5. Provide Distribution Efficiency
The channels bring together
manufacturer and user in an
economic manner and thereby
distribution efficiency to the
manufacturer.
6. Minimise number of contacts
needed for reaching consumers
When the channels are
dispensed with, the number of
contacts a manufacturer will
have to establish for reaching
out the consumers are far too
many.
7. Break the bulk and cater to
tiny requirements
Channels break the bulk and
meet small size needs of
individual consumers.
8. Supply products in suitable
assortments
The consumers normally need
an assortment of products. But
manufacturer can not provide
because it’s not feasible for him.
Thereby marketing channels are
needed.
9. Provide salesmanship
Buyers go by the
recommendation of the dealers.
The dealers establish the
products in the market through
their persuasive selling.
10. Help in Price Mechanism
Channels conduct price
negotiations with buyers and
assist in arriving at the right
price - the price that is
acceptable to the maker as well
as user.
11. Look After a Part of
Distribution and Financing
Channels also look after a part
of the phsycal distribution, order
processing and inventory
management and also share
financial burden.
12. Assist in merchandising
Merchandising; product
connected with a popular film,
singer, event, etc., or the selling
of these products.
13. Provide Market Intelligence
İn order to they are in constant
and direct contact with
customers, they can get
feedbacks of the customers.
14. Act as Change Agents and
Generate Demand
In some cases the marketing
task including diffusion of some
innovation among customers for
this reason channels go much
beyond of distribution.
15. Take Care of Flows Involved
in Distribution
The distribution process include
as a series of flows: physical
flow, the risk flow, the financing
payment flow… Marketing
channels handle of all these
flows.
16. Channel Functions Can not be
Eliminated
Firms assume that by
eliminating channels, they can
eliminate the channel costs.
When they do this, heavy
channel costs fall on company’s
shoulders.
17. Channel decisions have a bearing
other marketing decisions
The decisions on channel have
a vital bearing on other
decisions relating to marketing
For example pricing decisions
related to the channel pattern
adopted by the firm.
19. Sole-Selling Agent/Marketer
They are usually a large
marketing intermediary with
large resources and extensive
territory operation.
He takes care of most of the
marketing and distribution
behalf of the manufacturer.
20. C&F Agents (CFAs)
The CFAs can be described as
special category wholesalers.
Their function is distribution.
Their distinguishing
characteristic is they do not
resell products but act as the
agent of the manufacturer.
21. Semi-Wholesalers
Semi-wholesalers are
intermediaries who buy products
either from producers or
wholesalers.
They assist producer in
reaching a large number of
retailers efficiently
22. Retailer/Daler
Retailers sell to household
ultimate customers.
They are at the bottom of the
distribution. If the company
wants to use single tier, they
directly operate Retailer/Dealer.
23. DESİGNİNG A CHANNEL
SYSTEM
Every firms can use different
type of itermediaries. For
example, it can have a single-
tier or a two tier or a three tier
structure…
Steps:
24. 1. Formulating the Channel
Objectives
First step in desinging a channel
system.
The objectives clarify what is
sought to be achieved by having
the channels.
25. Channel objectives will decide
channel design
When Hindustan Lever lays
down the objective that Lifebuoy
should be available in more than
80 percent of the villages of
India, its channel design takes
shape in line with this objective.
26. Channel objectives will decide
channel design
Similar is the case, when FACT,
the fertiliser firm, lays down the
objective that in the home
market of company, no farmer
should have to travel more than
3 km to buy its product.
27. Channel objectives differ from firm
to firm; consequently their channel
designs differ
For example, intensity of
marketing coverage sought from
the channels and extent of
convenience to be provided to
the customer will vary from firm
to firm.
28. 2. Identifying Channel
Functions
Next step in designing a
channel system
Channel design depends on the
functions expected of the
channel and that functions must
be identified in specific context
in order to get practical
direction.
29. Linking Channel Design to
Product Characteristics
Different products require
different channel systems. The
firm should analyse the
characteristic of products and
choose the suit channel.
This factor in some detail:
32. Only some industrial products are
amenable for selling through
channels
The firm should check whether
its items are appropriate for
selling through channels. İf
“yes”, it must find out which type
of distributors will be
appropriate.
33. Even within consumer products,
channel requirements of different
products may vary
For example convenience
goods, shopping goods, and
speciality goods may need vary
of channel requirements.
34. The product’s PLC stage too
influence channel choice
PLC also helps channel
management. Different
channels fit different stages of
PLC.
35. The product’s PLC stage too
influence channel choice
A production in the introduction
stage will be relatively unknown
market. At this stage it
advantageous to sell product
directly to the customer,
dispensing with the channels.
36. Product influences type and
number of channel members as
well
For example for textiles or
shoes, franchises, who can run
showrooms, may be an effective
type of intermediary.
37. 4. Evaluation of the
Distribution Environment
Firm should evaluate the vital
features of the distribution
environment and ensure that the
proposed channel design is
compatible with them.
38. 5. Evaluation of Competitor’s
Channel Design
While the firm not necessarily
follow the competitors in
channel design is compatible
with them.
39. 6. Matching Channel Design
to Company Resources
Choice of channel is also
governed by the resources:
Firms with limited resources are
better off by depending on
conventional channels…
40. 6. Matching Channel Design
to Company Resources
Choice of channel is also
governed by the resources:
Firms with larger resources can
go in for varied distribution
channels
41. Evaluating the Alternatives
and Selecting Best
Two distinct evalutaions – an
economic evaluation and
conceptional evaluation – may
be necessary:
42. Economic evaluation; balancing
cost, efficiency and risk
Firm determines the unit cost of
selling in each of the
alternatives. The firm chooses
the one which is attractive from
the cost and lest risky.
44. Some Vital Aspects in
Finalising the Channel
The important aspects to be
decided are:
Channel intensity,
Number of tiers
The appropriate variant within
design.
45. Choosing the Channel
Intensity
For example, Maruti and
Mitsubishi India, being
passenger car firms operating
same market, may opt similar
channel design. But they may
settle for different channel
intensity.
46. Choosing the Number of Tiers
Correctly
Product type perhaps the most
important consideration.
For example for selling
passenger car fir need have
only one tier. Tootpastes or
cosmetics may need two or
three tiers.
47. Comparative merits of single-
tier and two-tier chanel
Single-tier Two-tier
Better motivation It helps quicker
to each member outflow of stocks
in the channel and more intensive
Firm can service coverage of the
all the outlets market.
directly But it results lower
The pattern profit to retailers
involves greater It also weakens
administrative the principal’s
burden control over outfit.
48. Selecting Appropriate Variant
within a Given Design
For example Nirma Chemicals
distributes Nirma soap with a
wholesalers-weighted system.
In contrast, HLL distributies its
Lifebuoy in the same market
through a retailer-weighted
system.
49. One Unified System
The firm has to handle
wholesaling, retailing and other
forms of selling as one unified
system and not seperate
entities.
50. Building channel system by
bottom-up method
Once the type of retailers suited
for context is determined, the
whole-saling arrangement that
would best suit the chosen retail
arrangement can be choosen
and put in place.
