Wk 1 Distribution Management and Marketing Mix

7/27/2019 Wk 1 Distribution Management and Marketing Mix

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To understand the role of distributionmanagement in the marketing mix

To understand why distribution channels arerequired

To study how distribution channels add valueto the marketing mix

To get a brief introduction to distribution

channel strategy To get an overview of distribution channel

members


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To understand different kinds of distributionnetworks

To understand about channels of ruralmarkets

To understand the different levels of intensityin the distribution effort


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The management of all activities whichfacilitates movement and coordination ofsupply and demand in the creation of timeand place utility in goods.

The art and science of determiningrequirements, acquiring them, distributing

them and finally maintaining them in anoperationally ready condition for their entirelives.


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Broad range of activities concerned with theefficient movement of finished products fromthe end of the production line to theconsumer and in some cases it also includes

the movement of raw materials from thesource of supply to the beginning of theproduction line.


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Place Utility Time Utility

Possession Utility


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The manufacturing sector cannot contributeto the growth of GDP without the support ofthe distribution systems in operation to helpthe manufacturing sector reach the goods

and services to the end user.

In the past, companies undertook many

distribution related operations and manycompanies believed that they can perform thetask themselves.


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Link between the manufacturer and his customers

Any channel member other than the manufacturer orend user

Their primary job is to re-distribute the products ofthe company in a manner that it reaches the ultimateconsumer and gets used.

Help in the smooth flow of goods and services

Help the process of exchange of goods and servicesat a certain margin to themselves


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ManufacturingPlant

Carrying and Forwarding Agent (C&FA)

Distributors

Retailers

Consumers


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Direct from the company via house to housecampaign

Direct from the company if it has a stall in aconsumer product exhibition

The company delivers the product in bulk to aC&FA or a distribution center, which breaks bulkand gives to distributor, distributor sellsconvenient lot sizes to retailers and retailers sells

to consumers

The distributor sells to a wholesaler who thensells to a retailer


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To accumulate the right kind of goods,aggregating and sorting to meet consumerneeds at the point of purchase

To believe in routine and simplifiedtransactions and work with a large number ofproducts (at the wholesaler and retailer level),

so that distribution cost is minimized


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To provide information both to the sellers andthe buyers to help them manage their businessbetter

To buy a large variety of goods and compare

costs and prices and make the rightrecommendations to their customer

To be aware of the environment in which theyoperate, hence, isolate the companies from the

direct impact of these local conditions

To reduce the number of touch points for thecompany


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Not always

With the advent of internet, companies likeAmazon and Dell can directly deal withconsumers

Technically complicated products (i.e.

medical equipment)


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Company 1 Company 2 Company 3

Intermediary

Large number of Consumers


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Placing goods or services where they areneeded and when they are needed is the jobof distribution channels.

The route between producers and consumersthat goods companies take to reach theirend-users or customers are called marketing

channels, trade channels or distributionchannels.


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Marketing Channels are the distribution networkthrough which the producers products flow tothe market

Marketing Channel may be defined as theexternal contractual organization which thecompany operates to achieve its distributionobjective.

A distribution channel is a set of independentorganizations involved in the process of makinga product or service available for use orconsumption by the customer or industrial user.


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Depending on The nature of the company and its products The nature and dispersal of the companys

customers The business goals of the company The companys capabilities and strengths Speed with which a company wants to

increase its sales and coverage of the market Nature of competition and how it operates Companys market shares


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Distribution channels take care of 4discrepancies that exist in the market place:

Spatial Discrepancy

Temporal Discrepancy

Need for Breaking the Bulk

Need for Assortment


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The distribution function adds value to theselling function by providing time, place andpossession utility to the consumer


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Corporate Strategy

Marketing Strategy

DistributionStrategy


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Defining customer service levels Defining distribution objectives to achieve

these service levels

Outlining the steps or activities required toachieve the objectives

Deciding on the structure of the network toimplement these activities

A clearly defined policy and procedure for thenetwork to carry out its daily activities

Stating the Key Performance Indicators


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Industrial Products Consumer Products

Consumer Durables

Pharmaceutical Products

Textiles/Paper Chemicals and Fertilizers

Automotive and Engineering

Services

Cellular Services IT Hardware

IT Software


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1. Objective Questions2. Conceptual Questions

3. Discussion of individual companysdistribution channel

Documents

Wk 1 Distribution Management and Marketing Mix