Marketing management-II

UNIT-4
DISTRIBUTION
 Topics
Meaning
Importance and functions
Levels of channel of distribution
Types of intermediaries
Factors affecting choice of channel of distribution
Channel management decisions
Retailing and wholesaling – meaning and
marketing strategy, physical activities involved in
distribution system (logistics)
 Distribution Channels
• According to Philip Kotler: A distribution
channel - set of independent organizations
involved in the process of making a product
or service available for the use or
consumption to the consumer or business
user.
• Used to move the customer towards the
product or the product to the customer
 Place = Distribution
• The 4Ps
– Product, Price, Place, Promotion

• What the “P” of Price is to Revenue

Management, the “P” of Place is to
Distribution
 Roles and importance of distribution
• It plays an important role in marketing functions
• Well managed channel provide sound competitive
advantage
• The product or service has to move in right quantity,
right place and right time
• To move the products from factory to the market
• Marketing channels transform the bulk assortments of
products made into small parts wanted by the
customers
• Channel members add value and acts as a bridge
between makers and users
 Functions of channels
• Forward flow (storage and movement, title and
communications)
• Backward flow (ordering and payment)
• Others (information, negotiation, finance and
risk taking)
 Functions of channels

Market Breaking
Promotion Contacts
information bulk

Supply in Price Physical

Risk taking
assortments negotiations distribution

Flows of
Financing Selling
distribution
 Distribution also describes
• Locations for hotel brand distribution
– Franchising
– Ownership
– Management contracts
• The sales staff and system
– Group sales or volume accounts
– Reservations and transient sales
– National sales offices
– Representation firms
Levels of channels of distribution

Cons Indus
umer trial
chan chan
nels nels
Consumer channels
Industrial channel
Examples
Types of intermediaries

Intensive
distribution

Exclusive
distribution

Selective
distribution
 Factors affecting choice of channel
distribution

Nature of products Market Competitors

Business Technological
Company
environment inventions

Cost of channel Consumer buying Middleman/channel

habits member
 Nature of products
• Perishable product
• Size
• Style
• Unit value
 Consumer buying habits
• Size of the average sale
• Concentration of consumers
 Middleman/channel members
• Services provided by middleman
• Attitude of middleman
• Creditworthiness and financial capacity of
middleman
Channel management decisions

Training and
Selecting channel
motivating
members
channel members

Modifying channel
Evaluating channel
design and
members
arrangements
Selecting channel design and arrangements

• Characteristics of intermediaries to evaluate

for effective channel:
• A) Number of years in business
• B) Growth and profit records
• C) Other lines carried by them
• D) Solvency of the intermediary
• E) Co cooperativeness
• F) Reputation
Training and motivating channel members

• Training provides technical knowledge about

manufacturers products. Eg: Sales, marketing
stock control, financial management etc..
• Motivating of the intermediaries can be done
by:

Coercive Reward Legitimate Expert

power power power power
 Evaluating channel members

• Whom to retain and whom to drop??

• Evaluation should be: Sales quota attainment,
average inventory level, customer delivery
time, treatment of damaged and lost goods, co
operation in promotion and training
programme.
 Modifying channel design and
arrangements
• Adding or dropping individual channel or
developing totally a new way to sell goods.
Retailing and wholesaling
 Retailing
• Any business entity selling product or services
to consumers is “Retailing”
• It can be done in a shop, in person, by mail, on
the internet, telephone or a vending machine
• It includes all the activities for personal or
home consumption
 Types of retailers
Corporate retailing
Store retailers Non store retailing
and franchising
• Self service • Direct selling • Corporate chain
• Self selection • Direct marketing store
• Limited service • Automatic vending • Voluntary chain
• Full service machine • Retailer co
• Buying service operative
• Consumer co
operative
• Franchise
organisation
• Merchandising
conglomerates
 Marketing strategies in retailing
Target market

Product assortment/variety

Procurement

Service and atmosphere

Price decision

Communication decision

Location decision
 Wholesaling
• According to S.E.Thomas: The wholesale is a
trader who purchases goods in large quantities
from manufacturers and resells to retailers in
small quantities
Marketing strategies for wholesaling

Assembling and warehousing of the goods

Order booking and execution

Transportation of the goods

Financing of the business

Risk bearing

Grading and packing

Providing market information

 Physical distribution
• According to philip kotler:- Physical distribution
involves planning, implementing and controlling the
physical flow of materials and final goods from
points of origin to point of use to meet customer need
at a profit.
Activities involved in physical distribution

Decision on Decision on storage

Decision on modes
size/levels of and inventory
of transportation
inventory location
• Sales • Geographic • Road, rail, sea
• Cost deployment of • Cost and time
inventory factors
• Ownership of
warehouse
facilities
• Number and
location of
warehouse
 Continue..

Material handling Order size

decisions decisions
• Elimination of • Cost of storage
man handling • Cost of
• Containerization inventory
control
Thank you