Hope its help all marketing Students....

1. PLACE
PHYSICAL DISTRIBUTION
IMS Unison University
MANISH SONKAR

2. PLACE / PHISICAL
DISTRIBUTION
 Place refers to the set of decisions that need to be taken in order to make the product available to
consumer,
 As if the product are not made available to the customers at the right place at the right time then
customer would not be able to buy them.
Thus,
 PLACE Element of Marketing is a process by which the goods are transferred from the place of
production to the place of consumption.
 Physical distribution is the group of activities associated with the supply of finished product from the
production line to the consumers.
Thus,
 “Physical Distribution is all about the Handling, movement, and storage of goods from the point of origin
to the point of consumption or use, via various channels of distribution.”

3. Decision in Physical Distribution
 Order Processing:- Order processing means the time and steps involved between taking order from
customer and delivery of goods as per order.
There is direct relationship between the time taken in order processing and satisfaction of
customer.
 Transportation
 Inventory Planning & Control:- Inventory refers to the stock of products a firm has on hand and ready
for sale to customers. Inventories are kept to meet market demands promptly. Inventory is the link
interconnecting the customer’s orders and the company’s production activity.
Marketing managers undertake an inventory planning to develop adequate assortments of products
for the target market and also try to control the costs involved in obtaining and maintaining inventory.
 Warehousing.

4. TYPES CHANNELS of DISTRIBUTION
 1. Zero level channel / Direct Channel.
 2. Indirect Channel.
One Level Channel.
Two Level Channel.
Three Level Channel.
CUSTOMER

5. FACTORS DETERMINING CHOICE OF CHANNEL OF DISTRIBUTION
• Value of product
• Product complexity
• perishability
• Nature of product
PRODUCT RELATED FACTOR
• Financial strength
• Degree of control
• Good will
COMPANY RELATED FACTOR
• Nature of the market
• Size of the market
• Geographical concentration
• Quantity purchased
MARKET RELATED FACTOR

6. vertical marketing system
 A vertical marketing system (VMS) is one in which the main members of a distribution channel—
producer, wholesaler, and retailer—work together as a unified group in order to meet consumer needs.
 In conventional marketing systems, producers, wholesalers, and retailers are separate businesses
that are all trying to maximize their profits.
 The concept behind vertical marketing systems is similar to vertical integration. In vertical integration, a
company expands its operations by assuming the activities of the next link in the chain of distribution.
 For example, an auto parts supplier might practice forward integration by purchasing a retail outlet to
sell its products. Similarly, the auto parts supplier might practice backward integration by purchasing a
steel plant to obtain the raw materials needed to manufacture its products.
 Vertical marketing should not be confused with horizontal marketing, in which members at the same
level in a channel of distribution band together in strategic alliances or joint ventures to exploit a new
marketing opportunity.

7. Horizontal Marketing System
“A Horizontal Marketing system is a form of distribution channel wherein two or
more companies at the same level unrelated to each other come together to gain the
economies of scale.”
In other words, Horizontal marketing system is the merger of two unrelated
companies who have come together to exploit the market opportunities.
Generally, this type of marketing system is followed by companies who lack in capital, human
resources, production techniques, marketing programs and are afraid of incurring the huge losses.
In order to overcome these limitations, the companies join hands with other companies who are
big in size either in the form of joint venture –that can be temporary or permanent, or mergers to
sustain in the business.
Horizontal marketing system has gained popularity in the recent times due to an immense
competition in the market where everybody is striving to gain a good position in the market along
with huge profits.

8. In this marketing system, the collaboration can be between:
•Two or more Manufacturers- With an objective of making optimum utilization of scarce
resources.
•Two or more Wholesalers-With the objective of covering a larger area of the distribution
of goods and services.
•Two or more Retailers- With the objective of providing bulk quantities in a particular
area.
Examples of Horizontal Marketing:
1.Nike and Apple have entered into a partnership, with the intent to have a Nike+
footwear in which the iPod can be connected with these shoes that will play music along with
the display of information about time, distance covered, calories burned and heart pace on
the screen.
2.Johnson & Johnson, a health care company, have joined hands with Google, with an
objective of having a robotic-assisted surgical platform. That will help in the integration of
advanced technologies, thereby improving the healthcare services.
Thus, two or more companies join hands to capitalize on the expertise of each and capture a
greater market share.

10. 3 Types of Vertical Marketing Systems
 Corporate
 A corporate vertical marketing system can be involved with the ownership that of the levels of distribution or
production chain that is associated with a single company. An example for the corporate is Apple who is
responsible for doing everything related with their products.
 Apple Company has place for the designing and also the making of the products. These products that are
made by the company are sold in the retailer shops of the company itself. They need not have to depend on
any of the other people for the purpose of production or even selling of the products.
 Contractual
 This is a kind of vertical marketing system that has formal agreement involved in it that exists between
various levels that of the production or it can be between the levels of distribution channel. This is done for
coordinating the overall process that is related with the particular company. A common form of contractual
VMS is franchising.
 Administered
 This is a kind of VMS that has one member from the production as well as the distribution chain has more
dominance and they organize the whole nature that is associated with the vertical marketing system in an
informal manner. This is due to the sheer size that is associated with the company. This is a kind of the
vertical marketing system that is similar to that of wal mart which is the huge kind of retailer available in the
market.

11. Types of Contractual Vertical Marketing System
Wholesaler-Sponsored Vertical Marketing System
A chain of retailers organized by a wholesaler unite into a voluntary chain of stores. The stores are owned
independently but they sign an agreement to work in the chain and they all agree to use the same name. The
wholesaler buys large quantities of merchandize for the retailers, it ensures buying economically for products, and
enables this chain of retailers to compete with large organizations. A wholesaler-sponsored vertical system works to
unite voluntary chains of stores to compete independently with large organizations. For example, Coca-Cola bottler’s
is a manufacturer-sponsored wholesaler.
Retailer Cooperatives
Retailers join together to organize a new wholesaling business known as a retailer cooperative. The new jointly
owned wholesaling company renders their service to the members. The retail members must accept to purchase their
goods from this wholesaler. The members in the retail organization use a name that is common among all of the
retailers so that they can have their own private product brands and jointly advertise their brands. For example,
retailer cooperatives are popular in food industries corporations.
Franchising
A franchise is a contractual company that makes an arrangement between a franchisor, a parent company, and a firm
or an individual; a franchise allows the franchisee to run a business under the parent companies name. This
franchisee must follow the rules of the franchise and is granted rights to sell certain goods and services in their
specific area. The franchise obtains distribution at the retail level and through their dealers, but maintains control over
how the service will be merchandised. For example, Ford Motor Company is a manufacturer-sponsored retail
franchise system.

12. Channel Power
 In the channel mechanism, power refers to the capacity of a particular channel member to
control or influence the behavior of another channel member.
 For instance, a large retailer may want the manufacturer to modify the design of the
product, or perhaps be required to carry less inventory. Both parties may attempt to exert
their power in an attempt to influence the other's behavior. The ability of either of the parties
to achieve this outcome will depend upon the amount of power that each can bring to bear.
 TYPES OF CHANNEL POWER
Coercive Power.
 Legitimate Power.
 Reward Power.
 Referent Power.
 Expert Power.

13. Channel conflict
 Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such as
distributors, retailers, dealers, and sales representatives, by selling their products directly to consumers
through general marketing methods and/or over the Internet.
 TYPES OF CHANNEL CONFLICTS
 Horizontal Conflicts
 A horizontal conflict refers to a disagreement among two or more channel members at the same level. For
example, suppose a toy manufacturer has deals with two wholesalers, each contracted to sell products to
retailers in different regions. If one wholesaler decides to branch its operations into the other wholesaler’s
region, a conflict will result. If the toy manufacturer doesn't help solve the problem, its business dealings with
both the wholesalers -- and the downstream retailers, as well -- might be in jeopardy.
 Vertical Conflicts
 Vertical conflicts involve a disagreement between two channel members on consecutive levels. For example,
if the toy manufacturer discovers its products are arriving at retail stores later than scheduled, a conflict might
develop between the manufacturer and the wholesaler responsible for shipping to retailers. At the same time,
the retail stores might be in conflict with the wholesaler due to its inability to ship products on time.

14. Retailing Concepts
 Retailing is a convenient, convincing and comfortable method of selling goods and services.
 The term 'retail' is derived from the French word retailer which means 'to cut a piece off or to break
bulk'. In simple terms, it implies a first-hand transaction with the customer.
 Retailing can be defined as the buying and selling of goods and services. It can also be defined as the
timely delivery of goods and services demanded by consumers at prices that are competitive and
affordable.
• Retailers will have a much stronger personal relationship with the consumer.
• The retailer will hold several other brands and products. A consumer will expect to be exposed to many
products.
• Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents.
• Products and services are promoted and merchandised by the retailer.
• The retailer will give the final selling price to the product.
• Retailers often have a strong ‘brand’ themselves e.g. Ross and Wall-Mart in the USA.

15. Types of Retail Operations:
1. Department Store – This type of retailer is often the most complex offering a wide range of products and can appear as a collection of smaller retail
stores managed by one company. The department store retailers offer products at various pricing levels. This type of retailer adds high levels of
customer service by adding convenience enabling a large variety of products to be purchased from one retailer.
2. Supermarkets – Generally this type of retailer concentrates in supplying a range of food and beverage products. However many have now
diversified and supply products from the home, fashion and electrical products markets too. Supermarkets have significant buying power and
therefore often retail goods at low prices.
3. Warehouse retailers – This type of retailer is usually situated in retail or Business Park and where premises rents are lower. This enables this type
of retailer to stock, display and retail a large variety of good at very competitive prices.
4. Speciality Retailers – Specialising in specific industries or products, this type of retailer is able to offer the customer expert knowledge and a high
level of service. They also add value by offering accessories and additional related products at the same outlet.
5. E-tailer – This type of retailer enables customers to shop on-line via the internet and buy products which are then delivered. This type of retailer is
highly convenient and is able to supply a wider geographic customer base. E-tailers often have lower rent and overheads so offer very competitive
pricing.
6. Convenience Retailer – Usually located in residential areas this type of retailer offers a limited range of products at premium prices due to the
added value of convenience.
7. Discount Retailer – This type of retailer offers a variety of discounted products. They offer low prices on less fashionable branded products from a
range of suppliers by reselling end of line and returned goods at discounted prices.

16. Wholesaling and Types of Wholesaling
 Wholesaling is the selling of merchandise to anyone—either a person or an organization—other than the end consumer of that
merchandise. Wholesalers, who are sometimes referred to as middle agents, represent one of the links in the chain along which most
goods pass on their way to the marketplace.
Wholesaling is the buying/handling of products and services and their subsequent resale to institutional users and in some cases to final
consumers.
 Types of Wholesaling:
 Manufacturer Wholesaling:
 In this case a firm has its own sales offices and wholesale activities are done at these offices. Sales office may be conveniently
located in a market place. This type of arrangement is preferred when the manufacturer desires more control on marketing and/or
customers who may be few in number and each is a key account.
 Merchant Wholesaling:
 Merchant wholesalers buy, take title and take possession of products for further resale. Merchant wholesalers may perform full
range distribution tasks. They provide credit, store and deliver products, after merchandising and promotion assistance, have a
personal sales force, offer research and training support and provide all necessary information to customers and provide
installation and after-sales services. This class is very commonly prevalent in durable consumer goods, pharmaceuticals and
grocery items etc. Merchant wholesalers demand higher compensation for performing large number of functions.
 Agents and Brokers:
 They perform various wholesale tasks, but do not take title of products, unlike merchant wholesalers. Agents and brokers enable
a manufacturer to expand sales volume because of their special expertise and experience in the field.
 Such agents and brokers may work for many firms and carry non competitive and complementary products in exclusive territories.
Agents have little say on marketing and pricing. This class is prevalent in steel, cement, automobile and white goods. Voltas Ltd.
works as wholesale agent for many white goods manufacturers.

17. Top 8 Essential Functions of a Wholesaler
(i) Buying and Assembling
(ii) Warehousing
(iii) Grading and Packaging
(iv) Transportation
(v) Financing
(vi) Risk Bearing
(vii) Providing Marketing Information
(viii) Dispersion of Goods

18. Top 8 Essential Functions of a Wholesaler
 (i) Buying and Assembling:
 The wholesaler purchases goods in large quantities from different manufacturers and assembles them
at one place and stores them in his warehouse and resell to the retailers.
 (ii) Warehousing:
 By preserving the goods received from different manufacturers in stores, the wholesaler performs the
function of warehousing. The storage of goods is needed on account of time lag between production
and consumption of goods.
 (iii) Grading and Packaging:
 The assembled goods are graded in accordance with their quality and packed in different containers
before supplying to the retailers. In this manner, the wholesaler performs important marketing functions
of grading and packing.
 (iv) Transportation:
 The wholesalers purchase goods from manufacturers and carry them to his godowns and then supply
the same to the retailers. He may employ his own vans or hire vehicles for carrying the goods on
account of bulk purchases. They can avail of economies in freight.

19. (v) Financing:
The wholesaler provides credit facilities to the retailers and manufacturers. They sometimes give advance
to the manufacturers for the goods to be received later. By selling goods on credit they help the retailers.
(vi) Risk Bearing:
A wholesaler performs the marketing function of risk bearing also. Goods are exposed to many risks such
as destruction and spoilage in warehouses on account of many avoidable and unavoidable reasons. The
wholesaler is also confronted with many other risks viz., sudden changes in demand of the product, prices
of the products going down and non recovery of payment from retailers in (bad debts) etc.
(vii) Providing Marketing Information:
The wholesaler imparts valuable information to both the manufacturer and the retailer. He keeps informing
the manufacturer about the tastes, preferences, likes and dislikes of the customers. He gathers this
information from the retailers.
(viii) Dispersion of Goods:

20. Designing a marketing channel system

21. Channel Management Decision:
“The process by which a producer or supplier directs marketing activity by involving and motivating parties
comprising its channel of distribution.”
The channel of distribution is when goods or services flow from the vendor to the customer. Therefore, channel
management decisions are needed to insure this process does not get interrupted.
Appropriate Distribution Channels
In the Parcel market there are various distribution channels we can utilize. There are four types of distribution
channels: producer-customer, producer-retailer-customer, producer-wholesaler-retailer-customer, and producer-
agent-wholesaler-retailer-customer. FedEx utilizes the producer to customer channel because our customers can
access our new home pick up service online on our website. The producer to customer channel eliminates the
middlemen costs and the customer has the comfort of knowing that they are working with the producer directly. Since
the middlemen costs will be eliminated this allows us to charge the customer at the retailer rate.

22. Logistics and Supply Chain Management
Supply chain
manegement
Logistics
Logistics Management is a small portion of Supply Chain Management that deals
with the management of goods in an efficient way. Although, if we talk about Supply
Chain Management, it is a broader term which refers to the connection, right from the
suppliers to the ultimate consumer. People are quite puzzled between these two concepts.
"Logistics is about getting the right product, to the right customer, in the
right quantity, in the right condition, at the right place, at the right time,
and at the right cost (the seven Rs of Logistics)" - from Supply Chain
Management: A Logistics Perspective By John J. Coyle.
"Logistics typically refers to activities that occur within the boundaries of a single organization and
supply chains refer to networks of companies that work together and coordinate their actions to
deliver a product to market. Also, traditional logistics focuses its attention on activities such as
procurement, distribution, maintenance, and inventory management. Supply Chain Management
(SCM) acknowledges all of traditional logistics and also includes activities such as marketing,
new product development, finance, and customer service"

23. BASIS FOR COMPARISON LOGISTICS MANAGEMENT SUPPLY CHAIN MANAGEMENT
Meaning
The process of integrating the
movement and maintenance of
goods in and out the organization
is Logistics.
The coordination and management
of the supply chain activities are
known as Supply Chain
Management.
Objective Customer Satisfaction Competitive Advantage
Evolution
The concept of Logistics has been
evolved earlier.
Supply Chain Management is a
modern concept.
How many organizations are
involved?
Single Multiple
One in another
Logistics Management is a fraction
of Supply Chain Management.
Supply Chain Management is the
new version of Logistics
Management.

24. EVALUATION OF MARKETING CHANNEL
 All marketers face the challenge of proving the value of their efforts. The idea of incorporating more
channels in the mix can be daunting. But in a world of ever evolving markets and media, new channels are
frequently under consideration within marketing departments. Knowing how to evaluate a channel before
investing in it will guide your efforts toward channels of greater value.
 So how do you effectively evaluate the merits of incorporating new channels in your marketing mix?
 Goals: Clearly define the results you are looking for from your marketing initiatives. Lead generation, brand
awareness, education, and site traffic are all things to consider.
 Budget: Set your overall marketing budget. Explore the costs associated with channels you’re considering
and note the costs of alternative options.
 Buyer Persona: Different demographics interact with certain channels more than others. Establish your
target audience. Consider where those consumers are most likely to encounter your messaging.
 Team Strengths and Expertise: Determine the specific skills of your team and play to their strengths –
your team is driving your campaigns. For channels in which your team has little experience, external
resources are a solid option.
 Existing Channels: Take into consideration what you’re already doing. Building off your already successful
campaigns provides a steady foundation for new initiatives.