1. It is a set of practices or activities necessary to transfer
the ownership of goods, from the point of production
to the point of consumption
Role of marketing channel in marketing strategies:
•Links producers to buyers
•Influences the firm’s pricing strategy
•Customizes profits, offer credit etc.
•Affect product strategy through branding, willingness
to stock.
2. Evolution
Agricultural products produced as per physical reach
Industrial Revolution brought assortment, transportation
etc. which brought ‘traders’ into the system.
Concept of branding and economies of scale was
significant. Distribution was relevant only for the ‘place’
part of the marketing mix
Effort put on selling brought a host of independent
intermediaries in the form of retailers and wholesalers.
Two major developments in the US impacted the
distribution networks automobile & highway systems
Early 1950’s are credited with laying the foundation of the
marketing concept which means each channel member
had to meet the needs of his customers.
Relationship marketing
3. Channel Formats Possible
Product Driven
1. Company owned Retail outlets:-
2. Consignment selling agents:-The company passes
on the physical stocks to the intermediary who pays
the company only after products have been sold.
3. Brokers:- The intermediary contacts the user and
sells the product on behalf of the company without
taking any physical possession of goods. He takes a
commission when the sale is consummated.
4. Franchisees:- product and merchandising are
decided by the company and the franchisee has to
pay from the company to sell
4. Channel Formats Possible
Seller driven
1. Existing retailers: These people are established in
the markets and are used by end-users.
2. Supermarkets: They are much bigger retailers who
not only sell a large number of branded products but
also sell other grocery, stationery and clothing items.
3. Specialty stores:-They are retailers who sell only
one type of merchandise only
4. Discount stores: These stores sell the same
products and brands as the supermarkets but at
much lower prices
5. Channel Formats Possible
Service Driven
1. Transporters: They provide service on contract for
companies to reach their ultimate customers.
2. Warehouse owner: They provide space for storage
of products closer to consumer markets and reach
them with minimum waiting time.
3. Couriers: It is similar to C&FA but handle much
smaller packets
4. C&FA: They are on contract and provide both time
and place utility- both storage and transport.
9. Functions
Physical Distribution
Keep contact with the company customers.
Helps build long term relationships.
Market feedback to a company
Company rules, promotions etc. are communicated to
the customers.
Negotiates price with the company and its customers.
Handles risks for price fluctuations.
Handles final stage product assembly.
Provides after sales service
