Professional Documents
Culture Documents
Background
Distribution is a key external resource
Logistics, Distribution and Channels Management are the less visible side of marketing The less promoted side when compared to something like advertising but it is as important, if not more India has millions of outlets Poor roads Distributing in Rural India is very, very hard Still, has to be developed... HLL is excellent at this SBI is very strong here
Plus
the increase in malls and large stores is a very big change in the making Imagine you are Nike You produce your shoes in Indonesia/china You have to make your product available in Russia, India, Latin America, Europe, USA - in short, the whole world It is thus mindblowingly complex More so in India.
Distribution - introduction
Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are : Product, Price & Promotion.
Marketing Channels
The Network of partners in the value chain that cooperate to bring products from producers to ultimate consumers Imagine Nike again All those who help in bringing shoes to the consumer from the factories in Indonesia are the channel members (except transporters) These include wholesalers, retailers, agents, brokers etc They are called intermediaries, middlemen, dealers, resellers or distributors However, the prevailing view is that channel members are more than just middlemen They are marketers first customers and partners; they add value to the marketers offer .
These middlemen are connecting links between producers of goods, on one side and consumers, on the other. They perform several functions such as buying, selling, storage, etc. These middlemen constitute the channels of distribution of goods. Thus, a channel of distribution is the route or path Along which goods move from producers to ultimate consumers.
Agent Retailer
Producer
Consumer
Wholesaler
Consumer Channels
Producers of consumer goods
Agents
Merchant whole salers
Agents
Merchant whole salers
Retailers
Retailers
Retailers
Retailers
Ultimate consumers
Business Channels
Producers of consumer goods
Agents
Agents
Business users
Service Channels
Producers of services
Agents
Exclusive distribution: only limited number of dealers granted exclusive rights distribution in a territory. Ex: Hyundai ,Maruti cars. Selective distribution: appointing more than one , but less than all the dealers willing to carry a product . Consumer durables like TV, fridge , washing machines and grinders are distributed thus. Adequate market coverage with more control and less cost is possible in such a system.
Producer/Retailer Conflict
Small suppliers complaints about large department stores:
Pressure to cut prices. Demands to give the stores exclusivity. Forcing suppliers to contribute advertising and promotional dollars to the stores. Requiring suppliers to invest in elaborate computerized inventory systems.
Legal Considerations
Dealer Selection: Refusing to sell to some firms. Selection: Can be done carefully. Exclusive Dealing involves shutting out competitors, giving most business to one firm. Tying Contracts involves providing one item on condition other lines be carried as well. Exclusive Territories can create monopolies.
References
http://www.nos.org/srsec319/319-23 http://nptel.iitm.ac.in http://www.jpec.org/handouts/jpec122. http://www.public.iastate.edu/~sjwong/mkt_ distribution Marketing management Dr. K. Karunakaran