Distribution Channels

PARAMJIT SHARMA

Distribution Channels

Who Are They?

•Merchants– Who Buy and Distributes •Agents– Who search for Customers •Facilitators– Who facilitate Distribution

Distribution Channels

What Do They Do?

M M M

C C C

Distribution Channels

M M M

c
D

c c

Distribution Channels

Functions

Gather information About Customers , Competitors &Others Develop Communication To Stimulate Purchasing Reaching Agreement On Price & Other Terms Place Orders With Manufacturers Acquire Funds to finance Inventories Assume Channel Risk Facilitate Storage & Movement Of Products Oversee Transfer Of Ownership

Distribution Channels

Channel flow

1 Physical Flow Suppliers T&W,s

M M

TW

D

T

Customers

2Title Flow
Suppliers

D
Banks

Customers

3 Payment Flow Suppliers Banks

M M M

D D D

B TB

Customers

4 Information Flow Suppliers TW &B

TWB
Adv. Agency

Customers

5 Promotion Flow
Suppliers Adv Agency Customers

Distribution Channels

Channel flow

1 Physical Flow

Suppliers

T&W,s

M

TW

D

T

Customers

Distribution Channels

Channel flow

2Title Flow

Suppliers

M

D

Customers

Distribution Channels

Channel flow

3 Payment Flow Suppliers Banks

M

Banks

D

B

Customers

5 Promotion Flow
Suppliers Adv Agency

M

Adv. Agency

D

Customers

Consum Distribution er Channels Marketi ng 0-level 1-level Channel

2-level

3-level

Manufacturer Manufacturer

Manufacturer

Manufacturer

Wholesaler

Wholesaler

Jobber Retailer Customer Customer Retailer Retailer

Customer Customer

Distribution Channels

Intermediaries

Type
Company Sales Force Manufactures’ Agency Industrial Distributors
Exclusive Distribution Selective Distribution Intensive Distribution Number Of Intermediaries

Distribution Channels

Other Types

•Sole Selling Agents •C& F Agents •Redistribution Stockiest •Stockiest/Distributor/Wholesaler •Semi-wholesaler •Retailer/dealer •Broker •Franchisees •Authorized Representatives •Commission Agents •Jobbers

Distribution Channels

Terms & Responsibilities Of Channel Members

Price Policy

Conditions of Sales Territorial Rights

Specific Services

Distribution Channels
High

Sales Force
Value Added Partners Direct Sales Channels

Value-add of sale

Distributors Retail stores
telemarketing

Indirect channel

internet low
low

Direct Marketing Channels

Cost Per Transaction

High

Distribution Channels

Evaluating Alternatives Criteria's

Economic

Control

Adaptive

Distribution Channels

Channel Management Decisions

Selecting Channel Members

Training Channel Members

Motivating Channel Members

Evaluating Channel Members

Modifying Channel Members

Distribution Channels

Channel Management Decisions

Characteristics
•No. Of Years In Bus. •Other lines carried •Growth &Profit •Financial Strength •Cooperativeness •Service Reputation

Selecting Channel Members

Distribution Channels

Channel Management Decisions

Motivating Powers

Motivating Channel Members

Coercive Power Reward Power Legitimate Power Expert Power Referent Power

Distribution Channels

Channel Management Decisions
Value Added By Channel
High 1 Introductory Low 4 Declining
-P C’ s

Low Modifying Channel Members Market Growth Rate

-PC’s :hobbyist

Mail Order Stores -Designer Apparel -DA’s Off-Price Stores Boutiques 3 Mature 2 Growing -PC Mass Merchandise -Designer Apparel Mass Merchandise

-PC’s: Specialty Stores High -Designer Apparel Better Dept Stores

Distribution Channels

Channel Dynamics

Vertical Marketing System
Horizontal Marketing System
Multi Channel Marketing Systems

Distribution Channels

Channel Dynamics

Vertical Marketing System
Producer Wholesalers Retailers

Corporate VMS

Administered VMS

Channel Captain

Contractual VMS

Distribution Channels

Contractual VMS

Value Added Partnerships

Wholesaler-sponsored voluntary Chains Retailer Cooperatives Franchise Organisations Manufacturer-sponsored Wholesale franchise

Distribution Channels

Horizontal Marketing System

Two Or more Unrelated Companies Put together Or Programs to exploit an emerging marketing Opportunities .Many supermarket Chains Have arrangements with Local banks to offer in-store banking

Distribution Channels

Channel Dynamics

Multi Channel Multi Marketing Channel Systems Marketing Systems

Single Firm uses two or more marketing Channels to reach one or more marketing segment

Distribution Channels

Channel Dynamics
Multi Channel

Demand Generation Tasks internet
Direct sales Tele marketing Retail distributor wholesaler
l e a d

Consumers

Vendors

Distribution Channels

Channel Conflicts

Between National Account & Sales Force Between Sales Force & Intermediaries Between Sales force & Dealers

Distribution Channels

Managing Channel Conflict

•Adopting Super ordinate Goals •Exchanging Persons •Co-optation In advisory bodies •Joint Membership Of Trade Associations •Diplomacy, Meditation & Arbitration

Distribution Channels

Legal & Ethical Issues

Exclusive territories

Exclusive Dealing Tying Agreements

Distribution Channels

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