distribution.ppt

7/30/2019 distribution.ppt

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DISTRIBUTION


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DISTRIBUTION / PLACE ISSUES

At the end of this module the learning

outcomes are:

1. What are the roles and functions of

channel partners?2. Various types of channel levels.

3. What are considerations in channel

design decisions


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SUGGESTED READINGS

1. Marketing management by Kotler,

Millineium edition, chapter 16.

2. Marketing management by Ramaswamiand Namkumari, chapter 21.



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DISTRIBUTION ISSUES PLACE

Why do you use

- Dealers

- Stockist

- Distributors etc

How does the product becomes available

to customer



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Marketing channels

Set of interdependent organizations

involved in the process of making a

product for use or consumptionExample

- Dealers

- Distributors- Retailers

- Agent



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Marketing channel

- Hindustan lever Lifebuoy

Goes to villages

5 lakhs villages in India

Can Lever set up 5 lakhs offices?

Do they have such resources?

No

Probably no company in this world has

Need of partner

Help you to reach your target customers

Role of channel partner required.



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CHANNEL FUNCTIONS & ROLES

1. Information gathering / feedback

- Potential / current customers

- Competitors

- Used by companies to alter marketing

mix

- Can take actions to counter competition



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2. Supply products in assortments

Example Pepsi

Pepsi supplies in case of 24 bottles

- Crate Suppose consumer requires

- 1 Pepsi

Shopkeeper

- Provides 1 Pepsi

Breaks products in assortments



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3. Risk sharing

- Channel members

- Buy goods from producers

- If the goods do not sell?

- Who bears the risk

- Channel partner

Risk sharing is critical



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4. Helps merchandise the product

Merchandising Attractive display

Increases

- Awareness

- InterestMusic world

Wide display of music

Can try

Attractive display Dcor

Invested in space, display

Sales personnel, warehouse, trucks



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5. Provides salesmanship

6. Assists in sales promotion

7. Provides pre-sale and after-saleservice.

- TV servicing in rural areas

- Company or channel

- Done by channel partner



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7. Extend credit to select customers

- Buy now, pay later.

8. Helps in test marketing

- Testing products before launch

- Use channel premises



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CHANNEL LEVEL

No of channel partners between

producer & consumer

Various levels are1. Zero level

2. One level

3. Two - level4. Three level



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1. Zero channel

No channel partners

Producer directly to customers

Examples

Eureka Forbes

- Door to door selling

Boeing- Directly to Indian airlines



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2. One level channel

One intermediary

Example

Competent motors Channel partners for Maruti

3. Two - level channel

Two intermediary

Example

Onida black & white TV

Onida sells to distributor in each district

Retailer buy from distributor



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4. Three level channel

Three intermediaries

Example Hindustan lever

Company

Stockist . (district level)

Wholesaler (town level)

Retailer (village level)



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Analysing customers DesiredService output levels

- What kind of service levels are

expected by target customers- Five Service Output levels1. Lot Size

2. Waiting time

3. Spatial convenience4. Product variety

5. Service backup



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1. Lot size

No of units the channel permits a typicalcustomer to purchase on one occasion

ExamplePurchase of Air-conditioners

A. Maruti

Prefer a channel from where it can buy 100

Air ConditionersB. Household

Buying a lot size of 1 Air conditioner.

Shop



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2 Waiting time

Average time customers of that channel

have to wait for receipt of the goods.

Customer normally fast delivery channels

Bread / Newspaper

Customer want newspaper every day

morning Will you wait for newspaper till evening ?



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3. Spatial convenienceDegree to which the marketing channel makes it

easy for customer to purchase the product.

Maruti Baleno vs Honda City

Maruti

About ten dealers in Dealers in Delhi

Honda

About 2 dealers

Maruti offers greater spatial convenience thanHonda

Repair and search cost lower in Maruti.



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4. Product variety

Variety

Normally customers prefer variety

More choice

Example

Shoppers Stop vs. Snowhite

Wide variety in Shoppers Stop

Snowhite only garments



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5. SERVICE BACKUP

Add on services

- Credit

- Deliver at home- Installation

- Repairs

Provided by the channel

Higher the service backup, greater the workprovided by the channel.



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6. MAJOR CHANNEL ALTERNATIVES

Has three elements

1. Types of intermediaries

2. Number of intermediaries

3. Terms and responsibilities of

intermediaries



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A. Types of Intermediaries

1. Company salesforce

Sales personnel from company directly

Products are complicated / not

understood

Boeing

Aircrafts

Complex

Can take one yr to finalize the sale

Own sales force Trained



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2. Dealers Appoint middleman in different territories

Example LG

Sells TV through multibrand dealer outlets

- Pankaj Electronics3. Canteen stores department (CSD)

Buys on behalf of defence services in India

Defence personnel can buy

LG

BPL supplies in CSD canteens all over India

Defence personnel buy from CSD departments.



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DISTRIBUTION CHANNELS

CEAT Tyres

1. Company Salesman

Supply to large Automobile

Manufacturers- Maruti, Ford, Hyundai

2. Dealers

Multibrand Shops all over India3. Ceat exclusive showrooms

Exclusive shops dealing with Ceat tyres

only


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B. Number of Intermediaries

Three types of strategies

1. Exclusive distribution

2. Selective distribution

3. Intensive distribution



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1. Exclusive distribution

Limiting the use of intermediaries

Not allowing competing brands

Maintain control Total commitment of intermediary

Maruti

Exclusive dealers

Huge investments by dealers

Maruti provides support



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2. Selective Distribution

Use of more intermediaries

Compared to exclusive

Need more visibility More control

Less cost

Shahnaz Hussain Herbal products Not available from every Grocery shop

Available at select outlets

Maintain Image



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3. Intensive Distribution

As many outlets as possible

Multiple channels

Consumers widespread

Reach critical

Problems of control

ExampleLux Soaps, Lifebuoy, Colgate



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C. Terms and responsibilities of channelMembers

Profitable relationship- Producer

- Channel partner

Rules of the game

Channel partner responsibilities- Prices

- Discounts

- Terms & conditions of sale

Credit policies

Defective return policies

Merchandise

Dos and Donts



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- Territorial Limit

- Scope of each others activities

Both work united

Conflicts happen when their roles are notclear



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Channel-Design Decisions

Economic Control

Adaptive

Criteria for Channel Alternative

Evaluation


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Channel-Management Decisions

Modification

The Channel Development Process

Motivation

Selection

Evaluation

Training

Channel Member

Channel Channel

Documents

distribution.ppt