disrtibution ppt

8/7/2019 disrtibution ppt

1/17

1

DistributionDistribution

BY:BY:--AshishAshish kumarkumar lambalamba

MBAMBA


2/17

2

IntroductionIntroduction

Marketing channels are sets ofMarketing channels are sets of

interdependent organizationsinterdependent organizationsinvolved in the process of making ainvolved in the process of making aproduct or service available for useproduct or service available for useor consumptionor consumption

Philip KotlerPhilip Kotler


3/17

Distribution ChannelDistribution Channel

What is a Distribution Channel?What is a Distribution Channel?

A set of organizations (intermediaries) involved inA set of organizations (intermediaries) involved in

the process ofthe process of making a product or servicemaking a product or service

availableavailable for use or consumption by the consumerfor use or consumption by the consumer

or business user.or business user.

Used to move the customer towards the productUsed to move the customer towards the product

Selling through wholesalers and retailers usually isSelling through wholesalers and retailers usually is

much more efficient and cost effective than directmuch more efficient and cost effective than direct


4/17

Nature and Importance ofNature and Importance of

Distribution ChannelsDistribution Channels Distribution channels is the circulatory system of aDistribution channels is the circulatory system of a

hospitality company.hospitality company.

Competition, a global marketplace, electronicCompetition, a global marketplace, electronic

distribution techniques have increased thedistribution techniques have increased the

importance of distribution.importance of distribution.

In the global economic market, companies shouldIn the global economic market, companies shouldcreate innovative ways to approach to new andcreate innovative ways to approach to new and

existing marketsexisting markets


5/17

Information

Information

Promotion

Promotion

Contact

Contact

Matching

Matching

Negotiation

Negotiation

Physical

Physical

Gathering and distributing marketing research aboutthe environment

Gathering and distributing marketing research aboutthe environment

Developing and spreading persuasive communicationsabout an offer

Developing and spreading persuasive communicationsabout an offer

Finding and communicating with prospective buyers

Finding and communicating with prospective buyers

Shaping and fitting the offer to the buyers need

Shaping and fitting the offer to the buyers need

Agreeing on price and terms of the offer so ownershipor possession can be transferred

Agreeing on price and terms of the offer so ownershipor possession can be transferred

Distribution: transporting and storing goods

Distribution: transporting and storing goods

Financing

Financing Acquiring and using funds to cover the costs ofchannel work

Acquiring and using funds to cover the costs ofchannel work

Distribution Key FunctionsChannel

Risk Taking

Risk Taking Assuming financial risks such as the inability to sellinventory at full margin

Assuming financial risks such as the inability to sellinventory at full margin

Distribution Channel Functions


6/17

Wholesaler

Wholesaler Jobber

Jobber Retailer

Retailer Consumer

Consumerp p p p

Consumer

Consumer

Retailer

Retailer Consumer

Consumerp

Producer

Producer

0-level channel

Wholesaler

Wholesaler Retailer

Retailer Consumer

Consumerp pProducer

Producer

2-level channel

Producer

Producer

3-level channel

1-level channel

Producer

Producer

Channel Level - E

ach L

ayer of M

arketing

Intermedi

aries th

at Perform Some Work inBringing the Product and its Ownership Closer to the Final Buyer.

Number of Channel Levels


7/17

7

Basic Channels ofBasic Channels of

DistributionDistributionManufacturers/products

Agents/brokers

Wholesalers/distributors

RetailersRetailers

Consumers and organizational end users


8/17

8

Distribution ObjectivesDistribution Objectives

Minimize total distribution costs for aMinimize total distribution costs for agiven service outputgiven service output

Determine the target segments and theDetermine the target segments and thebest channels for each segmentbest channels for each segment

Objectives may vary with productObjectives may vary with productcharacteristicscharacteristics e.g. perishables, bulky products, non-standard

items, products requiring installation &maintenance


9/17

9

Transaction Cost byTransaction Cost by

ChannelsChannelsAs the valueAs the value--added increases, the cost ofadded increases, the cost of

transaction also increasestransaction also increases

Direct marketing channelsDirect marketing channelslow valuelow value--added;added;low cost of transactions e.g. elow cost of transactions e.g. e--commerce,commerce,telemarketingtelemarketing

Indirect marketingIndirect marketing channelschannelsmedium valuemedium value--

added; medium cost of transactionsadded; medium cost of transactions e.g. retaile.g. retailstores, distributorsstores, distributors

Direct sales channelshigh valuehigh value--added; highadded; highcost of transactions e.g. own sales forcecost of transactions e.g. own sales force


10/17

10

Competitive Advantage ofCompetitive Advantage of

ChannelsChannels Traditional means of achieving competitiveTraditional means of achieving competitive

advantage is through products but can beadvantage is through products but can be

easily copiedeasily copied LowLow--cost as a competitive advantagecost as a competitive advantage

Also suffer from sustainabilityAlso suffer from sustainability

Brands as competitive advantageBrands as competitive advantage

Only if you are a strong brandOnly if you are a strong brand Marketers are turning more and more toMarketers are turning more and more to

channels as a competitive advantage e.g. Dellchannels as a competitive advantage e.g. DellComputerComputer


11/17

11

DistributionDistribution--Scope StrategiesScope Strategies Exclusive DistributionExclusive Distribution

Limiting the distribution to only oneLimiting the distribution to only one

intermediary in the territoryintermediary in the territory Intensive distributionIntensive distribution

Distribute from as many outlets asDistribute from as many outlets aspossible to provide locationpossible to provide location

convenienceconvenience Selective distributionSelective distribution

Appoint several but not all retailersAppoint several but not all retailers


12/17

12

Exclusive Distribution:Exclusive Distribution:

AdvantagesAdvantages

Maximize control over service level/outputMaximize control over service level/output

Enhance products image & allow higherEnhance products image & allow highermarkupsmarkups

Promotes dealers loyalty, betterPromotes dealers loyalty, betterforecasting, better inventory andforecasting, better inventory and

merchandising controlmerchandising control Restricts resellers from carryingRestricts resellers from carrying

competing brandscompeting brands


13/17

13

Example of IntensiveExample of Intensive

DistributionDistribution

NewspapersNewspapers

Most fast moving consumer goods youMost fast moving consumer goods yousee in the newsstandsee in the newsstand

Photo processing shopsPhoto processing shops


14/17

14

Advantages:Advantages:

Increased sales, wider customerIncreased sales, wider customerrecognition, and impulse buyingrecognition, and impulse buying

Disadvantages:Disadvantages:

Characteristically low price and lowCharacteristically low price and low--marginmargin

products that require a fast turnoverproducts that require a fast turnoverDifficult to control large number ofDifficult to control large number of

retailersretailers

Intensive DistributionIntensive Distribution


15/17

15

Selective DistributionSelective Distribution

Advantages:Advantages:

Better market coverage than exclusiveBetter market coverage than exclusive

distributiondistributionMore control and less cost than intensiveMore control and less cost than intensive

distributiondistribution

Concentrate effort on few productive outletsConcentrate effort on few productive outlets

Selected firms capable of carrying full productSelected firms capable of carrying full productline and provide the required serviceline and provide the required service


16/17

16

The Future: MThe Future: M--CommerceCommerce Mobile commerce is going to be the nextMobile commerce is going to be the next

revenue stream once the killer mobilerevenue stream once the killer mobile--application isapplication is rolledrolled outout


17/17

Thank youThank you

??????????????????????????????????????????????

??????????????????????????????????????????????????????????????????????????????

17

Documents

disrtibution ppt