Distribution Management

Distribution channels

It consists of a set of interdependent organizations involved

making a product or service available for use or consumption.

Managing the channel members and their activities in a

effective and efficient manner is distribution management.

 Why – Distribution channel

a) Demand side factors

b) Supply side factors
 Why – Distribution channels

Demand side factors

 They act as a link between buyers and sellers and facilitate the search
process for buyers and sellers.
 To adjust the discrepancy of assortment through the process of
sorting, accumulation, allocation and assortment.
Supply side factors
 Minimize distribution through routinizing and standardizing
transactions which makes exchange more efficient.
 Reduction in number of reach points/contact points.
Marketing flows/Functions in Channels
 Activities – Distribution channels
1. Spatial discrepancy
2. Temporal discrepancy
3. Need to break the bulk
4. Need to provide assortment
 Spatial discrepancy

It defined as the discrepancy that exists because of the

physical distance between the location where product is

manufactured and the location where product is consumed.

a) It has to consider the end users who are scattered and
fragmented.
b) It need to be cost–effective manner.
 Temporal discrepancy
It is defined as the discrepancy as the discrepancy that

exists because of the inevitable difference due to time of

production of goods and its consumption.
• To reduce this we need to do proper stock management at

different locations.
• When stock is perishable commodity the task becomes more

complex.
 Cost and control aspects

Cost efficiency

Control

Direct Distribution Indirect distribution

 How distribution function adds value

a) Time utility : utility enjoyed when customer can buy a

product on need rather than buying and stocking it .

b) Possession utility : Easy access and possession at a cost.

c) Place utility : Convenience
Distribution channel management - Two phases

The ex ante phase involves all the activities that are

associated with the design and establishment of the
distribution channel. These activities actually take place
before the distribution channel actually starts functioning.

The ex poste phase involves managing the day to day

activities of the channel wherein the behavior of the
individual channel members are coordinated
 Major steps

1. Setting distribution objectives focusing on customer

requirements.

2. Determining and finalizing the activities to achieve the

objectives
3. Organizing the activities and assigning it to different
entities to perform these activities.
4. Develop policy guidelines for effective functioning.
 Distribution channel management

Design of the
channel structure
Ex ante
Phase
Establishing the
channel
Distribution Channel Strategy
• Channel Objective
· Activity Finalization
· Organizing the activities Motivating
· Developing Policy Guidelines Channel
Members
Ex Poste
Phase
Resolving Conflicts
among channel
members
 Issues- Rural distribution

1) Economic

2) Physical infrastructure
3) Service output issues
4) Diversity
• Carrying and forwarding agents break the bulk and
dispatch the assorted products to distributor or

retailers.