FOR B.PHARM 3RD YEAR

1. Channels of Distribution

2. Marketing channels and distribution
 A distribution channel/MARKETING CHANNEL is
a chain of businesses or intermediaries through
which a good or service passes until it reaches the
final buyer or the end consumer.
 Marketing channels are set of interdependent
organizations involved in the process of making the
product or service available for use or consumption.
 They are the set of pathways a product or service
follow after production.
 Distribution channels can include wholesalers,
retailers, distributors and even the internet.

3. Importance of channels
Decisions about the marketing channels are
among the most critical management
decisions.
They just not serve markets, they make
market.
Channels chosen affects all other marketing
decisions.
Firm’s sale depends upon training and
motivation of dealers.

4. Classification of channels/channel levels

5. • Channels are broken into two different forms—direct and indirect. A direct channel
allows the consumer to make purchases from the manufacturer while an indirect
channel allows the consumer to buy the good from a wholesaler or retailer.

6. Intermediaries
 Intermediaries are the middlemen and signify those
individuals in the channels that either take title to
take goods and sell at profit.
 They are directly involved in process of flow of
goods from manufacturer to consumer.
 Individual or firm (such as an agent, distributor,
wholesaler, retailer) that links producers to other
intermediaries or the ultimate buyer.
 Each intermediary receives the item at one pricing
point and moves it to the next higher pricing point
until the item reaches the final buyer. Also called
distribution intermediary.

7. Types of intermediaries
1. Merchant middlemen
i. Wholesalers
ii. Retailers
2. Agents
i. Brokers
ii. Commission agents
iii. Selling agents
iv. Factors
v. Clearing agent
VI. Auctioneer

8. Wholesalers
Person or firm that buys large quantity of goods
from various producers or vendors, warehouse
them and resells to...
Functions of wholesalers:
1) Assembling and buying.
2) Warehousing.
3) Transporting.
4) Financing.
5) Risk bearing.
6) Grading, packing and packaging.
7) Dispersing and selling.
8) Providing market information.

9. Services of wholesalers
1.Service to manufacturers-
Economies scale.
Saving in time and trouble.
Better use of capital.
Price stabilization.
2. Services to retailers.
i. Saving in cost and time.
ii. Economy in transport an packing.
iii. Better use of limited factors.
iv. Expert knowledge.

10. Retailers
• A person or business that sells goods to the
public in relatively small quantities for use or
consumption rather than for resale.
• Retailing includes all activities directly related
to the sale of goods and services to the
ultimate consumer for personal or non-
personal use.

11. functions
1. Buying and assembling.
2. Warehousing.
3. Selling.
4. Grading and packing.
5. Financing.
6. Advertising.

12. Services of retailer
To manufacturer and wholesaler
1. Offer opportunity.
2. A big relief.
3. Provision of information.
4. Reduce the risk of loss.
To the consumers
1. Largest choice.
2. Relief from storage.
3. Extra service.
4. Supply of information.

13. Agent middlemen
• Agent middlemen are those channel components
who help in the transfer of goods from the hands
of ultimate users without acquiring the
ownership of these goods.
• They operate for a commission.
• Their position is between the producers and
ultimate buyers.
• Negotiates purchases or sales or both but does
not buy the goods in which he deals.
• An important link between producers and
ultimate consumers.

14. Types of middle agents
1. Commission agents.
2. Brokers.
3. Factors.
4. Auctioneers.
5. Selling agents.
6. Clearing agents.

15. Functions of Middlemen:
1. Middlemen are the furnishers of valuable information
to the producers about consumer behaviour, the
changes in tastes and fashions, etc.
2. Middlemen allow the manufacturers to concentrate on
production only and relieve them from the botheration
of marketing.
3. Middlemen render financial help to manufacturers.
4. They make available the goods according to the
consumers’ needs, fashion, tastes, etc.
5. Middlemen are an important link between the
producers and consumers.

16. Factors governing the choice of
intermediary
1. Economic factors
2. The legal restrictions.
3. Fiscal policies.
4. The financial position.
5. The facilities available.

17. Factors governing the choice of
channel of distribution

18. PRODUCT FACTORS
1. Product nature.
2. Technical nature: simple or complex.
3. The length of product line.
4. The market position: market position of
manufacturer.

19. The market forces-
1. The existing market structure.
2. The nature of purchase deliberations.
3. Availability channel.
4. Competitor's channels.

20. Institutional factors
1. The financial ability of channel members.
2. The promotional ability of channel members.
3. The post-sale service ability.

21. Unit factors
1. The company’s financial position.
2. The extent of market control desired.
3. The company reputation.
4. The company marketing policies.

22. Thank you