Distribution i.e. 4th P of the 4 Ps

1. PLACING
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Deboleena Panja
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1/15/2014

2. DISTRIBUTION MANAGEMENT:
CONCEPT
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3. Distribution Management:
Concept
PRODUCT
PRICE
PROMOTION
PLACE
 Aims at delivering various products to different
types of buyers when & where they want those
and at a reasonable price.
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4. Distribution Management:
Concept
 The management of the efficient transfer of
goods from the place of manufacture to the point
of sale or consumption.
 Distribution management encompasses such
activities as
 Warehousing
 Materials handling
 Packaging
 Stock control
 Order processing
 Transportation
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5. CHANNEL MEMBERS
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6. Different Channel Members
 Resellers
 Wholesalers
 Retailers
 Industrial Distributors
 Specialty Service Firms
 Agents and brokers
 Distribution Service Firms
 Others: Insurance companies, transportation
routing assistance
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7. ROLE OF DISTRIBUTION
CHANNELS
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8. The Importance of Distribution
Channels
 Distribution channels often require the
assistance of others in order for the marketer to
reach its target market.
 The higher the number of channels, the greater
the company’s market coverage and rate of
growth of its sales.
 Increase the efficiency as the middlemen are
specialised agencies of distribution.
 Distribution agents facilitate search for buyers
and sellers by keeping in touch with both.
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9. Channel Efficiency
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10. Starbucks – Market Coverage
A comedian quipped about Starbucks:“I don’t
know how fast they are growing but they just
opened one in my living room.”
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11. Function of Channel Members
 Promotion:
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
Undertake sales promotion activities through
media and personal contacts.
Negotiation: Negotiate prices and other terms and conditions
between buyer and seller.
Information: Middlemen collect information about demand,
competition, etc., from con-sumers and pass on to
manufacturers.
Ordering: Intermediaries collect small orders from consumers
and on that basis place large orders with manufacturers.
Physical possession: Middlemen take possession of goods
from producers and pass on possession to consumers.
Financing: Provide financial assistances, for example buy
goods in cash from producers and sell them to consumers on
credit.
INDIAN INSTITUE
MANAGEMENTRAIPUR
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Risk taking: OFIntermediaries assume most of the risks

12. LEVELS OF CHANNELS
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14. TYPE OF INTERMEDIARIES
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15. Wholesalers
 Wholesalers are independently owned firm.
 Take title to the merchandise they handle, the
wholesalers own the products they sell.
 Purchase product in bulk and store it until they
can resell it.
 Generally sell the products they have purchased
to other intermediaries, usually retailers, for a
profit.
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16. Distributors
 Are similar to wholesalers.
 Wholesalers
carry a variety of competing
products whereas distributors only carry
complementary product lines.
 Usually maintain close relationships with their
suppliers and customers.
 Take title to products and store them until they
are sold.
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17. Retailers
 Takes title to, or purchases, products from other
market intermediaries.
 Can be independently owned and operated, like
small “mom and pop” stores, or they can be part
of a large chain, like Wal-Mart.
 Sell the products it has purchased directly to the
end user for a profit.
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18. Agents
 Is an independent individual or company.
 Main function is to act as the primary selling arm
of the producer.
 Represent the producer to users.
 Take possession of products but do not actually
own them.
 Agents usually make profits from commissions or
fees paid for the services they provide to the
producer and users.
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19. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
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20. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
 Product Considerations:
 Unit Value
 Perish ability
 Bulk and Weight
 Standardization
 Technical Nature
 Product Line
 Age of the Product
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21. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
 Market Considerations:
 Consumer or Industrial Market
 Number and Location of Buyers
 Size and Frequency of Order
 Customer’s Buying Habits
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22. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
 Company Considerations:
 Market Standing
 Financial Resources
 Management
 Volume of Production
 Desire for Control of Channel
 Services Provided by Manufacturer
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23. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
 Middlemen Considerations:
 Availability.
 Attitudes.
 Services.
 Sales Potential.
 Costs.
 Customs and Competition.
 Legal Constraints.
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24. FACTORS INFLUENCING
CHOICE OF CHANNELS
MEMBERS
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25. FACTORS INFLUENCING CHOICE
OF CHANNEL MEMBERS
 MARKET FACTORS
 PRODUCT FACTORS
 COMPETITIVE FACTORS
 ENVIRONMENT FACTORS
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26. MARKET FACTORS
 CONSUMERS
 number of consumers
 their geographic location
 purchase pattern
 INTERMEDIARIES
 relative strengths and weaknesses of intermediaries
 the differences in the types of functions performed
and facilities and privileges desired by them
 COMPETITORS
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27. PRODUCT FACTORS
 INDUSTRIAL / CONSUMER PRODUCT
 direct channel is useful because of the relatively small
number of customers need for personalized attention,
customer training requirements and after sale servicing
 PERISHABLE NATURE
 direct channel is beneficial
 SEASONALITY
 intermediaries
are seldom prepared undertake the
function of inventory carrying
 manufacturer build up indirect distribution channels.
 TECHNICALITY
 Direct channel relatively useful
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28. COMPANY FACTORS
 FINANCIAL STRENGTH
 is better placed to select and design its distribution
channel
 PAST CHANNEL EXPERIENCE
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29. ENVIRONMENT FACTORS
 COMPETITIVE FACTORS
 Alternative distribution channel may be used as a
means of attaining competitive advantage
 MIDDLEMAN FACTORS
 Availability of Middleman
 Attitude
of Middleman Services Provided by
Middleman
 Sales potential of Middleman
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30. THANK YOU
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