The ex ante phase involves all the activities that are associated with the design and establishment of the distribution channel. These activities actually take place before the distribution channel actually starts functioning.
The ex poste phase involves managing the day to day activities of the channel wherein the behavior of the individual channel members are coordinated
Distribution channel design To consume a product Service outputs have to be delivered Channels Participates in channel flows Activities have to be performed Thus performs activities
Example of a service output delivered template Available Consumer financing 7. Free for first two years, but available on payment afterwards. Also available at every city from where the product was bought. After sales support 6. Available Installation support 5. Other consumer goods items including that of other competitors are available at all the outlets where the products are otherwise Available Assortment 4. Not more than 2 days for any model Waiting time 3. There is at least one outlet for almost every 3 km radius excluding of course thinly populated areas Spatial convenience 2. Units are delivered in ones Bulk-Breaking 1. Service output delivered Service dimension Sl.No.
Channel flows and contribution to service outputs Bulk breaking, spatial convenience, waiting time Payment Bulk breaking, spatial convenience, waiting time Ordering Assortment Spatial convenience, waiting time, bulk breaking Financing Waiting time, bulk breaking, spatial convenience Risk taking Assortment Spatial convenience, bulk breaking Negotiation Is a service output in itself Spatial convenience Promotion Spatial convenience Ownership Assortment Spatial convenience, bulk breaking, waiting time Physical Possession Other contribution Indirect contribution Direct contribution Flow
Channel control Pay–Off Function Tolerance Function Supplier authority Distributor’s profit earned Zone of acceptance
Role of persuasion, authority, and coercion in channel control Authority persuasion Coercion Pay –off function A B C Channel members profit Tolerance function control
Components of channel offering Financial returns Quality products Competitive price Reliable delivery National reputation Promotional support Training Market research Company policies Technical assistance Responsiveness systems Manufacturer sales force incentives Distributor sales force incentives Distributor firm incentives Capability building programmes Channel core elements Incentive programme
Influence strategy types (contd.) In this type of strategy the consequences of the acceptance or rejection of the channel programme or its implementation are stressed, but these consequences are based on a response from the market environment, not on the mediation of the channel Principal.
Direct Unmediated Strategies issues and the channel program is merely exchanged with channel member personnel. Where information on general business
Indirect influence strategies Explanation Types of Influence strategy Influence Strategy group
(contd.) Influence strategy types In this type of strategy specific action is requested; consequences of acceptance or rejection are stressed and are based on the mediation of the channel principal.
Direct Mediated strategies This strategy involves making a direct request to the channel member where the Principal mainly communicates desires or wishes concerning the channel member’s acceptance of the channel program.
Direct unweighted strategy In this type of strategy rewards and punishments are directly given to channel members
Reward and Punishment Strategies
Influence situations in channel relationship Positive Negative Neutral + ve - ve Attitude towards the channel progranmme Behaviour towards the channel programme Radical confrontation Behavioural and attitudinal change Moderate confrontation Behavioural and attitudinal change Inducement process Behavioural change Radical rationalization Attitude change Moderate rationalization Attitude change Reinforcement process Behavioural reinforcement
Stages in channel conflict CAUSES OF CONFLICTS Attitudinal Causes Structural causes Attitudinal sources of conflict Structural sources of conflict Conflict resolution Cognitive/ Affective conflict Manifest conflict Conflict outcomes
Conflict management methods at different stages of conflict Latent conflict Felt conflict Manifest conflict Institutional approaches Joint membership of associations Exchange of executives Cooptation Dealer councils Third party mechanisms Mediation arbitration Negotiation
Negotiation strategies Accommodative Collaborative/problem solving Compromise Avoidance Competitive /aggressive Concern for the others interest HIGH LOW LOW HIGH Concern for own interest
How merchandising functions affects profitability?
Retail marketing mix (contd.) (i) the merchandise in the store affect the volume of sales as it is primarily the merchandise that attracts customers ( ii) since profitability is based on the turnover rate of the inventory, the choice of merchandise and the quantity of merchandise of each category stocked affects the overall profitability of the establishment
Purchase process for service requirement identification Pre-purchase phase Purchase phase Post purchase phase Purchase process Service requirements Search Comparison Product related Augmentation of the product Transaction related Delivery Installation Use extension Repeat visits
Attitude towards trading format and store environment Pre-purchase Stage During Purchase Post-purchase Stage Task Oriented Pleasure Oriented Shopping Attitudes Convenient Locations Ample Parking Close to Other Task Oriented Stores Relevant Merchandise Selection Exclusive Store Merchandise Wide Choice Prestigious Image High Availability Competitive Pricing Rapid Cash Handling Ambience and Excitement Visual Merchandising In-store Facilities Product Services Centers Product Displays Customer Advice Areas Theme Displays Customer Advice Areas
Managing the I nternational Channels of Distribution
Differences in customer expectations across countries
Differences in channel structure and trade practices
Differences in governmental policies and regulations
Differences in the quality of physical infrastructure
Market entry strategy Indirect exporting Direct exporting Licensing Franchising Contract manufacturing Strategic alliance Joint venture Wholly owned subsidiary C O N T R O L R I S K
Success factors in manf. – overseas distributor relationships Full compliance with law,drafting a strong distributor agent. Vertical trading restrictions Dismissal difficulties Differences in the legal and regulatory structures Making judicious ways of two way visits, establishing a well managed communication programme Communication blocks Negative attitudes Problems in physical distribution Geographic, economic, and cultural gaps Offering good incentives, helpful support schemes, frank discussions, and high levels of interactions Divided loyalties Seller buyer atmosphere Unclear future intentions Separate ownership Remedies Outcomes Distribution inhibitors
Export procedure Exporter Importer Bank in exporter’s country Importers bank Manufacturing Freight forwarder Transportation and Documentation formalities secured Import warehouse Customs broker Customs Ship 1 2 3 4 5 6 5 8 7 9 9 Contd.
Contd. Importer has goods cleared through customs and delivered to the ware house 9 Exporter presents documents to bank for payment 8 Exporter ships goods to importer 7 Exporter arranges transformation and documentation and space reserved on ship or aircraft 6 Exporter produces or acquires goods 5 Exporters bank notifies that the LOC has been received 4 Letter of credit send by importer’s bank 3 Importer arranges bank financing. 2