Channel of Distribution (Place) in Marketing Mix

1. Place
The Next P of the Marketing Mix
Marketing Management - DJG

2. Objective of Distribution (Place)
To make products available in the right
place at the right time in the right
quantities.

3. Distribution Channel
• A Distribution Channel moves a product from production to
consumption.
• It can be defined as the activities and processes required to move a
product from the producer to the consumer.
• It also includes the intermediaries that are involved in this movement in
any capacity. These intermediaries are third party companies that act as
wholesalers, transporters, retailers and provide warehouse facilities.
AMA:
“ Marketing channel is a structure of intra-company organization, units
and intra-company agents and dealers, wholesalers and retailers through
which a commodity product or service is marketed.”

4. Levels in Channels of Distribution
Manufacturer Consumer
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WholesalerManufacturer ConsumerRetailer
Retailer
Agent/
Distributer
Wholesaler
Manufacturer
Manufacturer
Consumer
ConsumerRetailer

5. Types of Intermediaries
1. Retailers
2. Wholesalers
3. Distributor / Agent

6. Retailers
• Retailers is the final step in the chain – deals directly with the customer
• Focused on consumer markets.
• Typical Retailer Services:
Consumers Producers
- Anticipating wants - Expert Seller
- Breaking the bulk - Advertiser of goods
- Transport and Warehousing - Bulk breaking
- Financing - Financing
- Product guarantees - Storage
- Repairs and Installation - Feedback

7. Wholesalers
• Wholesalers “breaking the bulk”
- Bulk purchaser from manufacturers
- Break into smaller quantities to resale to retailers
• Typical Wholesaler Services:
- Maintenance of sales force
- Storage
- Delivery to retailers
- Financial help to both manufacturer and retailer
- Merchandising
- Sales Promotional work
- Product servicing
- Marketing Information
- Risk-bearing

8. Distributors/Agents
• Distribute (sell on) products and serve as a local sales point.
• Usually specialise in a particular industry.
- Ex: Building supplies, electrical components, industrial clothing
• Offer products from many producers = greater choice.
• Different from agents in that a distributor holds stock.
• Agents can be in industries like Travel, Insurance, Publishing.
• Agents earn commission based on sale.
Producer
Distributer /
Agent
Customer

9. Functions of a distribution channel
• Provide a link between production and consumption.
• To gather market information.
• Communicate promotional offers.
• Find and communicate with prospective buyers
• Physical distribution – transporting and storing
• Financing – Other parties finance the stock
• Risk taking – other parties take some risk.

10. Channel Strategy Decisions
• Channel length – direct / indirect?
• Choice of intermediary
• Use just one or several channels?
• How to move the goods through the channel?
• Control over the channel – ex: who decides price,
promotion, packing?

11. Channel Dynamics
1. Conventional Marketing System (an independent producer,
wholesaler(s), and retailer(s) – ex: local retailers.
2. Vertical Marketing System (producer, wholesaler(s), and retailer(s)
acting as a unified system) – ex: McDonalds/KFC.
3. Horizontal Marketing System (2 or more unrelated companies put their
resources together to exploit emerging marketing opportunities) – ex:
ICICI with Big Bazar
4. Multichannel Marketing System (when a single firm uses two or more
marketing channels to reach one or more customer segments.) – ex: ,

12. Logistics Decision
Logistics means the art of managing the flow of raw materials and
finished goods from the source to the user.”
Marketing logistics involves planning, implementing, and
controlling the physical flow of goods, services, and related
information from points of origin to points of consumption to meet
consumer requirements at a profit

13. WholesalerManufacturer ConsumerRetailerSupplier
Inbound
Reverse
Out bound
Reverse

14. Major Elements in Logistics Decision
1. Inventory Management
2. Warehousing System
3. Transportation

15. Inventory Management
What to be delivered?
• It refers to the process of ordering, storing and using a
company’s inventory.
• Inventory include the raw materials, components and finished
products.
• It makes sure that the core processes of a business keep
running efficiently by optimizing the availability of inventory.

16. Warehousing Management System
Where should a resource be stored?
• Warehousing involves more than storage.
• Warehouses perform many usual functions like breaking the
bulk, dispatch of smaller consignments to retailers, holding the
stock for retailers, regulating the goods flow of retailers,
providing market intelligence and many other merchandising
services of manufacturers.

17. Transportation
How inventory to be moved?
• It is the crux of the problem of physical distribution.
• Physical distribution system is network of activities consisting
primarily storage at multiple points interconnected by a series
of transport links in the machinery of distribution.
• We have 5 means of transport at our disposal: Road, Railway,
Water, Airplanes and Pipelines.
• It is govern by speed, frequency, dependability, availability,
safety, operational flexibility etc.

18. Thank you