Distribution or Placing

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Distribution i.e. 4th P of the 4 Ps

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Distribution or Placing

  1. 1. PLACING - Deboleena Panja 1 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  2. 2. DISTRIBUTION MANAGEMENT: CONCEPT 2 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  3. 3. Distribution Management: Concept PRODUCT PRICE PROMOTION PLACE  Aims at delivering various products to different types of buyers when & where they want those and at a reasonable price. 3 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  4. 4. Distribution Management: Concept  The management of the efficient transfer of goods from the place of manufacture to the point of sale or consumption.  Distribution management encompasses such activities as  Warehousing  Materials handling  Packaging  Stock control  Order processing  Transportation 4 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  5. 5. CHANNEL MEMBERS 5 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  6. 6. Different Channel Members  Resellers  Wholesalers  Retailers  Industrial Distributors  Specialty Service Firms  Agents and brokers  Distribution Service Firms  Others: Insurance companies, transportation routing assistance 6 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  7. 7. ROLE OF DISTRIBUTION CHANNELS 7 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  8. 8. The Importance of Distribution Channels  Distribution channels often require the assistance of others in order for the marketer to reach its target market.  The higher the number of channels, the greater the company’s market coverage and rate of growth of its sales.  Increase the efficiency as the middlemen are specialised agencies of distribution.  Distribution agents facilitate search for buyers and sellers by keeping in touch with both. 8 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  9. 9. Channel Efficiency 9 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  10. 10. Starbucks – Market Coverage A comedian quipped about Starbucks:“I don’t know how fast they are growing but they just opened one in my living room.” 10 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  11. 11. Function of Channel Members  Promotion:      11  Undertake sales promotion activities through media and personal contacts. Negotiation: Negotiate prices and other terms and conditions between buyer and seller. Information: Middlemen collect information about demand, competition, etc., from con-sumers and pass on to manufacturers. Ordering: Intermediaries collect small orders from consumers and on that basis place large orders with manufacturers. Physical possession: Middlemen take possession of goods from producers and pass on possession to consumers. Financing: Provide financial assistances, for example buy goods in cash from producers and sell them to consumers on credit. INDIAN INSTITUE MANAGEMENTRAIPUR 1/15/2014 Risk taking: OFIntermediaries assume most of the risks
  12. 12. LEVELS OF CHANNELS 12 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  13. 13. 13 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  14. 14. TYPE OF INTERMEDIARIES 14 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  15. 15. Wholesalers  Wholesalers are independently owned firm.  Take title to the merchandise they handle, the wholesalers own the products they sell.  Purchase product in bulk and store it until they can resell it.  Generally sell the products they have purchased to other intermediaries, usually retailers, for a profit. 15 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  16. 16. Distributors  Are similar to wholesalers.  Wholesalers carry a variety of competing products whereas distributors only carry complementary product lines.  Usually maintain close relationships with their suppliers and customers.  Take title to products and store them until they are sold. 16 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  17. 17. Retailers  Takes title to, or purchases, products from other market intermediaries.  Can be independently owned and operated, like small “mom and pop” stores, or they can be part of a large chain, like Wal-Mart.  Sell the products it has purchased directly to the end user for a profit. 17 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  18. 18. Agents  Is an independent individual or company.  Main function is to act as the primary selling arm of the producer.  Represent the producer to users.  Take possession of products but do not actually own them.  Agents usually make profits from commissions or fees paid for the services they provide to the producer and users. 18 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  19. 19. FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS 19 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  20. 20. FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS  Product Considerations:  Unit Value  Perish ability  Bulk and Weight  Standardization  Technical Nature  Product Line  Age of the Product 20 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  21. 21. FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS  Market Considerations:  Consumer or Industrial Market  Number and Location of Buyers  Size and Frequency of Order  Customer’s Buying Habits 21 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  22. 22. FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS  Company Considerations:  Market Standing  Financial Resources  Management  Volume of Production  Desire for Control of Channel  Services Provided by Manufacturer 22 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  23. 23. FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS  Middlemen Considerations:  Availability.  Attitudes.  Services.  Sales Potential.  Costs.  Customs and Competition.  Legal Constraints. 23 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  24. 24. FACTORS INFLUENCING CHOICE OF CHANNELS MEMBERS 24 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  25. 25. FACTORS INFLUENCING CHOICE OF CHANNEL MEMBERS  MARKET FACTORS  PRODUCT FACTORS  COMPETITIVE FACTORS  ENVIRONMENT FACTORS 25 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  26. 26. MARKET FACTORS  CONSUMERS  number of consumers  their geographic location  purchase pattern  INTERMEDIARIES  relative strengths and weaknesses of intermediaries  the differences in the types of functions performed and facilities and privileges desired by them  COMPETITORS 26 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  27. 27. PRODUCT FACTORS  INDUSTRIAL / CONSUMER PRODUCT  direct channel is useful because of the relatively small number of customers need for personalized attention, customer training requirements and after sale servicing  PERISHABLE NATURE  direct channel is beneficial  SEASONALITY  intermediaries are seldom prepared undertake the function of inventory carrying  manufacturer build up indirect distribution channels.  TECHNICALITY  Direct channel relatively useful 27 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  28. 28. COMPANY FACTORS  FINANCIAL STRENGTH  is better placed to select and design its distribution channel  PAST CHANNEL EXPERIENCE 28 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  29. 29. ENVIRONMENT FACTORS  COMPETITIVE FACTORS  Alternative distribution channel may be used as a means of attaining competitive advantage  MIDDLEMAN FACTORS  Availability of Middleman  Attitude of Middleman Services Provided by Middleman  Sales potential of Middleman 29 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014
  30. 30. THANK YOU 30 INDIAN INSTITUE OF MANAGEMENTRAIPUR 1/15/2014

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