Distribution Channels

Abhay Pathak
Industry Interface Head
What Do you mean by ?

Distribution means to spread the product/Service throughout the market place such
that a large number of people can buy/use it.

Is the process of making a product or service available for the consumer or business
user who needs it.

2
This can be done by ---------- Types.
Type of Distribution ?

• Direct
A distribution system is said to be direct when the product
or service leaves the producer & goes directly to
the customer – no intermediaries.

OR

• Indirect
Through intermediaries - is a chain of business or intermediaries through which a good
or service passes until it reaches the end customer.

This can be done through various Channels

Distribution Channels Defined as

• Are the set of Interdependent organisation involved in

the process of making a product or service available for
use or consumption

Need
Need of a Distribution Channels

Are the Intermediaries or Middlemen

• Exist because Producers Can’t reach all their consumer.
• Multiple reach & provide marketing process
• Facilitate smooth flow
• Have the core competency & reach to the consumer
• Provide contacts, Experience, Specialisation in operations

What is marketing mix ?

 The Marketing Mix are 4 “P”
DC Helps in which aspect ?

• Product

• Place
• Distribution Channel helps in “ Place” Aspect of
• marketing mix
Price
• Distribution provides Place , Time , & Possession utility to
• Promotion
the consumer

What are the7 R Expectations ?

7 R expectations

Right
• Product in
• Quantity in
• Condition at the
• Time &
• Place for the
• Customer @
• Cost

Importance
Importance of a Distribution Channels

• Provide distribution efficiency to the manufacturer.

• Provide vital input to the sales people.
• Look after the physical distribution functions.
• Act as manufacturer go down or depot.
• Helps in merchandising.
• Helps in prise mechanism.
• Promotion additional marketing inputs.
• Helps in sales forecasting.
• Helps in credit & collection of the sales documents.

Which r the channels ?

 Consumer products
Producer Producer Producer Producer
Multi Level
Two Level
Cfa.’s
One Level Distributor’s /
Zero Level Wholesalers
Distributor’s /
Retailer Wholesalers
Retailer
Customer / Customer / Retailer
Consumer Consumer Customer / Customer /
Consumer Consumer

Patterns
Patterns of Distributions

• Determines the Intensity of the Distributions.

• Intensity decides the Service level provided
• Types of Distribution Intensity :-

• Intensive  Convenience goods  FMCG

• Selective  Shopping goods  Home Appliances

• Exclusive  Specialty goods  Automobiles

Channels in FMCG
 VMS Vertical Marketing System

Contractual
Corporate Administered

VMS – Is a form of cooperation between Multiple levels of Distribution Channel

Lets Understand Each

 Vertical Marketing System
Corporate VMS involves the ownership of all levels of
Corporate
the production or distribution chain by a single company.
e.g. Apple Phone
Contractual VMS involves a formal agreement between the various
Contractual Levels of the distribution or production channel to coordinate the
over all process. e.g. KFC , Domino’s
Administered VMS is in which one member of the production
Administered & distribution chain due to its sheer size , is dominant & organizes the
Nature of VMS e.g. Walmart
Which Distribution Channels are
used for Following Products ?

 Minute Maid  What may be reason that Parle G has separated distribution
 Colgate Zig Zag for 500 gm pack & 50 gm pack ? –Justify
 Cello Butterfly
 What is the “Pure it” distribution channel ?

 Explain the Sundaram notebook channel ?

 Explain Corporate VMS & Administered VMS

Types of Channel members

• Sole selling agents

• Cfa.’s
• Distributor , Dealer , Stockist , Agent
& Broker.
• Franchisees.
• Jobber.
• Retailer

Lets Understand each

1.Sole selling agents

Sole Selling agents menace

• Manufacturer keep himself out of picture.
• Agents have extensive territory coverage.
• Only One agent ( Given territory )

• Marketed by P & G
2.C&F Agents or C&S Agents

C&F – Caring & Forwarding Agents / C&S – Caring & selling Agents – Both
are on contract with a company.
• Both are transporter & work between the Company & Its distributors.
• Goods belongs to company.
3.Distributors ,Stockists ,Dealers , Agents

Distributor invests in the products-Buy from the company

• Are on the commission , margin or mark-up.
• May or may not get credit – but extend credit.
• He covers the market as per given territory.
• He could be exclusive for the company.
• Agents bring buyer & seller together.
4.Franchising

Types
5.Jobber

one who buys from a wholesaler and sells to a retailer. A jobber, who actually
purchases goods himself and then resells them, is distinguished from a broker
or agent, who sells goods on another's behalf.
6. Retailer

Retailers are the important link between

manufacturers and customers. They are the final
point of sales and are invaluable to the entire
distribution channel. They, in fact, provide
services to both the wholesalers and the
consumers.
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