Professional Documents
Culture Documents
Chapter 9
Chapter 9
DISTRIBUTION
MANAGEMENT & THE
MARKETING MIX
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Chapter - 9
Learning Objectives
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• Price
• Place
• Promotion
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Example
• Consumer wants to buy a tube of toothpaste
– Made available at a retail outlet close to her residence – place
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Players Involved
• The company and its distribution network
– Direct company to consumer
– Company to a C&FA / distribution center to distributors to
retailers
– Distributor to wholesaler to retailer
• All these intermediaries help the process of ‘exchange’ of the
product or service.
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Distribution Management
• Management of all activities which facilitate movement and co-
ordination of supply and demand in the creation of time and
place utility in goods
• The art and science of determining requirements, acquiring
them, distributing them and finally maintaining them in an
operationally ready condition for their entire life.
A distribution channel…
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More Definitions
• Networks through which producer’s products flow to the market
– Cundiff & Still
• External contractual organisation which management uses to
achieve its distribution objectives – Bert Rosenbloom
• Set of independent organisations involved in the process of
making a product or service available for use or consumption by
the customer or industrial user – Kotler & Armstrong
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Distribution Channels
• Distribution channels:
– Exist because producers cannot reach all their consumers
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Types of Channels
• Sales: motivates buyers, shares information between company
and its consumers, negotiates fair bargains for consumers and
finances the transactions (company salespeople, internet)
• Delivery channel meant only for physical part of the distribution
(the railways)
• Service channel – performs after sales service (authorised
service centers)
Channel members…
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• Franchisees
• Electronic channels
• Wholesalers
• Retailers
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C&FAs / C&SAs
• C&FA: carrying and forwarding agent and C&SA: carrying
and selling agent – both are on contract with a company
• Status gets modified with GST
Wholesalers
• Operate out of the main markets
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Retailers
• The final contact with consumers
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Industrial Products
Customers may also buy direct from company sales force
Producer Producer
Agent/middleman
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Consumer Products
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Consumer Products
Retailers may also buy direct from company sales force
Distributor Distributor
Wholesaler
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Patterns of Distribution
• Determines the intensity of the distribution
– Intensive
– Selective
– Exclusive
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Distribution Intensity
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Intensive Distribution
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Selective Distribution
• Tanishque jewelry
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Exclusive Distribution
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Channel Intensity
Intensity Features Characteristics
Intensive Ensures widespread Provides convenience to a very
coverage, volumes and large number of consumers.
availability Large number of channel partners
– channel control not easy
Selective Good image, moderate Limited number of brand
market coverage, limited conscious users. Moderate
channel control. number of channel members.
Exclusive Premium and prestigious Good channel control and loyalty.
image for the product. Companies focus on major or key
Stable prices, high accounts. Limited number of
margins. channel partners and sales
potential.
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Distribution Objectives
Set of activities….
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Set of Activities
• Manner in which the company and its marketing channels
go about achieving the customer service levels
• Some of these steps could be:
– Sales forecasts
– Despatch plans
– Market coverage beat plans
– Journey plans for service engineers
– Collection of sales proceeds
– Carrying out promotional activities
Channel Structure
KPIs…. 30
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– Achievement of profitability
– No stock returns
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CSFs… 32
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Rural Markets
• Access to most markets either difficult or non-existent
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Strategy for handling customer Prompt action at the customer interface level
complaints If the problem persists, involve senior sales
and service people
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Key Learnings
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Key Learnings
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Key Learnings
• Companies could also choose the intensity of distribution
based on their products and distribution objectives
• Distribution could be intensive, selective or exclusive
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