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Distribution Channel Management …

Distribution Channel Management

Published in: Marketing

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  • 1. DISTRIBUTION CHANNEL MANAGEMENT DISTRIBUTION CHANNEL MANAGEMENT Presented By:- Bhanu Negi Gaurav Singh Piyush Sharma 1
  • 2. DISTRIBUTION CHANNEL MANAGEMENT Objective Distribution channels and needs Types of distribution channel and conflicts Distribution channel strategies Rural distribution channels 2
  • 3. DISTRIBUTION CHANNEL MANAGEMENT Distribution  The process of deciding how to get goods in customer’s hand.  One of the 4p’s of marketing. 3
  • 4. DISTRIBUTION CHANNEL MANAGEMENT Distribution channels The path through which goods & services travel from :-  Manufacturer to customer (g&s)  Customer to manufacturers (payment) 4
  • 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 5
  • 6. DISTRIBUTION CHANNEL MANAGEMENT Structure of direct channel MFG MFG MFG MFG MFG Consumer Consumer Consumer Consumer Consumer With no intermediaries 25 transactions needed. 6
  • 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. 7
  • 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 8
  • 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. 9
  • 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 10
  • 11. DISTRIBUTION CHANNEL MANAGEMENT Distribution channel strategy  Setting distribution objective  Finalizing channel activity  Organizing the activities  Developing policy guidelines for  Day-to-day operation 11
  • 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 12
  • 13. DISTRIBUTION CHANNEL MANAGEMENT Rural distribution channel - Major issue  Economic issues  Physical infrastructure  Service output issues  Diversity related issue 13
  • 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 14
  • 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 15
  • 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. 16
  • 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. 17
  • 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 18
  • 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 19
  • 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 20
  • 21. DISTRIBUTION CHANNEL MANAGEMENT  Three – level channel Three intermediaries Example :– Hindustan lever Company Stockist …........... (district level) Wholesaler. .…… (town level) Retailer……........ (village level) 21
  • 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 22
  • 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. 23
  • 24. DISTRIBUTION CHANNEL MANAGEMENT 24