Module 5

Distribution Channels
What is distribution channel ?
• Out of the 4 P’s of marketing It comes under the P, Place. Place refers
to the geographical location where the companies sells it products
and services to customers
• Channel of distribution is the path through which products move
from the place production to the place of ultimate consumption .
• It is the link between the producer and the consumer
Functions of distribution channels
Sorting :- It sorts products and services into homogeneous groups.
Eg:- I) Super market arrange homogeneous products in separate racks
ii) Different stores buy similar products from the different suppliers
and sell it to customers, customers are given choices.
Stocking (Accumulation ) :- The channel buy products in bulk quantity
to have continuous supply to the market. Many of them avail price
advantages of advance payment , bulk purchase discount and stock
advantage
Eg:- The terms of being a distributor or seller is the capacity to stock for
many products
• Allotting (Allotment ):- The distribution channels collect bulk quantities
from the suppliers and wholesalers and break into small quantity and
cater to the retailers and customers in smaller quantities.
• Eg: Medical distributors collect medicines from companies and sell to
medical stores in smaller quantities.
• Assorting :- Channels buy products from different sources and make
them into groups which are to be offered to the customers as per their
requirements.
• Eg:- A retailer collect different products from different sources and sell
to households
Other functions
• The distribution channels ensure Market operating price.
• The distribution channels follow the distribution norms set by the
company in geographical area.
• The distribution channels are supposed to maintain the ethics in
business.
• The distribution channels also involve in local promotion of their
products to improve their business.
• They take the risk of demand changes, stock safety and warehousing .
Types of distribution channels
Distribution channel
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Why Channel Motivation ?
• For the producers and manufacturers , Distribution channels as the primary customers .
• Motivation of Channels make the organisation to drive for its goals
through the distribution channels
• Ensures active involvement of the distributors in driving business
• Channel motivation Process
• 1. Identify the wants and needs of the distribution channels
• 2. Identifying their issues and concerns
• 3. Offering support to solve their problems
• 4. Provide leadership
Different types of support provided for channel motivation

• Cooperative support for channel motivation

• Advertising Support – Tie up ads
• Display support – display materials/ Dummy display/ free display products
• Incentives/contests for buyers and sales persons
• Warehousing stocking support/allowances
• Free goods
• Gift/trip contest for Channels
• Training and engagement program
• Manpower salary supports
• Company sponsored demonstrators/ sales persons
• Financial advice
• Insurance protection
B2B and B2C distribution
• Distribution occurs between producers and industries for their usages
as raw materials for their products are called B2B distribution

• Distribution happening between the producer and the consumer is

called the B2C distribution
Wholesaler
• A channel which sells goods in large quantity at a lower price to
retailers
• wholesaler takes goods from producer in large quantity and split into
smaller quantity and supply to the retailers
• It provides storage facility
• Acts as contact point for retailers and customers with the producers
• Takes market responsibility and promotion
 Franchise Business
• Franchising is a business relationship between two entities wherein
one party allows another to sell its products and intellectual property
• Roles and responsibility
• Ensure branding, credibility and goodwill
• Marketing activities
• Establish franchise branding
• Service /after sales service
• Training and skill development of franchise employees
• Compliance
Difference between Distributor and dealer
Retail marketing
• Any business that directs its marketing efforts towards satisfying the consumer by
selling goods and services as means of distribution.
• Retail industry includes
• Individual stores
• Super markets
• Chain shops
• Etc.,
• Features
• 1. It is the link between the distributor and the consumer
• 2. Provide choice for the consumers
• 3. Deal with the general public
• 4. Normally operates on Market price or MRP
• 5. Keeps personal contact with the customers
• Organized retailer
• Un organized retailer
• Online trading
• Vending machines
• Shopping malls