retailer

Retailer

Retailer

Retailer

Consumer

Consumer

Consumer

Consumer

Consumer

Distribution channel activities

Distribution channel activities arise due to discrepancies between typical manufacturing activity and consumption activity. Discrepancies vary at different situations. The general discrepancies that exist are:

Distribution activities
Spatial discrepancy: Exists because of the physical distance between point of manufacture and point of consumption. limited manufacturing locations and widespread consumption locations.

Distribution activities
Temporal discrepancies: The point of time in manufacturing is distinct from the point of time in consumption. To bridge or reduce the temporal discrepancy products have to be stocked at appropriate places and in adequate quantities

Distribution activities
Breaking bulk: appropriate selling units. Provide an assortment: The OSS concept

Distribution activities
Bridging the information discrepancy. Tourism and travel; Savings and Investment; New technology products

Channel levels
TWO LEVEL Manufactuer THREE LEVEL Manufacturer FOUR LEVEL Manufacturer FIVE LEVEL Manufacturer AGENT

WHOLESALER

WHOLESALER

RETAILER

RETAILER

RETAILER

CONSUMER

CONSUMER

CONSUMER

CONSUMER

Wholesaling
They are engaged in selling goods for resale or business use to retail, industrial, commercial, institutional, professional or agricultural firms. As well as to other wholesalers.

Whole seller /Sole Distributor

Helps the manufacturer with his expertise of the market in planning, forecasting, buying, storing, Financing, suggesting strategies of pricing, packaging, and communication Helps the Retailer by breaking bulk, enabling wider range, providing credit,

Wholesaler tasks
Market coverage Making sales contacts Holding inventory Order processing Gathering market information Offering customer support

Wholesaling systems in India

Freelance/ independent established whole sellers who work with several non competing companies or brands. Distributors, wholesalers stockists who are contracted by the company or brand. Branch offices

Wholesalers
Merchant wholesalers: independent firms also referred to as wholesalers, jobber, distributor, importer, exporter, Agents , Brokers, Commission merchants: also independent but do not take title to the goods. They are active negotiators in buying and selling on behalf of their clients. Also known as commission agents, selling agents, brokers, dalal Manufacturers sales and branch offices.

Classification of whole sellers

General line Specialty General merchants Cash and Carry Drop Shipper Mail Order