The document discusses various distribution channel design considerations for marketing products. It covers determining distribution objectives, evaluating direct and indirect distribution system alternatives, and factors that affect channel structure choices like market characteristics, product attributes, and firm capabilities. The key aspects of an effective channel design are selecting entities to perform distribution activities and establishing service output levels, activity flows, and performance responsibilities within the channel network.

1. Amity Business School MBA Class of 2010, Semester II Distribution & Logistics Management Ms.Vandana Gupta

2. Designing customer-oriented marketing channels

3. Distribution System for various Product categories Direct Mfg.’s website Direct call By Sales Force/ Phone call/ Mail Order etc Own store Indirect Dealer/ Retail Store C&F Agent Stockist Retailer Central and/or Distribution Warehouse Wholesaler/ Distributor Retailer Manufacturer/Service Provider Customers

4. TYPES OF DISTRIBUTION SYSTEM DIRECT DISTRIBUTION SYSTEM INDIRECT DISTRIBUTION SYSTEM MULTIPLE CHANNEL SYSTEM

5. Types of Direct Distribution System Personal Selling Direct Mailing Catalogue Marketing Telemarketing

6. Types of Indirect Distribution System One Tier Distribution System Two Tier Distribution System Multi Tier Distribution System

7. DESIGNING CHANNEL STRUCTURE Determining Distribution Objective Distribution System Alternatives Determining Intensity of distribution Factors affecting Choice of Distribution

8. 1. Determining Distribution Objective Higher Growth and Long Term performance of business Greater market coverage, dominance and penetration Sustainable competitive Advantage Distribution cost containment Development and maintenance of partnering channel relationships for qualitative outcomes of marketing Improvement of Social and Economic welfare

9. 2. Distribution System Alternatives Direct Distribution System One Tier Distribution System Two Tier Distribution System Multi Tier Distribution System Multiple Channel System

10. 3. Determining Intensity of distribution Channel Number Channel Length Channel Width Intensive Distribution Exclusive Distribution Selective Distribution

11. 4.Factors affecting Choice of Distribution Market Variables Product Variables Firm’s Variables Marketing Intermediary Variables Nature of Market No. of Potential customers Geographic concentration of the market Order size Customer Value models Customer Buying Habits Unit sale value Bulk and Weight Perishable Nature Technical Products Product Line Nature of The product Financial Soundness Desire for Channel control Direct Distribution Strengths Managerial Capabilities Cost of each Proposed channel Contribution of Middleman in Value addition Availability of Desired middleman Firm marketing Intermediary Relationships dynamics

12. Channel Design The channel design is normally meant to give a clear idea about: The number of channel entities in the channel network, The way in which they are linked, The roles and responsibilities of the entities in the network The rewards for participating in the activities and also Clear cut guidelines for the major activities to be performed during the normal functioning of the channel.

13. What are the service outputs Waiting time Breaking the bulk Spatial convenience Assortment

14. Distribution channel design To consume a product Service outputs have to be delivered Channels Participates in channel flows Activities have to be performed Thus performs activities

15. Example of a service output delivered template Available Consumer financing 7. Free for first two years, but available on payment afterwards. Also available at every city from where the product was bought. After sales support 6. Available Installation support 5. Other consumer goods items including that of other competitors are available at all the outlets where the products are otherwise Available Assortment 4. Not more than 2 days for any model Waiting time 3. There is at least one outlet for almost every 3 km radius excluding of course thinly populated areas Spatial convenience 2. Units are delivered in ones Bulk-Breaking 1. Service output delivered Service dimension Sl.No.

16. Channel flows and contribution to service outputs Bulk breaking, spatial convenience, waiting time Payment Bulk breaking, spatial convenience, waiting time Ordering Assortment Spatial convenience, waiting time, bulk breaking Financing Waiting time, bulk breaking, spatial convenience Risk taking Assortment Spatial convenience, bulk breaking Negotiation Is a service output in itself Spatial convenience Promotion Spatial convenience Ownership Assortment Spatial convenience, bulk breaking, waiting time Physical Possession Other contribution Indirect contribution Direct contribution Flow

17. Channel design effort decisions The service output levels The flows or activities that are associated with the achievement of the service output levels The type of entity who would be entrusted with the performance of each of these flows

18. Parameters for comparing channel designs Efficiency Effectiveness Equity Scalability Flexibility

19. The channel establishment plan (contd .) The main purpose of the channel to be set-up The profile of the customers who are the target market for the channel The needs and requirements of the target market with regard to the identified service outputs provided by the proposed/ existing channel: Analysis of the operations of the existing channels that deal in similar product/service lines Detailed activity chart for achieving the service output objectives

20. Plan….. Contd. Details about the various channel constituents who will be performing these tasks The cost of performing the activities The designated roles and responsibilities of the channel constituents The proposed remuneration for performing these roles and responsibilities Standards for measuring the performance Procedures for reporting and information sharing Monitoring mechanisms Criteria for appointing the channel members