Distribution Channels and Supply

Chain Management
Mamta Mohan

Distribution Channels &

Value networks
Push Strategy- sales force and trade
promotions
Pull Strategy- Advertising
Hybrid channels- IBM, ICICI
- Channel integration & Customer expectations

- ability to order online, pick up at convenient

retail location, return online order, right to avail
discounts on online & offline purchases

Customers fall in 4 categories

Habitual shoppers
Deal seekers
Variety loving
High involvement shopper

Value network
( VN)
A system of partnership and alliance to source and
deliver its offering.
Think of the target market and then think of the
supply chain
SIVA- Solution , information Value and access.
E.g. Palm- consists of whole community of suppliers,
assemblers of semiconductors , components , plastic
cases, lcd displays, accessories offline & online
resellers, 275,000 developers who have created 21,000
soft wares for computers and smart phones.

Channel demand planning

Can estimate if the company can make
more money upstream or down stream.
More aware of disturbances any where on
supply chain.

Role of channels
Sales channel , Service channel , Delivery
channels.
Bring in financial resources .e.g. 250
strong dealers help Mauriti udyog manage
its capital better.
Help break bulk 7 create assortment.
More effective due to specialization,
contacts, experience, scale of operation.

Functions of channels

Physical flow
Title flow
Payment flow
Information Flow
Promotion flow.

Channel levels
0 level direct marketing
1,2, 3 level
Reverse flow channels- refilling ,
refurbishing , disposing of products.

Channel design decisions

Analyzing customer's service output
levels Lot size
Waiting and delivery time.
Spatial convenience
Service backup

Channel design decisions

- Establishing objectives
Vary with product characteristics ( perishable
products, bulky pdts local taxes)
-identifying major alternatives
( types of available intermediaries,
no of intermediaries ( Exclusive, selective
,intensive)
Terms and conditions

Channel design decisions

- Companies reward the customer to switch fm
high cost to low cost channel.
cost estimation, economic criterion
- Selecting channels
- No of yrs in business
- Other lines carried
- Growth & profit record
- Financial strength.
- Cooperativeness
- Service reputation

Channel design decisions

Evaluating channels
Sales quota attainment
Average inventory levels
Customer delivery time
Treatment of damaged goods
Cooperation in promotional schemes.

Channel Management and Leadership

Channel Captain:
Captain a dominant and controlling
member of a marketing channel
Channel Conflict
Horizontal Conflict
Most often, horizontal conflict causes sparks between
different types of marketing intermediaries that handle
similar products
Sometimes results from disagreements among channel
members at the same level

 Vertical Conflict
Channel members at different levels find many
reasons for disputes
Example: when retailers develop private brands to
compete with producers brands or when
producers establish their own retail outlets or
WWW Sites

The Gray Market

Grey Good: product made abroad under license
from a Indian firm and then sold in the Indian
market in competition with that firms own domestic
output
Viewed by producers as undesired competition

Vertical Marketing Systems

Vertical marketing system (VMS):
planned channel system designed to
improve distribution efficiency and cost
effectiveness by integrating various
functions throughout the distribution chain
Forward integration
Backward integration

 Administered marketing system:

system VMS
that achieves channel coordination when a
dominant channel member exercises its
power
Corporate marketing system:
system a VMS in
which a single owner operates at each
stage in its marketing channel

 Contractual marketing system:

system VMS
that coordinates channel activities through
formal agreements among channel
members like:
Wholesaler-Sponsored Voluntary Chains
Retail Cooperatives
Franchises