2. Definition
Marketing channels can be viewed as sets of
interdependent organisations involved in the process
of making a product or service available for use of
consumption.
3. Needs
Local knowledge
Push strategy for weak products.
Reduces complexity, time & cost.
Some producers may lack financial resources to carry out
direct marketing hence channel marketing may be used.
Marketing intermediaries through their contacts,
experience, specialisation & scale of operations offer the
firm more than it can achieve on its own.
5. Channel levels
Zero level ( direct marketing)
producer ------> consumer.
One level channel
producer-----> retailer ----->consumer
Two level channel
producer wholesaler retailer consumer.
Three level channel
producer wholesaler jobber retailer consumer
6. Factors affecting the selection of
distribution channel
Product characteristics
Market factors
Factors related to middlemen
Factors related to manufacturer
8. Factors related to market
Number of consumers
Regional concentration
Size of orders
Nature of market
Policies of competitors
9. Factors related to middlemen
Availability of desired middlemen
Sales possibilities
Cost consideration
Marketing policies & strategies
Services provided by middlemen
10. Factors related to the
manufacturer
Financial resources.
Marketing experience & managing ability
Goodwill
Size of the enterprise
Desire to control
11. Types of middlemen
Merchant middlemen those who take the title of the
product & then resell it.
Agents do not take the title of the product. eg. Property
dealers
Facilitators independent business units that facilitate
the flow of products from producer to consumer. Eg.
Transport companies
12. CHANNEL DESIGN
Designing a marketing channel system involves:
- Analyzing customer needs,
- Establishing channel objectives,
- Identifying major channel alternatives
- Evaluating major channel alternatives
13. Analyzing customers’ desired
service output level
In designing the marketing channel, the marketer
must understand the service output levels desired by
target customers.
Channels produce five service outputs:
- Lot Size
- Waiting & delivery time
- Spatial convenience
- Product variety
- Service backup
14. Establishing objectives &
constraints
Channel objectives vary with product
characteristics.
Channel design must take into account the
strengths & weaknesses of different types of
intermediaries.
Channel design must adapt to the larger
environment
15. Identify major channel
alternatives
A channel alternative is described by three
elements:
- The types of available business intermediaries.
- The number of intermediaries needed.
- Terms & responsibilities of each channel member.
16. Types of intermediaries
A firm needs to identify the types of intermediaries available to carry
out its channel work.
For eg. Channel alternatives for a cellular car phone maker:
- The company could sell its car phones to automobile manufacturers
- Sell its car phones to auto dealers.
- Car phone specialist dealers through a direct sales force or dealers
- Through mail order catalogs.
- Through mass merchandisers.
17. Number of intermediaries
Companies have to decide on the number of
intermediaries to use at each channel level.
Three strategies are available
- Exclusive distribution
- Selective distribution
- Intensive distribution
18. Terms & Responsibilities
The producer must determine the rights & responsibilities
of participating channel members.
Each channel member must be treated respectfully & must
be given the opportunity of to be profitable.
The main elements in the “the trade relation mix” are
- Policies
- Condition of sale
- Territorial rights &
- Specific services to be performed by each party.
19. EVALUATING THE MAJOR ALTERNATIVES
Each channel alternative needs to be evaluated against
- Economic
- Control &
- Adaptive criteria
20. LOGISTICS & SUPPLY CHAIN
MANAGMENT
MARKET LOGISTIC : market logistics involves:
planning the infrastructure to meet demand,
then implementing & controlling the physical flows of
material & final goods from points of origin to point of use,
to meet customer requirements at a profit.
21. Contd…
Hence logistics management involves two distinct
but integrated functions:
1) Materials management
2) Physical distribution management
22. Market logistics planning has
four steps:
Deciding on the company’s value proposition to its
customers
Deciding on the best channel design & network strategy for
reaching the customers
Developing operational excellence in sales forecasting,
warehouse management, transportation management &
materials management
Implementing the solution with the best information
systems, equipment, policies, & procedures
24. TRANPORTATION DECISION…
Transportation can impact a firm’s ability to exploit a
market opportunity.
Inadequate transport services, uncertain transit time &
inadequate preparation can lead to a mismatch in
demand & supply & hence leads to firms stocking large
inventories of finished products.
All this leads to increased costs, poor customer service
& missed product sales opportunities
25. Contd…
The decision maker should consider the following in selecting a
transportation mode: (sea , river, air, road, railways)
a) Nature of product
b) Market conditions
c) Costs
d) Dependability of the mode
e) Transit loss or damage
f) Reach of the mode
g) Speed at which the firm is able to reach the market.
Increasingly, the companies are using intermodal transportation to
reach to their markets ( combining two or more modes)
26. WARE HOUSING:
A firm can choose to either have its
a) own dedicated network of warehouses or
b) share space with others in third party operated
warehouses.
27. Own Warehouse…
The own dedicated warehouse offers :
- greater flexibility in design to meet product
characteristics & storage needs,
- greater control over warehouse operations,
- Effective market feedback
- & lower cost per unit
28. Third party warehousing
Third party warehouse offer:
- No fixed investment is required
- Flexibility in location & space utilization.
29. Reasons for third party warehousing
gaining prominence
Firms are able to concentrate on their core
competencies
It eliminates staffing & internal system
development costs
Reduces initial start up distribution costs
Customizes the offer to market needs better than
the manufacturer
Controls cost & improves customer service across
markets.
30. Contd…
In selecting a third party logistics, the supplier firm
needs to focus on:
a) Compatibility in approach, attitude & culture.
b) Quality of service provided by the supplier
c) Experience in a particular industry.
d) Performance track record
e) Flexibility
f) Financial muscle
g) Brand image
31. INVENTORY MANAGEMENT
Inventory levels also impact the competitive advantage of a
firm.
Here the marketer has to maintain a fine balance between
stock outs & stockpiles
Many companies are trying to manage this function
through JIT ( JUST IN TIME) processes.
But given the infrastructural constraints in India , it is still
to early to ensure JIT in all the markets.
32. ORDER PROCESSING
Most companies today are trying to shorten the order–to– payment
cycle that is the elapsed time between an order’s receipt, delivery, &
payment.
This cycle involves many steps , including
1) Order transmission by the salesperson,
2) Order entry & customer credit check,
3) Inventory & production scheduling,
4) Order & invoice shipment,
5) & receipt of payment.
33. conclusion
Distribution is one of the key marketing decisions in
any market, more so in Indian market where
infrastructure, like roads, means of transportation,
and warehousing, is not as developed as the west.
