1+2.Distribution Function n Equity,Channel Design

Distribution Management

•Distribution Channels

SALES AND DISTRIBUTION MANAGEMENT: Syllabus

Marketing Channels : Definition & Importance, Functions of Marketing Channels

Channel Institutions & control, Wholesaling & Retailing, Channel Information systems, Managing & Evaluating Channel Performance, tasks and responsibility of channel members.

Technology in distribution - ERP Solutions (opportunities and challenges)

Rural Distribution - Future Prospects, Challenges and Success stories with strategies

Fiscal Levies \ Regulation in distribution - CST, LST, Octroi, Excise duties etc…

Supply Chain Management - issues, opportunities and strategies.

DistributionProduct distribution (or place) is one of the four elements of the marketing mix. Its an organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user .

Distribution in supply chain management refers to the distribution of a good from one business to another. It can be:

factory to supplier,

supplier to retailer, or

retailer to end customer.

It is defined as a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user.

Channels of Distribution

A number of alternative 'channels' of distribution may be available:

• Distributor, who sells to retailers via direct marketing, or brokers can also be used,

• Retailer (also called dealer or reseller), who sells to end customers

• Direct Distribution(Direct Marketing),where an organization sells its products directly to the end customer.

Types of Distribution channels

Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, any particularly the brand leaders in consumer goods markets (price competition may be evident).

Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.

Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.

Distribution Equity

• Distribution Equity (DE) is the term which can be used to define the edge that a company or business holds in a market due to its strong distribution channel.

• Distribution equity is the asset value of a distribution relationship.

• Distribution equity is characterized as the increase in marketing opportunities that result when a firm effectively utilizes its Knowledge relationships with an existing distribution channel partner to market its products.

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• Provides market information• Interprets consumers’ wants• Promotes producers’ products• Creates assortments• Stores products• Negotiates with customers• Provides financing• Owns products• Shares risks

• Anticipates wants• Subdivides large quantities of a product• Stores products• Transports products• Creates assortments• Provides financing• Makes products readily available• Guarantees products• Shares risks

SALES SPECIALISTFOR PRODUCERS

PURCHASING AGENTFOR BUYERS I

NTERMEDIARY

The Distribution Functions

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Designing the ChannelChannel design is a strategic marketing tool. Four

decisions can be help a firm design a distribution channel:

• what role distribution is to play in achieving objectives

• what type of channel is needed? with or without intermediaries?

• what level of intensity of distribution?• which specific intermediaries to use? which will

be best suited to achieve objectives?

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Specifythe role ofdistributionwithin themarketingmix

Selecttype ofdistribu-tion channel

Determine appropriateintensityof distri-bution

Choosespecificchannelmembers

The Well-Designed Distribution Strategy

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Selecting the Type of Channel• some firms will distribute directly; others will

use a number of intermediaries:– producerconsumer (direct)– producerretailerconsumer– producerwholesalerretailer consumer– produceragentretailerconsumer– produceragentwholesaleretailerconsu

mer• when would each of these be considered?

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Major Distribution Channels

• For distribution of consumer goods, five different types of channels are widely used.

• Business goods are normally distributed through four major types of channels.

• There are only two common channels of distribution for services.

• Some producers are not content to use only a single distribution channel and use multiple channels (a.k.a dual distribution)

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ULTIMATE CONSUMERS

PRODUCERS OF CONSUMER GOODS

Retailers Retailers Retailers Retailers

Merchantwholesalers

Merchantwholesalers

Agents Agents

Consumer Channels

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BUSINESS USERS

PRODUCERS OF BUSINESS GOODS

Merchant wholesalers(industrial distributors)

Agents Agents

Merchant wholesalers(industrial distributors)

Business Channels

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ULTIMATE CONSUMERS OR BUSINESS USERS

PRODUCERS OF SERVICES

Agents

Service Channels

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Multiple Distribution Channels• some firms will use several distribution

channels to reach specific markets or segments• dual distribution is used, for example, to reach

business and consumer markets, or to carry different groups of products

• or may be used to reach different segments of the seller’s market; different sizes of buyers or different regions of the country

• some companies operate their own stores

Channel Designs: Parallel Design

Channel Management for Consumer Products

Channel Management for Industrial Products

Levels of channel Management