Channel of distribution:

It is an organized network or a system of

agencies &institutions which in combination
,perform all the activities required to link
producers with users to accomplish the
marketing task.

MARKETING CHANNELS: are the sets of

interdependent organization involved in the
process of making a product or service
available for
the use or consumption.
Basic intermediaries:

Intermediaries

merchants agents facilitators

Managing intermediaries:
• PUSH STRATEGY: • PULL STRATEGY
• Focus is on carry, • Consumer
promote and sell persuasion
• Low brand loyalty • High brand loyalty
• Impulse item • High involvement
product
 Factors governing the choice of
channels of distribution:

product Market Unit Environment

factors factors factors factors
Cont….
• Product factors: • Market factors
• Nature of product • Market structure
• Perceived A. concentrated
risk/product value B.Dispersed
• Technical nature Purchase
• Product volume deliberations
Cust .wants high
level service
Cont….

• Unit factors
• Co’ financial
position
• Extent of market
control
• co 'reputation
Types of channels:

Conventional/ non.-conventional/
Non integrated integrated

direct

vertical horizontal

indirect
Direct channels:

• Zero level/direct marketing:

manufacturer consumer
One level/indirect
channel

manufacturer retailer consumer

Two level:

manufacturer wholesaler retailer

consumer
 consumer
manufacturer wholesaler
3-level:

manufacturer wholesaler jobber retailer

consumer
INTEGRATED CHANNELS:

• Those that work with full

coordination rather than in loose
manner

• Integrated mkt channels can be

vertical and horizontal in nature
VERTICAL MARKETING SYSTEM:

• ALL the channel members act as

part of a Unified system in one of
them owing the other so have the
power to make them all corporate
CORPORATE VMS:
• Successive stages from production to
distribution are under single ownership.
• E.g.
• amartex
• Bata have their own manufacturing as well
as retail outlets.
• Woodlands
• Raymond's owns their own retail stores
while producing textiles and woolens.
• Giant food stores operates an ice making
facility, soft drink boiling operations, ice-
cream plant that supplies them
Administrative VMS:

• Seeks control over successive stages

from production to distribution
through size and power of one of the
channel members.
• E.g. HLL,P&G,nestle,maruti are brand
and market leaders
 Contractual VMS:

• Independent firms at different levels

of production & distribution
integrating their programs on
contract basis.
• For e.g.
• Manufacturer sponsored retailer
franchise
• Manufacturer sponsored wholesaler
franchise
Horizontal marketing
system:
symbiotic marketing

• 2 or more unrelated co’s

• Put together their resources or programs
to exploit an emerging market opportunity
• E.G.
• Supermarkets have arrangements with
local banks to offer in store banking
• Tie-up b/w TVS whirlpool,onida to market
• washing machines
Channel design decisions:
1.Analyzing customer desired service
outputs.
2.Establishing channel alternatives
3.Identifying major channel
alternatives
4.Evaluating major channel
alternatives
Analyzing the customers
desired service output: getting
know
what your customer want
• Lot size
• Spatial convenience
• Waiting and delivery time
• Product variety
• Service back up
Establishing objectives and
constraints:
Obj.are stated in the terms of services.
Channel objective vary with Product
characteristics.
For e.g.
perishable product timely and fast
delivery

Bulky product Minimize the shipping

distance and amount of handling.

High unit value service ,training,

installation
Identifying major alternatives:
Channel alternatives for a cellular car
phone maker:
1.Co’ could sell car phones to
automobile manufacturers to be
installed as original equipment.
2.Could sell it car phones to auto
dealers.
3.Could sell it to retail automotive
equipment dealer.
4.Trough mail order catalogs
Channel alternatives described
by:

1.types of business intermediary

2.No,of intermediaries
3.Terms &responsibility
Channel management
decision:
1.Selecting the channel members
2.Training channel members
3.Motivating the channel members