Distribution Channel Management

1. DISTRIBUTION CHANNEL MANAGEMENT
DISTRIBUTION CHANNEL
MANAGEMENT
Presented By:-
Bhanu Negi
Gaurav Singh
Piyush Sharma
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2. DISTRIBUTION CHANNEL MANAGEMENT
Objective
Distribution channels and needs
Types of distribution channel and conflicts
Distribution channel strategies
Rural distribution channels
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3. DISTRIBUTION CHANNEL MANAGEMENT
Distribution
 The process of deciding how to get goods in customer’s
hand.
 One of the 4p’s of marketing.
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4. DISTRIBUTION CHANNEL MANAGEMENT
Distribution channels
The path through which goods & services travel from :-
 Manufacturer to customer (g&s)
 Customer to manufacturers (payment)
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5. DISTRIBUTION CHANNEL MANAGEMENT
Direct and indirect distribution
Direct distribution – direct sell to customer with no
intermediaries
Ex:- manf customer
Indirect distribution – involving one or more intermediaries
Ex:- manf w/s agent retailer customer
example
 Wholesalers
 Retailers
 Agent
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6. DISTRIBUTION CHANNEL MANAGEMENT
Structure of direct channel
MFG MFG MFG MFG MFG
Consumer Consumer Consumer Consumer Consumer
With no intermediaries 25 transactions needed.
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7. DISTRIBUTION CHANNEL MANAGEMENT
Structure of Indirect channels
MFG MFG MFG MFG MFG
Consumer Consumer Consumer Consumer Consumer
Intermediary
With 1 intermediary 10 transactions needed.
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8. DISTRIBUTION CHANNEL MANAGEMENT
Example
Coffee does not reach the consumer before first going
through a channel involving the farmer , exporter/importer
, distributor and retailer.
This is called distribution channel
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9. DISTRIBUTION CHANNEL MANAGEMENT
Pro’s and con’s
Pro’s
 Helps in minimising the distribution expenses (transport
, intermediaries)
 Smooth flow of goods & services ,information ,money
etc.
 Helps the business to reach maximum customers
Con’s
But each intermediaries receives the item at one pricing
point and moves it to the next higher pricing point until it
reaches the final user.
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10. DISTRIBUTION CHANNEL MANAGEMENT
Channel conflicts
 Arise when one intermediary actions prevent another
intermediary from achieving their objectives
 Vertical channel conflicts
 Occurs between the levels within a channel
 Horizontal channel conflicts
 Occurs between intermediary at the same level within
channel
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11. DISTRIBUTION CHANNEL MANAGEMENT
Distribution channel strategy
 Setting distribution objective
 Finalizing channel activity
 Organizing the activities
 Developing policy guidelines for
 Day-to-day operation
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12. DISTRIBUTION CHANNEL MANAGEMENT
Selection of channel in rural area
 Size of prospective channel member
 Sales Strength
 Product lines
 Reputation
 Market Coverage
 Sales Performance
 Management
 Advertising and sales Promotion
 Sales Compensation
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13. DISTRIBUTION CHANNEL MANAGEMENT
Rural distribution channel - Major issue
 Economic issues
 Physical infrastructure
 Service output issues
 Diversity related issue
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14. DISTRIBUTION CHANNEL MANAGEMENT
Analysing customer’s Desired Service
output levels
What kind of service levels are expected by target
customers
Five Service Output levels
 Lot Size
 Waiting time
 Spatial convenience
 Product variety
 Service backup
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15. DISTRIBUTION CHANNEL MANAGEMENT
 Lot size:- No of units the channel permits a typical
customer to purchase on one occasion
Example:-
Purchase of Air-conditioners
 Waiting time:- Time for which channel have to wait for
receipt of the goods
 Spatial convenience:- Degree to which the
marketing channel makes it easy for customer to
purchase the product.
ex :- Maruti vs Honda City
 Maruti :-About ten dealers in Delhi
 Honda:- About 2 dealers
 Maruti offers greater spatial convenience than
 Honda
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16. DISTRIBUTION CHANNEL MANAGEMENT
 Product variety
 Variety
 Normally customers prefer variety
 More choice
 Example
 Shoppers Stop vs. Snowhite
 Wide variety in Shoppers Stop
 Snow white – only garments
 SERVICE BACKUP
 Add – on services
 Credit
 Deliver at home
 Installation
 Repairs
 Provided by the channel
 Higher the service backup, greater the work provided by the channel.
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17. DISTRIBUTION CHANNEL MANAGEMENT
Types of distribution (intensity)
 Intensive distribution
 Manufacturer used all possible outlets for distribution
 it required where customer have the wide range of
brands
 Example:- if one brand is not available ,a customer will
simply choose another product
 Cigarette , biscuits and beer etc.
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18. DISTRIBUTION CHANNEL MANAGEMENT
 Selective distribution
 Limited outlets used for distribution
 Choose best performing outlets
 Helps in gain optimum market coverage
 Exclusive distribution
 Only one wholesaler or retailer used in a specific
geographical area
 Helps in making high prestigious image
 Takes benefits of aggressive selling
 Example:- automobiles – Rolls Royce
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19. DISTRIBUTION CHANNEL MANAGEMENT
 CHANNEL LEVEL (indirect distribution)
Number of channel partners between producer & consumer
Various levels are
 Zero – level
 One – level
 Two - level
 Three – level
 Zero – channel
 No channel partners
 Producer directly to customers
Example:-
 Eureka Forbes Door – to – door selling
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20. DISTRIBUTION CHANNEL MANAGEMENT
 One – level channel
One intermediary
Example:-
Competent motors channel partners for Maruti
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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21. DISTRIBUTION CHANNEL MANAGEMENT
 Three – level channel
Three intermediaries
Example :– Hindustan lever
Company
Stockist …........... (district level)
Wholesaler. .…… (town level)
Retailer……........ (village level)
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22. DISTRIBUTION CHANNEL MANAGEMENT
Channels Design (11 C’s)
 Customer characteristic
 Culture distribution
 Communication
 Competition
 Company objective(for market share and profitability)
 Character(Nature of the product and position of the product)
 Capital (financial requirement)
 Cost(cost incurred in maintaining the channel)
 Coverage ( Intensive, selective and exclusive Distribution)
 Control ( product/service presentation, quality and Image)
 Continuity
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23. DISTRIBUTION CHANNEL MANAGEMENT
Comparing the channel design
 Effectiveness
 Efficiency
 Equity
 Scalability
 Flexibility
Channel establishment plan
 Main purpose of the channel to be setup.
 The profile of the customer who are the target market for the
channel.
 Need and requirement of the target market.
 Analysis of the operation of the existing channel that deal in
the similar product/service lines.
 Detail activity chart for achieving the service output objective.
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24. DISTRIBUTION CHANNEL MANAGEMENT
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