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Distribution Strategy & Channels


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Distribution Strategy, Function of Channel Distribution, Marketing Intermediaries, Relationship Marketing in Channels, Types of Marketing Systems, and Non store retailing.

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Distribution Strategy & Channels

  1. 1. Distribution Strategy
  2. 2. -the path through which goods & services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor. - A distribution channel may include several interconnected intermediaries along the way such as wholesalers, distributers, agents and retailers. Channel of distribution
  3. 3. 1. Middleman – independent link between producers and consumers 2. Merchant middleman – actually buys goods and takes title/ownership 3. Agent – business unit that negotiates purchases & sales but does not take ownership 4. Wholesaler – a merchant who primarily stores and handles goods in large quantities 5. Retailer – merchant middleman who sells to final consumers 6. Broker – middleman who serves as a go-between for the buyer and seller 7. Manufacturer’s agent – an agent who operates by contract serving a geographic territory 8. Distributor – wholesale middleman in lines with selective or exclusive distribution 9. Jobber – a middleman who buys from manufacturers and sells to retailers 10. Facilitating agent – a firm that performs distribution tasks other than buying, selling and transferring Major types of Marketing Intermediaries
  4. 4. Major functions Performed in Channel Distribution
  5. 5. Conventional Channel of Distribution of Consumer goods
  6. 6. Conventional Channel of Distribution of Organizational goods
  7. 7. General considerations in Channel Planning - Customer characteristics - Product characteristics - Intermediary characteristics - Competitor characteristics - Company characteristics - Environmental characteristics
  8. 8. Distribution Coverage required Channel selection may depend upon the nature of market coverage desired Intensive distribution – Using as many wholesalers and retailers as possible Selective distribution – Using only the best available per geographic area Exclusive distribution – Selected intermediaries are given exclusive rights within a particular territory Degree of control desired - Achieved by the seller is proportionate to the directness of channel Total distribution cost - Channel should be viewed as a total system composed of interdependent subsystems Objective should be to optimize total system performance Generally assumed that the total system should be designed to minimize costs, other things being equal Channel flexibility – Ability of the manufacturer to adapt to changing conditions
  9. 9. Relationship Marketing in Channels Types of Vertical Marketing Systems (VMS) Corporate VMS single ownership of each stage in the marketing channel Administered VMS a dominant channel member produces channel coordination through the exercise of power similar to conventional channels Contractual VMS formal agreements between channel members involve independent production and distribution companies
  10. 10. WHOLESALING- Wholesaling is the process of selling goods and services to a client who will in turn resell those products to other consumers. Wholesalers can include retailers, organizations who market services to members, and companies that sell the purchased products under their own brand. Generally, wholesaling involves providing the customer with a discounted rate per item in exchange for buying the item in large amounts. Specialty stores sell just one category of merchandise, although that category may be further divided into particular departments Department stores- They are organized by divisions that include several clothing categories, cosmetics and accessories, jewelry, household goods, furniture, kitchenware. Each department has a manager, and there are store designers and decorators, plant maintenance and cleaning divisions, store security and more.
  11. 11. Warehouse Store-. Products include clothing, automotive parts, sports equipment, nursery plants, toys, bedding, electronics--and even groceries. Some stores require annual memberships that offer discounts. Others are just huge discount operations. Warehouse stores may train employees for multiple departments and shift you from one area to another as needed. Grocery Stores- Mom 'n' pop groceries, national chains, organic specialists, corner delis--grocery stores come in all flavors. Departments may include a bakery, deli, produce, meat and floral. Resale Stores Resale or second-hand stores might be considered charity shops, antique stores or consignment. Items found in these stores vary from donated clothing to valuable antiques. Resale store employees accept and sort donations, stock racks and shelves, assist customers and answer questions about the items on display. Online Stores- They sometimes have real stores as well as virtual ones. But, even if they exist only online, the stores need a fulfillment division to take orders, find and pack purchased items from the warehouse, manage billing and shipping and deal with customer service questions and complaints.
  12. 12. Non store retailing 1. Catalogs and direct mail - consumers can be targeted effectively and reached home & work. 2. Vending Machines - sales are beverages/food. Its available 24 hours & placed in variety of places. 3. Television Home shopping - includes cable channels. 4. Direct sales - from salesperson to consumers to their homes and offices. 5. Electronic exchange or Internet marketing - involves collecting information, shopping, and purchasing from internet.
  13. 13. END OF REPORT