This aspect of marketing provides place, time & possession utility to the customer. If a consumer wants to buy a tube of Colgate toothpaste, then the company ensures that toothpaste is made available to this consumer at a retail shop near by his residence- thus providing the ‘place utility’.

1. Distribution
Strategy

2. Concept of Distribution
• This aspect of marketing provides place, time
possession utility to the customer.
&
• If a consumer wants to buy a tube of Colgate
toothpaste, then the company ensures that toothpaste is
made available to this consumer at a retail shop near by
his residence- thus providing the „place utility‟.
• If this customer wants to buy this pack of toothpaste
@ 8pm on Tuesday, the company ensures that the
product is available at the retail counter at this chosen
time of the consumer- thus providing the „time utility‟.

3. • When the consumer goes to the retail shop to buy the
tube, he can pay for it & take it home whereby he
becomes the owner of the tube and thus the
„possession utility‟ has also been provided for.
• Thus distribution management is the art & science
of determining requirements, acquiring them,
distributing them and finally maintaining them in
an operationally ready condition for their entire lifes.

4. Distribution Channel
• A distribution channel is a group of people &
firms involved in the transfer of title or
ownership as the product moves from the
producer to the ultimate consumer.
• The American Marketing Association describes
a distribution channel as: “the structure of
intra company organization units & extra
company agents, dealers, wholesalers and
retailers through which a commodity, product or
service is marketed.”

5. It can be further classified as:
1. Sales Channel- which has the functions of
motivating buyers, sharing information between
the consumer & the company, negotiating fair
bargains for the consumer and financing the
transactions.
2. Delivery Channel- which is only meant for physical
transactions. This is the primary job of C&FA.
3. Service Channel- which performs after sales
service like a Maruti service station.

6. A distribution Channel includes
manufacturer
C &F As
Distributors
Customer
/ Consumer
Retailer
Wholesaler

7. Factors required for designing an effective
distribution strategy
1. Defining customer service levels: • Companies should think in terms of categorizing
their customers into A, B & C (Pareto‟s law) to
decide different levels of service.
•
Category A customers, who contribute the
maximum to the company volumes & revenue will
obviously get special treatment. An automobile
company takes extra care of the services of this
category who may contribute maximum to the
sales of its trucks.

8. Cont…
• B category are the next set of customers who
contribute regularly but in moderate levels to the
business. They get second priority in service but are
important as they have potential to become “A
category.”
• C category customers are low contributors and
may not even be regular. They can be handled as
part of the routine marketing plans.

9. 2.
Setting
distribution
objectives
• Apart from the firm‟s decision on the service levels to
be provided, the customers also have certain
expectations from the company and its channel
partners.
• E.g. retailers selling HUL Products, the distribution
objectives to be worked out in this case will be to take
care that the retailers & distributors should hold
minimum stock, they should never run out of stock,
the desired levels of customer service should meet
their expectations etc.

10. 3. Set of activities
• Periodic (normally monthly) sales forecasts by geography.
• Arranging for dispatch of the products from the plants or C&
FAs to a point closest to the market normally the distributor‟s
point.
• Developing beat plans for market coverage, service engineers.
• Market visits to sell the product.
• Collection of sales proceeds.
• Carrying out promotional activities.
• Calling regularly on “A category” customers to build long
term relationships.

11. 4. The distribution organization
• Who will do to what extent of in-company support
(own sales team) and outsourcing (use of channel
partners) is the big question.
• The planning of inventory, arranging for dispatches
etc. are done by the company personnel.
• „ Affordability ‟ is an important factor as far as the
selection of the channel partners are concerned. Own
sales team means high fixed costs whereas a bigger
outsourced network may mean higher variable costs
if the volume goes up.

12. Cont…
• Selecting of the channel partners including C&FAs
and distributors, stockists or agents establishes that
the channel cannot be easily and frequently
changed.
• Clear objectives for each channel partners should
be set & system to measure the performance of these
partners should be there.

13. 5. Policy & procedures
• It is expected that the company sales personnel &
channel partners understand what is expected of
them and discharge their roles & responsibilities
faithfully.
• Hence companies clearly define policy and
guidelines. Normally this is in the form of Operation
Manuals which are in the custody of sales people.
• This manual is capable of answering any query on
procedure which sales people or channel partner
may have in any given situation.

14. Policy & procedures
Apart from routine procedures, guidelines are also
required for:
– Complaints from channel partners
– System for settling disputes
– Any additional payments to the channel members
– Coverage of business & service levels to be extended

15. 6. Key Performance Indicators
(KPIs)
• Consistent achievements of targets by product groups,
territories.
• Achievement of market shares & profitability.
• Zero complaints from the customers.
• No stock returns.
• Ability to handle emergencies & sudden rise in
demand.
• Balanced sales achieved.
• Market coverage with ready stocks.
• Minimise damages to the product.

16. 7. Critical Success Factors (CSFs):
• Clear, transparent and unambiguous policy &
procedure.
• Serious commitment to the channel partners.
• Fair dealing of the company with all its partners i.e.
no biasness.
• Clearly defined customer service policy.
• Equal distribution in times of shortage of a product.
• Compensation to channel partners on special
promotional activity should be prompt & not
delayed.

17. Two types of distribution strategy
1.Distribution Scope Strategy : - Establishing the scope of
distribution, i.e. the target customers, Choices are:
– Exclusive Distribution (one retailer is granted sole rights in
serving a given area)eg: Bata, Nike, Mercedes, Gucci bags ,
Rolex watches.
– Intensive Distribution (a product is made available at all
possible retail outlets) eg. Toothbrush, toothpaste etc.
– Selective Distribution (Between exclusive and intensive
distribution there is Selective Distribution, many but not all
retail outlets in a given area distribute a product). Eg.
Consumer Durables

18. 2. Multiple Channel Strategy
Employing two or more different channels for
distribution of goods and services. Multiple-channel
distribution is of two basic types:
• Complementary (each channel handles a different
non-competing product or market segment)
Example- VIP Sells through discount stores and
company's outlet
• Competitive (two different and competing channels
sell the same product). Example- two different
automobile dealer of Bajaj Automobiles.

19. E-Commerce: Online Distribution
The success depends on the characteristics of the
consumers in the market in terms of their disposition
to e-commerce and surfing habits e.g.
• South Korea has the most dynamic Internet surfers in
Asia. They spend the least time—28 seconds—on a
web page before moving on
• Australian surfers were the “stickiest”, clocking one
minute per page
(Source: March 2001 figures from Nielsen/Net Ratings Global
Index)
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20. The Future: M-Commerce
• Mobile commerce is going to be the next revenue
stream in the coming days
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