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Distribution channels and marketing intermediaries

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Distribution channels and marketing intermediaries

  1. 1. UNIT - IV
  2. 2. PLACEMENT MIX : [ PLACE MIX] • Functions and types of intermediaries • The flows • The marketing logistics CHANNELS OF DISTRIBUTION ADDRESSESS THE FOLLOWING : 1. 2. 3. 4. Distance gap Time gap [temporal gap] Perceptional gap Transactional gap
  3. 3. IMPORTANCE OF DISTRIBUTION CHANNEL : • Distribution channel is an important element of the marketing mix of a firm & other elements are closely inter – related like pricing, promotion and product • It enables to cut down costs and maximize sales revenue • It determines where and when the product will be available to ultimate consumers or users • It involves the long – term commitment of the firm changes in the channel are very difficult and costly. • Fluctuations in the production can be reduced due to continuous & effective distribution.
  4. 4. MARKETING MIDDLE MEN – KINDS : 1. Agents 2. Brokers 3. Dealers 4. Distributors 5. Jobbers 6. Rack jobbers 7. Resident buyer 8. Retailers 9. Whole sellers 10.Commission houses 11.Discount houses 12.Branch houses 13.Facilitating houses 14.Consumer co – operatives 15.Industrial stores
  5. 5. PARTICIPANTS IN THE DISTRIBUTION CHANNEL : 1. 2. 3. 4. 5. 6. 7. Initiators Users Influencers Deciders Approvers Buyers Gate keepers
  6. 6. ** v.Imp CHANNEL DESIGN DECISIONS : I. Analysing customer’s desired service output levels : • Lot size • Waiting time • Spatial convenience • Product variety • Service backup II. Establishing objectives and constraints. III. Identifying major channel alternatives: a) Based on types of intermediaries  Company sales force  Manufacturing agency  Industrial distributors
  7. 7. b) Number of alternatives / intermediaries  Exclusive intermediaries  Selective intermediaries  Intensive intermediaries c) Terms & responsibilities of channel members  Pricing policy  Conditions of sale IV. EVALUATING THE MAJOR ALTERNATIVES :  Economic  Control  Adaptive
  8. 8. CHANNEL MANAGEMENT DECISIONS : 1. 2. 3. 4. 5. Selecting channel members Training channel members Motivating channel members Evaluating channel members Modifying channel arrangements. CAUSES OF CHANNEL CONFLICT: • • • • • • Goal incompatibility Conflict b/w national a/c managers & field sales force Conflict b/w the field sales force & tele – marketers Conflict b/w sales force & dealers Differences in perception Greater dependence
  9. 9. MANAGING CHANNEL CONFLICT : • Fix super ordinate goals • Exchange persons b/w two or more levels • Co-optation • Joint membership • Diplomacy • Mediation
  10. 10. Factors influencing a selection of distribution channel : I. a) b) c) d) NATURE OF THE MARKET : Number & location of buyers Size & frequency of purchase Consumer/ industrial market Buying habits & preferences II. a) b) c) d) e) f) g) NATURE OF PRODUCT : Size of the product [bulky/less weight] Unit value Perishability Standardization Technical nature Age of the product [expiry date] Product line
  11. 11. III. NATURE OF FIRM : a) Market standing b) Financial resources c) Volume of output d) Degree of control desired e) Managerial competence IV. NATURE OF DISTRIBUTION : a) Availability of middlemen b) Attitudes of middlemen c) Services provided by middlemen d) Sales potential e) Cost of the channel f) Customers & competition g) Legal considerations
  12. 12. KINDS OF DISTRIBUTION CHANNELS : I. SELLING THROUGH MIDDLEMEN : • Agency • Through whole sellers • Selling through retailers II. SELLING DIRECTLY TO CUSTOMERS : • Door to door • Mail order • Producers retail chains
  13. 13. ONLINE MARKETING ADVANTAGES OF ONLINE MARKETING : • • • • • • • • • • • • • No time restrictions [24*7] Convenience Information unlimited Fewer hassle's [difficulties] Quicker adjustments to market conditions Low cost Relationship building Audience sizing Both small & large firms can afford it No real limit on advertising space Information access & retrieval is fast Anyone at any place, any time in the world can buy or sell Shopping can be done privately.
  14. 14. CONDUCTING ONLINE MARKETING : • Electronic presence • Corporate presence • Marketing website CHALLENGES OF ONLINE MARKETING IN INDIA : • • • • • Limited consumer exposure and buying Skewed user demographic & psychographics Security issues Ethical concerns Consumer back lash
  15. 15. PUBLIC & ETHICAL ISSUES IN DIRECT MARKETING :  Irritation  Unfairness [ different prices, different facilities for different people ]  Deception & fraud  Invasion of privacy
  16. 16. RETAILING Meaning: Retailing includes all the activities involved in selling goods or services directing to final consumers for personal, non – business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Any organization selling to final consumers whether it is a manufacturer, whole seller or retailer is doing retailing.
  17. 17. MAJOR RETAILER /RETAILING STYLES / TYPES :              Speciality store [only 1 brand] e.g: Bata Department store - e. g: medical shops Super market Convenience store Discount stores Off price retailer Factory outlets Independent off-price retailers Ware house clubs Super stores Combination stores Hyper markets Catalogue show room – e. g: jewellery, tiles, paints
  18. 18. TRENDS IN RETAILING : I. New retail forms and retailing :  Super markets includes banks  Book stores include coffee shops  Growth of inter type competition [competition b/w store based & non- store based retailing]  Growth of giant retailer  Decline of middle market retailers  Growing investment in technology  Global presence of major retailers – e.g.: wall mart, banks II. Multiplex retailing – e.g.: Imax, inox, pvr, gvk
  19. 19. III. Non – fuel retailing : Retailers can position themselves as offering one of Four levels of service. • Self service • Self selection - e.g.: ATM • Limited service - e.g.: medical shops • Full service – e.g.: banks
  20. 20. IMPORTANT Q’S : 1. What are channel design decisions ? [p.g 410 in philip kotler] 2. Explain the reasons for channel conflict & steps to resolve such conflict ? 3. What is online marketing ? Explain the challenges faced in online marketing ? 4. Explain the channel structure and participants of channels of distribution ? 5. What is retailing ? Explain the emerging trends in retailing? [pg 432 in philip kotler]

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