SDM - Part II- Channels of Distribution.pptx

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  hannels of

Distribution

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Distribution Channel

The chain of businesses or intermediaries through which agood or service passes until reaches the end consumer.

A distribution channel can be as short as being direct from the

vendor to the consumer or may include several inter-connected(usually independent but mutually dependent)

intermediaries such as wholesalers, distributors, agents,

retailers.

Each intermediary receives the item at one pricing point and

moves it to the next higher pricing point until it reaches the

final buyer. Also called channel of distribution or marketing

channel .

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Producer Consumer

Producer Retailer Consumer

Producer Wholesaler Retailer Consumer

Producer Agent Wholesaler Retailer Consumer

Channel of Distribution 1

Channel of Distribution 2

Channel of Distribution 3

Channel of Distribution 4

DISTRIBUTION CHANNELS

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Distribution channel

of

FM G Goods

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Definition of FMCG Goods

FMCG are products that have a quick shelf turnover, at

relatively low cost and don’t require a lot of time and

financial investment to purchase. The margin of profit

on every individual FMCG product is less.Examples: Lux soaps, Colgate, Surf excel, Pepsi, Maggi

etc.

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Characteristics of FMCG goods

• From the consumers' perspective:

 – Frequent purchase

 – Low involvement (little or no effort to choose the item

Products) – Low price

• From the marketers' angle:

 – High volumes

 – Low contribution margins

 – Extensive distribution networks

 – High stock turnover

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Dabur

Factory

Carry & Forward

agent

Super Stockist Stockist Institute &

Modern

tradeRural Stockist

(INDIRECT)

Consumer

Wholesaler Retailer Wholesaler Retailer

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Profit Margins

Carrying & Forwarding Agent 1.5%

Super Stockist 2 - 2.8%

Distributor/ Stockist 5.8%

Re- Distributor / Sub – Stockist 3.8%

Wholesaler 1.5 – 2%

Retailer 7 – 8 %

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SAMPLE PRICES AT VARIOUS LEVELS

C&F

agent

Super

Stockist

Distributor

/Stockist

Sub-Stockist Wholes

aler

Retailer

Landing

Price

33.60 34.08 34.08 34.70 36.05 36.77

Selling

Price

34.08 34.70 36.05 36.05 36.77 39-45

MRP 45

Dabur Amla hair Oil – 100ml

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Typical Distribution of P&G Products

Manufacturers (PGHH Ltd.India)

Marketing Agents - State wise

Retailers/Wholesalers/Distributors

Chemists Shops, Provision Stores ,

Retail Outlets, Big Markets etc

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Distribution Channel At The Bidadi

Plant BangaloreBidadi Plant

Targeted Customer In &

Around Bangalore City

Hebbal

Depot

Delivery

Trucks

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 WHITE GOODS

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•

Heavy consumer durables such as airconditioners, refrigerators, stoves, etc., which

used to be painted only in white enamel

finish.

• Despite their availability in varied colors now,

they are still called white goods. See also

brown goods.

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 TYPES

Major appliances may be divided as:

  Refrigerators

Stoves

Washing equipment

Miscellaneous like AC, Computer, Television,

Water heater, Amplifiers.

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• White GoodsDistribution Network

Customers

Distributor OrDealer

Retailer

Producer

Service backup

Own or

Franchise

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 SAMSUNG DISTRIBUTION CHANNEL

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Company Manufacturing

Unit

C&F Agent

Distributor

Franchised

OutletsBig Retailers Retailer Chains

Small

dealers/retailer

Digital

Plazas

Digital

Homes

Digital

Worlds

Customers

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B B CHANNEL

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Business to Business (B2B) marketing refers to a market where

other businesses, not end consumers, are the purchasers of the

goods and services.

B2B describes commerce transactions between

businesses, such as between a manufacturer and a wholesaler,

or between a wholesaler and a retailer

For example, a chair manufacturer may buy steel for the frame from one

company, wood from another, and the fabric from another 

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CH NNEL STRUCTURE FOR

SELLING THE REFRIGER NT

G S

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Manufacturer

Direct Channels Indirect channels

Direct

Sales

Online

MarketingTelemarketing Manufacturers

Representatives

IndustrialDistributors

Customer Segments

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Distribution channel at CEAT Tyres

CEAT has one of the largest distribution network for tyres in India. It has divided the

Indian sub continent into 33 regions and has set up a Regional Office for each region.Clearing and Forwarding agents (C&FAs) are attached to them. Often the larger regions

have 2 or 3 or more C&FA’s to cover the region properly. The total number of C&FA’s

across the country is 112.

The basic operating structure of the Ceat Ltd comprises of the following entities:

FactoryRDC

C&FA

Dealers

CEAT has three level distribution structure. The factory supplies goods to the RDCs

(Regional Distribution Centers) and from these RDCs the goods are transferred to CFAs(Carrying and Forwarding Agents) which act as godowns for distribution to the dealers.

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• Services Sector

Distribution Network

Customers

Producer

Franchise/

Agent

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Distribution Channel

for Insurance

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• Insurers market various insurance covers either directly or through various

distribution The marketer in the distribution network is in direct interface

with the prospect and the customer.

• An increasing number of insurers are using multiple distribution channels

as they continue to balance the needs of different groups of consumers

against the cost of distributing their products and services. When it comes

to insurance distribution channels, one size does not necessarily fit all.

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Channels In the Insurance Markets

• Personal Distribution Systems

Agencies of different models and brokerages, banc assurance,

and work site marketing

• Direct response distribution systems

Client purchases the insurance directly

Internet, telemarketing, direct mail, call centers, etc..,

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Types of Insurance

• Life Insurance

• Health Insurance

• Agriculture Insurance

• Vehicle Insurance

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Insurance

CompanyConsumer

InsuranceCompany

Agents Consumer

Channel of Distribution 1

Channel of Distribution 2

DISTRIBUTION CH NNELS

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Direct Channel

Insurance

Companies Consumer

Internet

DirectMarketing

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Indirect Channels

Banc

assurance

Trade

Specific

NGO’s 

Post

Offices

Insurance

Brokers

CustomerInsurance

Company

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Bharati xa Life Insurance

Distribution Head

Direct Sales BrokersLife

Advisors

Other

Channels

Consumer

ll l

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Cellular Services

Idea CellularService Provider

Hardware Software Services

Own Sales

Team

Franchise/

Dealers

Consumers

d i

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• DELL

Hardware Services

Customers

Service

Provider

Services BackUp

Franchisee/Own/

Reseller

Dealer/

Reseller

Own Sales

Team

H i li S

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Hospitality Sector

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Marketing Intermediaries of Hotel Industry 

• Travel Agents

• Tour Wholesalers

• Specialists• Hotel Reps

• Concierges

• National, State, and

Local Agencies

•

Consortia andReservation Systems

• Global Distribution

Systems• Internet

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Airlines

Distribution Network

Clients

Airlines

Direct Distribution-Call center or

website

Computer

Reservation

Systems

Online Travel

Agents

Brick-and-Motor

travel agents

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 Selecting a distribution channel is an important aspect of building a competitive advantage for businesses of every

size.

The right distribution channel ensures that customers indifferent locations around the country, or around the

world, can buy your products and get the right level of

service from your company.

Conclusion: