Distribution Channel ManagementAn Introduction

Compiled and Presented by: Ms. Kumkum Bharti


Channel Management- An Introduction


An Introduction 05/13/12 . Million people in India Contribution can’t be ignored Undergoing tremendous change w.INTRODUCTION       No.t both span & productivity Role of internet Distribution channels are critical for marketing 2 Channel Management.r. of retail outlets in India Provides livelihood to ….

Definition  According to STERN & EL ANSARY(1992). 3 Channel Management.An Introduction 05/13/12 . Distribution channel is defined as a set of interdependent organizations involved in the process of making product or service available for use or consumption.

intermediaries essentially exist to perform three fundamental functions:     4 Adjust to discrepancy of assortment through the process of sorting.An Introduction 05/13/12 Leads to economic efficiency . making exchange more efficient and effective Facilitate the searching process of both the parties Place and opportunity Channel Management. Accumulating. allocation and assorting Minimize distribution cost through routinizing and standardizing transactions.Why they are required?   Take services for granted… criticize for minor inconvenience According to Pitt et all(1999).

ordering. 5 Breaking down a heterogeneous supply into separate stocks that are relatively homogeneous in nature called ‘sorting out’ Bringing similar stocks from a number of sources together into a larger homogeneous supply called ‘accumulation’ Breaking a homogeneous supply into smaller and smaller lots called ‘allocation’ Building up of an assortment of products for resale in association with each other called ‘assorting’ Each transaction involves. 4. valuation and payment Channel Management.Sorting Includes: 1. 3. 5.An Introduction 05/13/12 . 2.

3. Distribution activities fills the gap between production of goods and the consumption Discrepancies 1.Distribution Channel Activities   According to Alderson. 4. Spatial Discrepancies Temporal Discrepancies Need to Break the Bulk Need to Provide Assortment 6 Channel Management.An Introduction 05/13/12 . 2.

An Introduction 05/13/12 .SPATIAL DISCREPANICY    It refers to the discrepancy caused in exchange process because of the geographical distance between the buyer and the seller Should be bridged in the most cost effective manner Ex: GlaxoSmithKline 7 Channel Management.

it should be stocked Waiting time should be reduced What will happen in case of perishable goods? 8 Channel Management. To reduce.An Introduction 05/13/12 .TEMPORAL DISCREPANCY     It refers to the discrepancy caused in the exchange process because of the time gap that exists between the time product is consumed and the time product is produced.

Ex: ITC Cigarette 9 Channel Management.An Introduction 05/13/12 .Need for Breaking the Bulk   This activity is carried out by an intermediary in which he breaks down the bulk production into small parts to facilitate purchase and consumption by a buyer.

Ex: assortment of chocolates Information gap Affects motivation of consumers Impact buying decision 10 Channel Management.An Introduction 05/13/12 .Need for Assortment      It is the activity carried out by an intermediary wherein products from different sources are brought together to form a heterogeneous group according to the buying pattern of the customers.

Intermediation: Is it actually needed?        YES/ NO Challenged because of internet Example: DELL computers Desirable+ level of commitment+ new product(who’s PLC is very short) + technical products= distribution channels should be taken as strategic option Concept of specialization Cost associated with direct distribution is prohibited Diagram??? Channel Management.An Introduction 05/13/12 11 .

An Introduction 05/13/12 .Value Enhancement Through the Distribution Channel     Form utility Time utility Place utility Possession utility 12 Channel Management.

An Introduction 05/13/12 .Distribution Channel Strategy 1. 2. 3. Setting distribution objectives Finalizing channel activities Organizing channel activities Developing policy guidelines for the day-today operations 13 Channel Management. 4.

.An Introduction 05/13/12 . Organizing the activities 4. Framework for the channel management Distribution channel strategy 1. Developing policy guidelines Motivating channel members Designing channel structure Establishing the channel Resolving conflicts among channel members 14 Channel Management. Channel objectives 2. Activity finalization 3.

Framework For The Channel Management   Ex-ante: involved in the design and establishment of the distribution channel Ex-poste: involved in the logistical network 15 Channel Management.An Introduction 05/13/12 .

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