14706791 Channel of Distribution

8/9/2019 14706791 Channel of Distribution

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Channel of distributionChannel of distribution::It is an organized network or a system of agenciesIt is an organized network or a system of agencies&institutions which in combination ,perform all the&institutions which in combination ,perform all theactivities required to link producers with users toactivities required to link producers with users to

accomplish the marketing task.accomplish the marketing task.

MARKETING CHANNELS:MARKETING CHANNELS: are the sets ofare the sets ofinterdependent organization involved in the processinterdependent organization involved in the process

of making a product or service available forof making a product or service available for

the use or consumption.the use or consumption.


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Basic intermediariesBasic intermediaries::

Intermediaries

merchants agents facilitators


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Managing intermediaries:Managing intermediaries:

PUSH STRATEGY:PUSH STRATEGY: Focus is on carry,Focus is on carry,

promote and sellpromote and sell Low brand loyaltyLow brand loyalty Impulse itemImpulse item

PULL STRATEGYPULL STRATEGY Consumer persuasionConsumer persuasion

High brand loyaltyHigh brand loyalty High involvementHigh involvement

productproduct


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Factors governing the choice ofFactors governing the choice of

channels of distribution:channels of distribution:

product

factors

Market

factors

Unit

factors

Environment

factors


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Cont.Cont.

Unit factorsUnit factors Co financial positionCo financial position

Extent of marketExtent of marketcontrolcontrol

co 'reputationco 'reputation


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Types of channels:Types of channels:

Conventional/

Non integratednon.-conventional/

integrated

direct

indirect

horizontalvertical


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Direct channels:Direct channels:

Zero level/direct marketing:Zero level/direct marketing:

manufacturer consumer


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One level/indirectchannelOne level/indirectchannel

manufacturer retailer consumer


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Two levelTwo level::

manufacturer wholesaler retailer

consumer


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manufacturer wholesaler consumer


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33--level:level:

manufacturer wholesaler jobber retailer

consumer


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VERTICAL MARKETING SYSTEM:VERTICAL MARKETING SYSTEM:

ALL the channel members act as part ofALL the channel members act as part ofa Unified system in one of them owinga Unified system in one of them owingthe other so have the power to makethe other so have the power to makethem all corporatethem all corporate


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CORPORATE VMS:CORPORATE VMS:

Successive stages from production toSuccessive stages from production todistribution are under single ownership.distribution are under single ownership.

E.gE.g..

amartexamartex Bata have their own manufacturing as well asBata have their own manufacturing as well asretail outlets.retail outlets.

WoodlandsWoodlands

Raymond's owns their own retail stores whileRaymond's owns their own retail stores whileproducing textiles and woolens.producing textiles and woolens.

Giant food stores operates an ice making facility,Giant food stores operates an ice making facility,soft drink boiling operations, icesoft drink boiling operations, ice--cream plantcream plant

that supplies them everything.that supplies them everything.


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Administrative VMS:Administrative VMS:

Seeks control over successive stages fromSeeks control over successive stages fromproduction to distribution through size andproduction to distribution through size and

power of one of the channel members.power of one of the channel members. E.g. HLL,P&G,nestle,maruti are brand andE.g. HLL,P&G,nestle,maruti are brand and

market leadersmarket leaders


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Contractual VMS:Contractual VMS:

Independent firms at different levels ofIndependent firms at different levels ofproduction & distribution integrating theirproduction & distribution integrating their

programs on contract basis.programs on contract basis. For e.g.For e.g. Manufacturer sponsored retailer franchiseManufacturer sponsored retailer franchise

Manufacturer sponsored wholesalerManufacturer sponsored wholesalerfranchisefranchise


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Horizontal marketing system:Horizontal marketing system:symbiotic marketingsymbiotic marketing

2 or more unrelated cos2 or more unrelated cos

Put together their resources or programs toPut together their resources or programs toexploit an emerging market opportunityexploit an emerging market opportunity E.G.E.G. Supermarkets have arrangements with localSupermarkets have arrangements with local

banks to offer in store bankingbanks to offer in store banking TieTie--up b/w TVS whirlpool,onida to marketup b/w TVS whirlpool,onida to market washing machineswashing machines


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Channel designdecisions:Channel designdecisions:

1.Analyzing customer desired service1.Analyzing customer desired serviceoutputs.outputs.

2.Establishing channel alternatives2.Establishing channel alternatives

3.Identifying major channel alternatives3.Identifying major channel alternatives4.Evaluating major channel alternatives4.Evaluating major channel alternatives


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Analyzing the customers desiredAnalyzing the customers desiredservice output: getting knowservice output: getting know

what your customer wantwhat your customer want

Lot sizeLot size

Spatial convenienceSpatial convenience Waiting and delivery timeWaiting and delivery time Product varietyProduct variety

Service back upService back up


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Establishing objectives andEstablishing objectives andconstraintsconstraints::Obj.are stated in the terms of services.Obj.are stated in the terms of services.

Channel objective vary with ProductChannel objective vary with Productcharacteristics.characteristics.

For e.g.For e.g.

perishable product timely and fast deliveryperishable product timely and fast delivery

Bulky product Minimize the shipping distanceBulky product Minimize the shipping distance

and amount of handling.and amount of handling.

High unit value service ,training, installationHigh unit value service ,training, installation


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Identifying major alternatives:Identifying major alternatives:

Channel alternatives for a cellular car phoneChannel alternatives for a cellular car phonemaker:maker:

1.Co could sell car phones to automobile1.Co could sell car phones to automobile

manufacturers to be installed as originalmanufacturers to be installed as originalequipment.equipment.

2.Could sell it car phones to auto dealers.2.Could sell it car phones to auto dealers.

3.Could sell it to retail automotive3.Could sell it to retail automotiveequipment dealer.equipment dealer.

4.Trough mail order catalogs4.Trough mail order catalogs


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Channel alternatives described by:Channel alternatives described by:

1.types of business intermediary1.types of business intermediary

2.No,of intermediaries2.No,of intermediaries

3.Terms &responsibility3.Terms &responsibility


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Channel management decision:Channel management decision:

1.Selecting the channel members1.Selecting the channel members

2.Training channel members2.Training channel members

3.Motivating the channel members3.Motivating the channel members

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14706791 Channel of Distribution