Distribution Networks and flows

1. FLOWS IN CHANNELS
Submitted By :
Nitish Sadotra

2. WHAT DOES “FLOW” MEANS IN
DISTRIBUTION CHANNEL?
 One traditional framework that has been used to
express the channel mechanism is the concept of flow.
 These flows, reflect the linkages that tie channel
members and other agencies together in the
distribution of goods and services.
 When a marketing channel has been developed, a
series of flows emerges.

3. From the perspective of the channel manager or the
management, there are five important flows;
1. Product flow
2. Negotiation flow
3. Ownership flow
4. Information flow
5. Promotion flow

4. PRODUCT FLOW
The product flow refers to the actual
movement of the physical product from
the manufacturer through all of the parties
who take physical possession of the
product until it reaches the ultimate
consumer. This is one directional flow.
For e.g. Clothes, FMCG goods.
Manufacturer
Transportation
company
Wholesalers
Retailers
Consumers

5. NEGOTIATION FLOW
The negotiation flow represents the buying and
selling functions associated with the transfer of
title (right of ownership) to products. This flow
does not includes transportation firm because it
does not participate in negotiation function. This
flow is two directional as negotiations involve a
mutual exchange between buyers and sellers at all
levels of the channel.
Manufacturer
Wholesalers
Retailers
Consumers

6. OWNERSHIP FLOW
The ownership flow shows the movement
of title to the product as it passes through
the channel. Here also transportation can
not be taken as it can’t posses the title.
For e.g.. Transaction of a car.
Manufacturer
Wholesalers
Retailers
Consumers

7. INFORMATION FLOW
Information flow shows the flow of information
from manufacturer to consumer in two directions.
All parties participate in exchange of information
either up or down flow. This flow might not
always have transportation firm as a party.
For e.g. Information about time of shipping or the
rates from manufacturer to transportation
Manufacturer
Transportation
company
Wholesalers
Retailers
Consumers

8. PROMOTION FLOW
The promotion flow refers to the flow of
persuasive communication in the form of
advertising, personal selling, sales
promotion, and publicity. Here
advertising agency is in the flow as it is
providing and maintaining the
promotional flow. The two directional
arrow shows the combined work
performance for the promotional
activities.
Manufacturer
Advertising
agency
Wholesalers
Retailers
Consumers

9. CHANNEL FLOWS IN GENERAL

10. Physical Possession:
Product moves from producer to consumer.
Ownership:
When does title change.
Risking:
Who is responsible for damage.
Negotiation:
Two-way communication.

11. Ordering:
One-way communication.
Payment:
When does money change hands.
Financing:
Where does the money come from?
Promotion:
One-way persuasive communication.

12. Only physical possession deals with the
tangible products.
All other flows are essentially intangible or
we can say are the information with the help
of information technology and software.
Tangibility vs. Intangibility