2. DISTRIBUTION CHANNEL DECISION
Distribution channel decision
DISTRIBUTION CHANNEL DECISION
Is a set of interdependent intermediaries are firms
organizations that help or individuals such as
make a product available wholesalers, agents, selection of
for use or consumption brokers, or retailers who
by the consumer or help move a product from
best alternative
business user the producer to the
consumer or business
user.
4. RETAILING
Retailing includes all the activities in selling goods and
services directly to final consumer for non business use.
TYPE OF RETAILER
1. Specialty store- narrow product line, Athelete’s foot
,reebok
2. Department store- several products line, Nordstrom A-Z
departmental store
3. Super market- large, low cost, low margin, high volume,
self service. Food emporium, Safeway ,bigbazar ,easyday,
Subhiksha
4. Convenience store- small store in residential area, often
open 24*7. 7-eleven, circle-k, Reliance Fresh
5. Conti……
5. Off- price retailing- leftover goods, irregular
merchandise sold at less than retail, factory outlets.
Tj max, Costco, samsonite ,
6. Superstores- huge selling space, routinely purchased
food and household item plus services (laundry,
shoe repair, dry cleaning, deep assortment in one
category). Pet smart, Star India Bazaar , Reliance
Retail
7. Catalog showroom- broad selection of high markup
fast moving brand name goods sold by catalog at
discount. Bike , New digital world(sony)
6. WHOLESALING
Wholesaling includes all the activities in selling
goods or services to those buy for resale or
business use, it includes manufacturers and
farmers. Because they are engaged primarily in
production.
TYPES OF WHOLESEALER
1. Merchant wholesaler- independently owned
businesses that take title to merchandise they
handle they are full service and limited service
jobbers distributer.
7. Conti..
2. Full service wholesaler- carry stock maintain a
sale force offer credit, make deliveries, provide
management assistant.
3. Limited service wholesaler- cash and carry
wholesaler sale a limited line of fast moving
goods to small retailer for cash, truck
wholesaler, hospitals, restaurants.
4. Broker and agent- facilities buying and selling
on commission. Brokers bring buyer and seller
together and assist in negotiation, insurance
broker, real state broker.
8. Conti…
5. Manufacturers and retailers branches and
offices- wholesaling operation conducted by
seller or buyer themselves rather than
through independent wholesaler.
6. Specialized wholesaler- agricultural
assemblers (buy the agricultural output of
many firms), petroleum bulk plants
(consolidate the output of many wells)
14. Types of Marketing Channels
1.Direct Channels
2.Indirect Channels
3.Single Marketing Channels
4.Multiple Marketing Channels
5.Vertical Marketing Systems
15. Companies Using Direct Marketing
Channels
Producer:
Eureka forbes Personal Business buyer:
Cummins Engine Co. selling Truck manufacturers
(International market)
Diesel engine
Producer:
Telebrand Telemarketing,
Munder Capital Man- direct response Consumer
agement (International advertising
market) Mutual Fund
Producer:
Dell Computer Corp. Toll-free
(International market) phone/fax
ordering, Consumer
Personal computers
internet
16. Companies Using Indirect Marketing
Channels
A B
Producer: Producer:
Thousands of manufacturers Beecham Products
Examples: Black & Decker, Stanley Tools, 3M, Weedeater Examples: Aqua-Fresh toothpaste, Mennen aftershave,
Sucrets lozenges
Wholesaler:
Orgill Brothers, one of the world’s largest hardware
Wholesalers, located in Memphis, Tennessee
Retailers:
Retailers: Thousands of drug, grocery & discount stores
Thousands of hardware stores Examples: Wal-mart, Kroger, Eckerd Drugs, Walgreens
Ultimate consumers:
Ultimate consumers:
Millions of people in the United Stated, Mexico,
Millions of people around the world
South & Central America
17. Companies Using Vertical Marketing Systems
Corporate
Forward integration: raymond ,Polo, Laura Ashley, Gulf States Paper Corp.
Backward integration:
Winn-Dixie grocery chain
Description,
One channel member owns one or more other channel members
Contractual
Wholesaler-sponsored voluntary groups:
Ace Hardware, Western Auto
Retailer-sponsored cooperative groups:
Affiliated Grocers, Cotter & Company
(True Value Hardware)
Franchise system:
McDonald’s, NIIT, APOLLO HOSPITAL
Description
Channel members operate according to contractual agreement
Administered
Abbott Labs, General Electric, Rolex
Description
Channel members operate according to agreed-upon plan
18. FACTORS AFFECTING CHOICE OF
DISTRIBUTION CHANNEL
Market Factors:
Nature of Market
Number of Potential Customers
Geographic Concentration
Order Size
Product Factors:
Unit value
Perishable Goods
Technical Nature of Products
Sizes & weight of the product
Company Factors:
Financial Resources
Managerial Capability
Desire for Channel Control
Service provided by the seller
19. How a Marketing Intermediary
Reduces the Number of Channel
Transactions
20. CHANNEL DESIGN DECISIONS
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Identifying Major Alternatives
Intensive Selective Exclusive
Distribution Distribution Distribution
Evaluating the Major Alternatives
Designing International Distribution Channels
21. Logistics
Involves entire supply chain
Increasing importance of logistics
effective logistics is becoming a key to winning
and keeping customers.
logistics is a major cost element for most
companies.
the explosion in product variety has created a
need for improved logistics management.
information technology has created
opportunities for major gains in distribution
efficiency.
22. Market Logistics
Involves the planning, implementing and
controlling the physical flows of materials
and final goods from point of origin to points
of use to meet customer requirements at a
profit.
It involves materials management,
distribution systems and IT systems
interlinked with one another
23. Logistics objective
Getting the right goods at the right place at
the right time for the least cost
‘the last frontier for cost economies’.
24. Goals of Logistics system
• Provide a Targeted Level of Customer
Service at the Least Cost.
• Maximize Profits, Not Sales.
Higher Distribution Costs/
Higher Customer Service
Levels
Lower Distribution Costs/
Lower Customer Service
Levels Levels
25. Integrated Logistics Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork, Both Inside the Company and Among All
the Marketing Channel Organizations.
Cross-Functional Teamwork inside
the Company
Building Channel Partnerships
Third-Party Logistics
26. Logistics Functions
• Order Processing
• Warehousing
• Inventory Management
• Transportation
Design system to minimize costs of
attaining objectives
27. Inventory vs Service levels
100%
Reorder point should balance
the risks of stockouts against
costs of overstocking
Company needs to balance ordering costs vs
inventory carrying costs
inventory
28. Transportation Modes
Rail
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value
goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or to
ship high-value, low-bulk items
29. Top 10 Logistics Companies
in India:
TNT Express
AFL
DHL
Blue Dart
Gati
Safeexpress
Ashok Leyland
Packers & Movers
DTDC
First Flight
