Distribution & Channel Decisions

 Marketing channel performs the work of

moving goods from producers to consumers
 Marketing intermediaries try to fill the following
gaps:
 Time Gap
 Space Gap
 Quantity Gap
 Variety Gap

1
Channel Flows:
 Physical /Possession Flow
 Title/Ownership Flow

 Payment/Financial Flow

 Information Flow

 Promotion Flow

 Risk Flow

2
 Channel Levels:
 Length of a channel:
No. of intermediaries b/n producer & final consumer
 Zero Level:
 Manufacturer Consumers
 Eg: Eureka Forbes, Dell PC/Laptops
 One Level:
 Manufacturer Retailer Consumer
 Eg: Maruti/Suzuki dealers
 Two Level:
 Manufacturer Wholesaler Retailer Consumer
 Eg: FMCG, White goods
 Three Level:
 Manufacturer Dist. Wholesaler Retailer Cons.
 Eg: FMCG, White goods 3
Reverse Channel of Marketing/ Backward Channel:
Flow of goods from end users to producers. Eg: Soft
drink bottles, product recall, old issues of magazines
 Channel-Design Decisions:
 Understand Service Output levels/Utilities desired
by target customers:
 Lot Size Utility
 Temporal Convenience Utility
 Spatial Convenience Utility
 Product Variety/Selection Utility
 Service Utility
 Establishing Channel Objectives & Constraints:
 Minimize cost & transport time
 Environmental Constraints
4
 Which markets to serve
Channel Design Decisions (Cont.)
 Identifying Major Channel Alternatives:
 Type of Intermediaries:
 Company sales force
 Outside agency Eg: DSAs employed by many banks
 Number of Intermediaries:
 Exclusive Distribution: Seen in automobile sector
 Selective Distribution: Nike shoes, Branded jewelry
 Intensive Distribution: Used for FMCG products
 Terms & Responsibility of Channel Members:
 Price Policy/Margins
 Conditions of Sale/ Guarantees
 Distributor’s territorial rights
 Responsibilities 5
Channel Design Decisions
(Cont.)
 Evaluating Major Alternatives
 Evaluation to be based on:
 Economic Criteria
 Control Criteria

 Adaptive Criteria