1. Case Study on Selection of
Distribution channel

2. Channel-1
Year Discount Sales P.V. Exp. P.V. Net P.V.
Factor Margin
1 0.847 10 8.47 8 6.77 2 1.69
2 0.718 12 8.61 11 7.98 1 0.78
3 0.608 15 9.21 12 7.29 3 1.82
4 0.515 18 9.27 14 7.27 4 2.06
35.47 29.61 6.35

3. Calculation for channel 1
Discount factor= [1/(1+0.18)]^R
Exp. / Sales = 0.822
Net Margin/Sales = 0.179
Profitability = 17.9%

4. Channel-2
Year Discoun Sales P.V. Exp. P.V. Net P.V.
t Factor Margin
1 0.847 8 6.77 7 5.92 1 0.84
2 0.718 10 7.18 8 5.74 2 1.45
3 0.608 11 6.68 10 6.08 1 0.60
4 0.515 16 8.24 11 5.66 5 2.57
28.87 23.23 5.44

5. Calculation for channel 2
Exp./ Sales = 0.80
Net Margin/Sales = 0.188
Profitability = 18.8%

6. Channel-3
Year Discou Sales P.V. Exp. P.V. Net P.V.
nt Margin
Factor
1 0.847 14 11.85 12 10.16 2 1.69
2 0.718 16 11.48 13 9.33 3 2.15
3 0.608 18 10.94 15 9.12 3 1.82
4 0.515 21 10.815 17 8.75 4 2.06
45.07 37.36 7.72

7. Calculation for channel 3
Exp./ Sales = 0.82
Net Margin/sales = 0.171
Profitability = 17.1%

8. Conclusion :
*Profitability for channel-1 : 17.9%
*Profitability for channel-2 : 18.8%
*Profitability for channel-3 : 17.1%
As per the profitability for all the 3 channels,
we will prefer channel-2.

9. Thank You!