MARKETING CHANNELS

AND THEIR
MANAGEMENT
 What are Marketing Channels
 Marketing channels are the heart-line of any
typical distribution system which aid in proper
dissemination of products / services at the
right place and right time with the help of
various business intermediaries.
 These intermediaries are the vital components
of any marketing channel design and play a
key role in the business flow.
 Why Marketing Channels?
 Optimal utilization of the cost component
 Efficient management of TIME INVOLVED
which is a pre-requisite in distribution
management
 Availability and Visibility ( Considered as the
two eyes of any typical intensive distribution
system)
 Financial viability
 Channel Functions and Flows
 INFORMATION
 PROMOTION
 NEGOTIATION
 ORDERING
 FINANACING
 RISK TAKING
 PHYSICAL POSSESSION
 PAYMENT
 TITLE
 Channel Flows
 Physical Flow
 Title Flow

 Payment Flow

 Information Flow

 Promotion Flow
Components of a Mktg. Channel
 Producer/Manufacturer
 WC&F Agent
 Dealer/Distributor/Wholesaler/Stockist/ Re -
distributor Stockist / Wholesale Dealer
 Retailer ( A / B / C Class Retailers)
 Consumer
 Types of Marketing Channels
 Basically there are 2 broad types
- CONSUMER MARKETING CHANNEL

- INDUSTRIAL MARKETING CHANNELS

 Consumer Marketing Channels
 Zero Level (Manufacturer -------- Consumer)
 One level channel ( Manufacturer ----- Retailer
----- Consumer)
 Two level ( Manufacturer --- Wholesaler
---Retailer------- Consumer)
 Three level Channel ( Manufacturer ---
Wholesaler -------- Jobber ----- Retailer ----
Consumer )
 Industrial Marketing Channels
 Manufacturer – Industrial Customers
 Manufacturer – Industrial distributors –
Industrial Customer
 Manufacturer – Manufacturer’s Representative
----------- Industrial Customer
 Manufacturer ---- Manufacturer’s Sales
Branch ----Industrial Customer
 CHANNEL DESIGN DECISIONS
 Analyzing Service output levels desired by
customers ( Lot size / Waiting time / Spatial
Convenience/ Product Variety / Service Backup)
 Establishing Channel objectives & Constraints
 Identifying Major Channel Alternatives ( Firm
needs to identify the types of intermediaries
based on the nature of the business )
 Evaluation of such channel alternatives
Channel Management Decisions
 Selecting Channel members
 Motivating Channel Members

 Evaluating Channel Members

 Modifying channel arrangements

 Vertical Marketing Systems (VMS)
 Various forms of vertical marketing systems
- Corporate VMS
- Administered VMS
- Contractual VMS
A) Wholesaler sponsored voluntary chains
B) Retailer based
C) Franchisee organizations
 A Typical Example of Intensive
Distribution Channel System
 Industry – FMCG ( Fast Moving Consumer
Goods Sector)

 Specific company taken into consideration

Gujarat Co-operative Milk Marketing
Federation Limited (Better known by it’s
brand name AMUL)
 Marketing Channel in AMUL

 Member Unions ----- Depot

( WC&F Agent and
Company officials) ------
Wholesale Dealer ------
Retailer ------ Consumer
 Member unions are the
factories of the company or
the factories authorized by
the company to produce and
pack products under the
brand name AMUL as per
legal guidelines
 DEPOTS (STOCK POINTS CUM
SALES / BRANCH OFFICE)
 There are basically 2 types of depots
- Depot Cum Warehouse
Operations
- Depot and Warehouse at separate
locations but control is vested with
depots)
 Depots …………………….
 Depots have to decide on the appointment of
WC&F Agent and it’s modalities taking into
account the business potential of the area
which it has been assigned
 Depots have to appoint a set of wholesale
dealers according to the geographical set-up ,
logistics infrastructure available , expected
turnover (monthly and annual)
 Factors in WC&F Appointment
 Experience in C&F operations of renowned companies
 Financial soundness
 Availability of adequate infrastructure for cold and dry
warehouse
 Availability of skilled manpower and sufficient manpower for
loading/unloading operations
 Requisite computerization is essential
 Requisite transportation set-up needed for second leg logistics
 Factors in Wholesale Dealer
Appointment
 Experience of the party in FMCG Distribution
 Market Reputation
 Financial soundness
 CST NO. / LST NO. / BABY FOOD LICENCE / OIL LICENCE
 Shopkeeper’s Insurance Policy
 Sales invoices of present business / sales invoice of sister concern
 Requisite infrastructure – office / provision for cold room/ dry
warehouse / computerization
 Skilled sales force and adequate transportation facilities for third
leg logistics
 Nature of firm (Proprietary / Partnership)
 Market potential of the area to be allotted
 Factors in WD Appointment
 Various other distributors in the same area for the same product
range ( their turnover and other details)
 General Details of other distributors in the area for other product
ranges (soaps / biscuits / chocolates / foods / beverages etc.)
 Local taxation details
 Comparative chart to be prepared in order of preference for WD
Appointment
 Model Beat Plan to be formulated
 List of retailers in each route
 Expected monthly turnover (product-wise cum retailer-wise sales
value to be worked out beat / route –wise )
 Expected annual turnover product-wise and projections for ensuing
3 years to be attached
 Managing Channel Members
 Motivate C&F / WD / Retailers through
various means
 Manage channel conflict
 Consistently assess and re-assess the
performance of each intermediary in the
distribution channel
 Evaluate trade and consumer feedback through
market research studies and cyber customer
care.
Thankyou