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By Arun Mishra firstname.lastname@example.org
and information system order processing and documentation”.DISTRIBUTION MANAGEMENT management “is concerned with management of physical movement of goods from the production center to the consumer through different distribution channels. involving transportation. warehousing. Distribution management comprises of two distinct sections Distribution Physical distribution Distribution channels . inventory.
With so many alternatives available. A good physical distribution or availability at the right place and time increases sales and helps to build a customer base/network. . The distribution function is undergoing a tremendous change because of technological developments in communication. It provides „Place utility‟ and „Time utility‟ to a product by ensuring that it is available to the user at the right place and at the right time.PHYSICAL DISTRIBUTION Physical distribution is related to “Place” of the marketing mix. it is an area with high cost reduction potential. transportation and Information technology. Distribution cost forms a substantial part of the total cost. It becomes all the more important where the distance between the production centers and the consuming centers (market) is large and time consuming.
PHYSICAL DISTRIBUTION The factors considered for designing physical distribution system are : The distribution objectives and the minimum service level desired. Ensuring flexibility of the system. meeting emergencies etc) Finding out what the competitors do? Optimising cost which means incurring lowest cost without sacrificing the minimum service level. Transportation Inventory management Warehousing Order processing Packaging Material handling Functions involved in physical distribution are: . Expectations of the customer in the product delivery (lead time.
tour operators.Stern The main function of a distribution channel is to provide a link between production and consumption. hotels may sell their services (booking of rooms) directly or through travel agents. They may be used for moving a service from producer to consumer in certain sectors. airlines etc. . It is the Supply chain’s front end.DISTRIBUTION CHANNEL What is distribution channel? “A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user”. . The use of Distribution channels may not be limited to movement of physical products alone. For instance.
FLOWS IN MARKETING CHANNEL .
negotiation & financing. Both direction flows : movements are information.FLOWS / MOVEMENTS IN CHANNEL Forward flows: are promotion. & ownership/title. physical. Backward flows : are ordering & payment. Distribution. .
g. holding stock .FUNCTIONS OF A DISTRIBUTION CHANNEL Channel organisations perform many key functions : Information: Gathering and distributing market research and intelligence . E.important for marketing planning Promotion: Developing and spreading communications about offers Contact: Finding and communicating with prospective buyers Matching: (presales service) Adjusting the offer to fit a buyer's needs. including grading. Financing: Acquiring and using funds to cover the costs of the distribution channel Risk taking: Sharing commercial risks. assembling and packaging Negotiation: Reaching agreement on price and other terms of the offer Physical distribution: Transporting and storing goods After sales services: This may include installation and maintenance.
DIFFERENT LEVELS OF DISTRIBUTION FLOW ZERO LEVEL MANUF'ER ONE LEVEL MANUF'ER TWO LEVELS MANUF'ER THREE LEVELS MANUF'ER DIRECT MARKETING DIRECT SELLING (ZEROINTERMEDIARIES) RETAILER RETAILER DIRECT CHANNEL .
education. One . banking (also known as service channels) level – consists of one intermediary Two level – consists of two intermediaries and is the most common for FMCG products Three Level – Consists of three intermediaries and most common in case of Pharmaceutical companies.CHANNEL LEVELS Zero level – if the product or service is provided to the end user directly by the company. Used mostly by companies delivering service like health.
TYPES OF INTERMEDIARIES Following are the types of intermediaries in a marketing channel: Sole selling agent: It is a large marketing intermediaries with large resources. referred to as CFAs or C&F agents. Works on commission basis. C&F agents (CFAs) . Operates in an extensive territory. Usually chosen when a manufacturer prefers to stay out of marketing and distribution task. They act as branches of the manufacturer. Often manufacturers employ carrying and forwarding agents. They do not resell products but act as agent/ representative of the manufactures.
Usually a wholesaler does not sell directly to consumers ( except the institutional buyers).TYPES OF INTERMEDIARIES Wholesaler/ stockist A wholesaler buys in bulk ( large quantities) from the and resells the goods in sizable lots to semi-wholesalers and retailers. market feedback etc. promotion and receiving orders. Wholesalers not only play the role of stockholders and sub-distribution. Agent wholesaler: Merchant wholesaler. but also perform functions such as promotion. Agent wholesaler perform all or most of the marketing functions associated with wholesaling. They negotiate sales but do not but do not take title to merchandise. They are primarily involved in the buying and selling of the products. They can be categorised as. Agent wholesaler unlike merchant wholesaler do not take ownership . They also participate in collecting market information. financing. .
They add value to goods and services that they sell by creating time. In cases where the company operates a single tier distribution system. they operate directly under the company. Retailers perform much more than simply buying and selling. They sell to the ultimate customers. The stocks they keep are just operational stocks needed for immediate sale at the retail outlet. They are at the last end of the distribution chain. . possession and form utility.TYPES OF INTERMEDIARIES Retailer/ Dealer. place. The retailers are also sometimes referred to as dealers or authorised representatives.