Distribution Management and Marketing Mix

Chapter 8 Krishna Havaldar

Distribution Management  This aspect of the marketing function provides    Place Time Possession Place utility Time utility Form  Form Utility to the customer Possession utility .

.Distribution Management  Consumer wants to buy Colgate  PLACE: Make it available at retail shop close to his residence (alternative places)  TIME: He wants it at 8 pm on Tuesday (not a office time) (At customers chosen time  POSSESSION: He pays and take it home  FORM: He wants a single packet. and not a carton.

. distributing them and finally maintaining them in an operationally ready condition for their entire lives  Broad range of activities concerned with the efficient movement of finished products from the end of the production line to the consumer and in some cases it also includes the movement of raw materials from the source of supply to the beginning of the production line.  The art and science of determining requirements.Distribution Management  The management of all activities which facilitates movement and co-ordination of supply and demand in the creation of time and place utility in goods. acquiring them .

Supply chain. and weak link Supplier¶s Supplier¶s Supplier Supplier¶s Supplier Supplier Company Customer Customer¶s Customer ´Who could be this weak link?µ Customer¶s Customer¶s Customer .

. ? . .Need for distribution channels  How else can we distribute  door-to-door?  through exhibitions?  through C&F agents?  through wholesalers?  through distributors? . .

The company will be able to meet demands of thousands of customers directly and hence needs intermediation.Need for distribution channels  Functions of Intermediaries:         To accumulate right kind of goods. Help manufacturer to effectively run trade and consumer promotions Provide credit facilities to their buyers ´Are intermediaries necessary?µ . so that the distribution costs could get minimized. To provide information both to the sellers and the buyers to help them manage their business better To buy a large variety of goods and can compare costs and prices and make the right recommendations to their customers To be aware of the environment in which they operate and hence isolate companies from the direct impact of these local conditions To reduce the no of touch points. aggregating and sorting to meet consumer needs at POP To believe in routine and simplified transaction and work with large no of products.

Marketing Channels and Value Networks Philip Kotler .

Role of Marketing Channels M C M C M C M D C M C M No of contacts M + C = 3+3 = 6 C No of contacts M x C = 3X3 = 9 M: Manufacturer D: Distributor C: Customer Philip Kotler .

Channel Functions and Flows  Gather info about potential and current customers.         and other actors and forces in the marketing environment Develop and disseminate persuasive communications to stimulate purchasing Reach agreement on terms Place orders Invest in business Assume risks Inventory control Manage financial transactions Delivery and ownership transfer Philip Kotler ´Direct distribution or Indirect distribution?µ . competition.

level Manufacturer 2.level Manufacturer 1.Channel Levels: Consumer Marketing Channel 0.level Manufacturer Distributor Distributor Wholesaler Retailer Retailer Retailer Consumer Consumer Philip Kotler Consumer Consumer .level Manufacturer 3.

Discrepancies and Distribution channels (Wroe Alderson)  Distributional channel members take care of four discrepancies that exist in the market place      Spatial discrepancy  Helps reduce the distance between the producer and the consumer Temporal discrepancy  Helps speed up time in meeting the requirement of the consumer Need to break the bulk  Reduce large quantities into acceptable lot sizes for the consumer Need to provide assortment  Provide variety to the consumer to choose from Financial support  Helps fund the activities of reaching the product to the consumer .

requirements Set of activities expected by them  Provide forecast to them  Arrange dispatches  Develop beat plan  Market visits to sell proceeds  Collections  Promotions  Build long term relationships with A class dealers The distribution organization  Extent of company support  Affordability  Selecting channel partners  Set system for monitoring  Ensuring financial investment Policy and procedure Key performance indicators (KPIs) Critical success factors (CSFs) . finance. Distribution channel strategy    How does distribution add value?     Customer service level  ABC analysis of service level and then plan Setting distribution objectives  Availability.

Distribution channel  Distribution channel can broadly be classified as  Sales channel  Delivery channel  Service channel .

FMCG products of HLL  Selective distribution  Only few carefully selected outlets  Outlets that matters the most  Ex. Automobiles  .Patterns of Distribution  Intensive distribution As many outlets as possible  Ex. McDonalds. Consumer durables  Exclusive distribution  More selective  Only one outlet in a market  Own outlets or franchisee outlets  Ex.

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