It is an organized network or a system of agencies &institutions which in combination ,perform all the activities required to link producers with

users to accomplish the marketing task. MARKETING CHANNELS: are the sets of interdependent organization involved in the process of making a product or service available for the use or consumption.

Channel of distribution:

Basic intermediaries:




Managing intermediaries:
• PUSH STRATEGY: • Focus is on carry, • PULL STRATEGY • Consumer

promote and sell • Low brand loyalty • Impulse item

persuasion • High brand loyalty • High involvement product

Factors governing the choice of channels of distribution:
product factors Market factors Unit factors Environment factors

• Product factors: • Nature of product • Perceived • Market factors • Market structure
A. concentrated B.Dispersed Purchase deliberations Cust .wants high level service

risk/product value • Technical nature • Product volume

• Unit factors • Co’ financial

position • Extent of market control • co 'reputation

Types of channels:
Conventional/ Non integrated non.-conventional/ integrated


vertical indirect


Direct channels:
• Zero level/direct marketing:
manufacturer consumer

One level/indirect channel




Two level:
manufacturer wholesaler retailer





manufacturer wholesaler jobber retailer


• Those that work with full

coordination rather than in loose manner

• Integrated mkt channels can be

vertical and horizontal in nature

• ALL the channel members act as

part of a Unified system in one of them owing the other so have the power to make them all corporate

• Successive stages from production to
distribution are under single ownership. • E.g. • amartex • Bata have their own manufacturing as well as retail outlets. • Woodlands • Raymond's owns their own retail stores while producing textiles and woolens. • Giant food stores operates an ice making facility, soft drink boiling operations, icecream plant that supplies them

Administrative VMS:
• Seeks control over successive stages

from production to distribution through size and power of one of the channel members. • E.g. HLL,P&G,nestle,maruti are brand and market leaders

Contractual VMS:
• Independent firms at different levels
of production & distribution integrating their programs on contract basis. • For e.g. • Manufacturer sponsored retailer franchise • Manufacturer sponsored wholesaler franchise

Horizontal marketing system: symbiotic marketing
• 2 or more unrelated co’s • Put together their resources or programs

to exploit an emerging market opportunity • E.G. • Supermarkets have arrangements with local banks to offer in store banking • Tie-up b/w TVS whirlpool,onida to market • washing machines

Channel design decisions:
1.Analyzing customer desired service outputs. 2.Establishing channel alternatives 3.Identifying major channel alternatives 4.Evaluating major channel alternatives

Analyzing the customers desired service output: getting know what your customer want • Lot size • Spatial convenience • Waiting and delivery time • Product variety • Service back up

Establishing objectives and constraints:
Obj.are stated in the terms of services. Channel objective vary with Product
characteristics. For e.g. perishable product timely and fast delivery

Bulky product

Minimize the shipping distance and amount of handling. service ,training,

High unit value

Identifying major alternatives:
Channel alternatives for a cellular car phone maker: 1.Co’ could sell car phones to automobile manufacturers to be installed as original equipment. 2.Could sell it car phones to auto dealers. 3.Could sell it to retail automotive equipment dealer. 4.Trough mail order catalogs

Channel alternatives described by:
1.types of business intermediary 2.No,of intermediaries 3.Terms &responsibility

Channel management decision:
1.Selecting the channel members 2.Training channel members 3.Motivating the channel members