Marketing Finance

Session 2
MFM-Vth semester
Jyotinder Kaur Chaddah
Channel Distribution
• Means used to transfer merchandise from the
manufacturer to the end user.
• Physical distribution (or place) is one of the four
elements of the marketing mix. An organization or set
of organizations (go-betweens) involved in the process
of making a product or service available for use or
consumption by a consumer or business user.
• Hotels, for example, may sell their services (typically
rooms) directly or through travel agents, tour
operators, airlines, tourist boards, centralized
reservation systems, etc.
• Intermediaries in the channel of distribution are
used to facilitate the delivery of the merchandise as
well as to facilitate payments, and information about
the merchandise.
• For example, a manufacturer may rely upon the
workforce employed by a distributor to sell the product,
make deliveries, and collect payments.
• The channels used by a marketer are an integral part of
the marketing plan and play a role in all strategic
marketing decisions.
• Intensive Distribution: Aims to provide
saturation coverage of the market by using all
available outlets. For many products total sales
are directly linked to the number of outlets
used(eg. Cigarettes, Alcoholic beverages).
Intensive distribution is usually required where
customers have range of acceptable brands to
choose from. In other words if one brand is not
available , a customer will simply choose another.
• Selective Distribution: Involves a producer using
a limited number of outlets in a geographic area
to sell products. An Advantage of this approach
is that the manufacturer can choose the most
appropriate or best performing outlets and focus
efforts(eg. Training) on them. Selective
distribution works best when consumers are
prepared to shop around.
Cont…
• Here the consumer has a preference for a
particular brand or price and search out outlets
that will supply it.
Exclusive Distribution
• Is an extreme form of selective distribution in
which only one wholesaler, retailer or distributor
is used in a specific geographic area.
Benefits of a good distribution system
• Easy Availability
• Satisfied customers
• Competitive Advantage
• Better Market Reputation
• Saves Time

• Airtel has a deep penetration in the market

Selecting Channel Members
• Capital Investment
• Relevant Experience
• Not deal with competitors products
• Infrastructure: space, vehicle, qualified
workforce
• Market Reputation
• Prior Experience
Appraisal of Distribution system
• Average inventory size

• Order Processing : Shoppers stop

• Logistics: in house Vs outsourced
- Rail/Road/by Air.
- Performance appraisal of Channel members
- Assigning of Targets: Population, total area to be
covered, No. of distributors in that region, Potential
available, Past performance of individual sales
person.