MARKETING CHANNEL
A set of independent organisations involved in the
process of making a product or service available for
use or consumption by the consumer or business
user.

FUNCTION OF MARKETING CHANNEL
 Carrying of inventory
 Demand generation
 Physical Distribution
 After – sale service
 Extending credit to customer

MARKETING CHANNEL STRATEGY
GROWING IN IMPORTANCE. WHY???
 Search for sustainable competitive advantage.
 Growing power of retailers in marketing channel.
 Need to decrease the cost of distribution.
 Increased role and power of Technology.
 New stress on growth.

CHANNEL FUNCTIONS & FLOW
 Physical Flow
 Title Flow
 Payment Flow
 Promotion Flow
 Information Flow

CHANNEL LEVELS

CHANNEL INTEGRATION SYSTEM

CHANNEL CONFLICT

“Channel conflict is generated when
channel member’s actions prevent
another channel from achieving its
goals.”

TYPES OF CHANNEL CONFLICT
Vertical Channel Conflict.
Horizontal Channel Conflict.
Multi – Channel Conflict.

VERTICAL CHANNEL CONFLICT
Conflict between different levels with
in the same channel.
e.g.- HUL came into conflict with its
distributers in Kerala on the issue of
commission.

HORIZONTAL CHANNEL CONFLICT
Conflict between members at the same
level with in the channel.
e.g.- Conflict between two same retail
outlets.

MULTI-CHANNEL CONFLICT
Conflict exists when the manufacturer
has established two or more channels
that sale same product.
e.g.- Reebok has its own store and
other licensed store who also sale
Reebok products.

CAUSES OF CHANNEL CONFLICT
 Goal incompatibility.
 Role ambiguity.
 Differences in perception.
 Intermediaries' dependence on the
manufacture.

STRATEGIES TO MANAGE
CHANNEL CONFLICT
 Adoption of super ordinate goals.
 Exchange of employees.
 Joint membership in trade association.
 Co-optation.
 Diplomacy, mediation, or arbitration.
 Legal recourse.

DISTRIBUTION CHANNEL
The process or channel or flow which makes
the product or service available for use by the
customer can be regarded as a distribution
channel.

DISTRIBUTION FUNCTION
 To meet the satisfaction level of the consumer by
delivery of products to different types of customers
when and where they required at a reasonable cost
can be considered as one of the major function of
distribution.

TYPICAL CHANNELS OF DISTRIBUTION

DISTRIBUTION FUNCTIONS
 Bridge the gap between production and consumption.
 Responsible for promoting, awareness regarding the
produce.
 Creating contacts and maintaining liaison with existing
one.
 Understanding customer need and adjusting the offer
accordingly.
 Price negotiation as per the customer demand of the
product.

WHY INTERMEDIARIES?
 Contacts
 Experience
 Socialisation
 Scale of operation
 Purpose – Match supply from producers to demand from
consumers.

STEPS IN DISTRIBUTION PLANNING
Develop Distribution Objective
Evaluate Internal and External Environmental influences
Choose a Distribution Strategy
• Conventional, Vertical, or Horizontal system
•Intensive, exclusive or selective distribution
•No. Of channel levels
Develop Distribution Tactics
•Selecting channel members
•Managing the channel
•Physical distribution planning
Order processing
Warehousing
Transportation
Inventory Control

CHOOSING A DISTRIBUTION SYSTEM
Intensive
Distribution
Exclusive
Distribution
Selective
Distribution
Distribution Intensity

MARKETING INTERMEDIARIES
• MIDDLEMAN – independent link between producers and consumers
• MERCHANT MIDDLEMAN – actually buys goods and takes title/ownership
• AGENT – business unit that negotiates purchases and sales but does not take
ownership
• WHOLESALER – a merchant who primarily stores and handles goods in large
quantities
• RETAILER – merchant middleman who sells to final consumers
• BROKER – middleman who serves as a go-between for the buyer and seller
• MANUFACTURER’S AGENT – an agent who operates by contract serving a
geographic territory
• DISTRIBUTOR – wholesale middleman in lines with selective or exclusive
distribution
• JOBBER – a middleman who buys from manufacturers and sells to retailers
• FACILITATING AGENT – a firm that performs distribution tasks other than
buying, selling and transferring

CHANNEL EFFICIENCY:
HOW INTERMEDIARIES REDUCE THE NUMBER
OF CHANNEL TRANSACTIONS

CHANNELS OF DISTRIBUTION
OF CONSUMER GOODS

TYPES OF DISTRIBUTION STRATEGIES
1. Exclusive distribution
2. Selective distribution
3. Intensive distribution

1. EXCLUSIVE DISTRIBUTION
SITUATION WHERE SUPPLIERS AND DISTRIBUTORS ENTER
INTO AN EXCLUSIVE AGREEMENT THAT
ONLY ALLOWS THE NAMED DISTRIBUTOR TO SELL A
SPECIFIC PRODUCT.
 Limiting the use of intermediaries
 Not allowing competing brands
 Maintain control
**MARUTI
 Exclusive dealers
 Huge investments by dealers

2. SELECTIVE DISTRIBUTION
TYPE OF PRODUCT DISTRIBUTION THAT LIES BETWEEN INTENSIVE
DISTRIBUTION AND EXCLUSIVE DISTRIBUTION, AND IN WHICH
ONLY A FEW RETAIL OUTLETS COVER A SPECIFIC GEOGRAPHICAL
AREA. CONSIDERED MORE SUITABLE FOR HIGH-END ITEMS SUCH
AS 'DESIGNER' OR PRESTIGE GOODS.
 Use of more intermediaries compared to exclusive
 Need more visibility
 More control
 Less cost
**SHAHNAZ HUSSAIN HERBAL PRODUCTS
 Not available in every Grocery Shop
 Available at selected outlets
 Maintain image

3. INTENSIVE DISTRIBUTION
A MARKETING STRATEGY UNDER WHICH A COMPANY SELLS THROUGH
AS MANY OUTLETS AS POSSIBLE, SO THAT THE CONSUMERS ENCOUNTER
THE PRODUCT VIRTUALLY EVERYWHERE THEY GO: SUPERMARKETS,
DRUG STORES, GAS STATIONS, AND THE LIKE.
 As many outlets as possible
 Multiple channels
 Consumers widespread
 Problems of control
**LUX SOAPS, LIFEBUOY, COLGATE, SOFT DRINKS

CHANNEL MANAGEMENT

CHANNEL MANAGEMENT
Channel Management involves the strategy, development and
alignment of channels, or customer interfaces, across your
marketing, sales and service processes. Channels typically
include the Internet, call centers, retail stores, phones and text
messaging.

FUNCTIONS OF INTERMEDIARIES IN DISTRIBUTION
CHANNEL MANAGEMENT?
 The functions of intermediaries are :
1. Availability.
2. Information.
3. Communication.
4. Negotiation.
5. Order.
6. Payment collection.
7. Financing.
8. Risk taking.
9. Title transfer.

SUCCESS CHANNEL MANAGEMENT
Outline

34
Vertical Integration:
Owning the Channel
Selection Criteria
Channel Structure and
Membership Issues
Channel
Implementation
Building
Channels

35
Managing Conflict to
Increase Channel
Coordination
Channel Power:
Getting It, Using It,
Keeping It
Bargaining for
Influence with Channel
Members
Key Account
Management in
Collaborative
Relationship Building
Partner Relationship
Management
Managing
Channels

36
Selection and
Termination
Policies
Making the Plan
Work Effectively
Performance
Measurement
Implementation

MANAGEMENT TECHNIQUES
37

38
Value and Resource Scarcity
Value and Market
Information
Cooperation
Information: The
Core of Transaction
Costs
Transaction-Specific Assets
Specific Human Assets
Brand Capital
Time Specificity
Preparing a Marketing Plan
for Channels
Factors in Deriving
Economic Value

39
Marketing Channels
Creating Customer
Value via Channels of
Distribution
Components of
Customer Value
form,
place,
possession, and
time
Marketing
Channels: Structure
and Functions
Demand-Side Factors
Facilitation of
Search, Adjustment of
Assortment
Discrepancy, Routinisat
ion of Transactions
Reduction in Number
of Contacts.
What Is The Work Of
The Marketing
Channel?
Marketing Channel
Membership
Customer
Relationship
Management
Three types of
channel
relationships exist:
Supplier
Relationships.
Customer
Relationships.
Lateral
Relationships.
Sifting the
cycle
Marketing
Channels

40
Channel Design
and
Implementation Channel Design:
Segmentation
Channel Selection
Channels Type
Options:
Establish New
Channels or Refine
Existing Channels?
Channel
Access
Formats

41
Distributor and Agent
Selection Criteria Recruiting and
Screening New
Prospects
Recruiting as a
Continuous Process.
Screening
Credit
Personality
Business and Operational
Criteria
Final Selection
Criteria
Channel Candidate
Inducements
Business Policies that
Bond Your Channel to
You
Preparing a
Business Policy
Statement
Distributor and
Agent Selection
Criteria

42
Managing Conflict to
Increase Channel
Coordination
Forms of Channel
Conflict Assessing the Degree
and Nature of Channel
Conflict
Measuring Conflict
When Conflict Is
Desirable
When Is Conflict
Functional?
Major Sources of
Conflict
Competing Goals
Differing Perceptions of
Reality
Clashes Over Domains
Multiple Channels
Fuelling Conflict
Conflict Resolution
Strategies
Co-optation
Third-Party Mechanisms
Building Relational
Norms
Information Exchange
Styles of Conflict
Resolution
Accommodation
Repeated Compromise
Competition
Collaboration
Managing
Conflict to
Increase
Channel
Coordination

43
Legal Constraints on
Marketing Channel
Policies
Market Coverage
Policies
Pricing Policies
Discounts
Product Policies
Exclusive Dealing
Product Line Policies
Promotional
Allowances and
Services
Legal Issues

44
Channels for
Services
Direct Delivery of
Value
Delivery of Value via
Intermediaries
Independent
Service Channels
Innovations in Methods of
Distributing Services
Channels for Services

IBM Marketing channel
Management Clips….

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