The slideshow covers concepts related to Distribution channel, marketing channel, channel management, intermediaries, retailing meaning, type etc.

1. Department of MBA
IMS Engineering College,
Ghaziabad
Marketing Management – II
UNIT 3 – PART 2
Distribution Management

2. Distribution Management
• Distribution channel or marketing channel
stands for a set of interdependent organizations
involved in the process of making a product or
a service available for use or consumption by
individual or industrial consumer

3. Distribution - Introduction
• Getting a product to the market largely
requires an effective marketing channel for
companies that manufacture durable goods and
other products. A supply chain typically
features various middlemen between the
manufacturer and the consumer, such as
distributors, wholesalers and retailers.

4. Channel - Meaning
• A channel is an entity that realizes the distribution
function for a product/service
• A distribution channel is the people,
organizations, and activities necessary to transfer
the ownership of goods from the point of
production to the point of consumption. It is the
way products and services get to the end-user, the
consumer; and is also known as a marketing
channel.
• Channel entities are also called ‘intermediaries’

5. Various Type of Intermediaries
• Distributors
• Wholesalers
• Retailers
• Warehouse keepers
• Transporters
• Insurance agents
• Infomediaries
• Cybermediaries
are all included in distribution channel

6. Need for marketing Channels
• Provide market information to the
manufacturer
• Involve in ‘resale’
• Product promotion (through sales incentives)
• Matching demand and supply
• Perform the logistics function
• Minimize distribution costs by standardizing
transactions

7. Need for marketing Channels
• Marketing channel, distribution channel,
channel, intermediaries .. All these entities are
extremely inter-related .. All of these performs
tasks and functions to take the product from
the point of its manufacture to the point of its
consumption. These manage the logistics
which includes packaging, inventory and
warehousing and transportation.

8. Decisions involved in setting up
Channel
• Designing a channel calls for the following
decisions:
Analyzing customer needs
Defining channel objectives and constraints
Specifying distribution tasks
Identifying major channel alternatives
Evaluating those alternatives
Choose the most suitable channel structure
Select channel members (intermediaries)

9. Decisions involved in setting up
Channel

10. Decisions involved in setting up
Channel
Analyzing customer’s needs
Distribution channel decision starts with the
customers, what do they want? Are they
willing to travel or do they need product
nearby? Channels are viewed as customer
value delivery systems in which each
channel member adds value for the
customer.
Evaluating channel alternatives
The Company must evaluate each
alternative against the following -
economic criteria (profitability),
control criteria (control over marketing
the product) and adaptive criteria
(channel must be adaptable to the
changing marketing environment)
Identifying major channel alternatives
Company identifies its major channel
alternatives in terms of the types and
number of intermediaries to use and the
responsibilities of each channel
member. A number of option exists such
as Direct Marketing, Sales force, use of
intermediaries etc
Defining Channel Objectives and
Constraint
Channel objectives should be stated in terms
of desired service level of the customers.
Companies channel objectives are also
influenced by nature of its products,
company policies, intermediaries,
competitors and environment

11. Types of Marketing Channels

12. Channel Management Strategies
• Channel management involves creating
operational strategies that go beyond a single
organization. Channel management strategies
bring together partners in a supply chain,
including material suppliers, manufacturers,
distributors and resellers, in an effort to lower
costs and increase operational efficiency
throughout the chain.

13. Types of Channel Flows
• Physical flow – from the manufacturer to the
customer
• Ownership flow – from the manufacturer to
the customer
• Information flow – both ways
• Payment flow – from the customer to the
manufacturer
• Promotion flow – from the manufacturer to the
customer

14. Logistics Management
Definition: ‘Logistics management is a supply
chain management component that is used to
meet customer demands through the planning,
control and implementation of the effective
movement and storage of related information,
goods and services from origin to destination.’
LOGISTICS
INBOUND
LOGISTICS
OUTBOUND
LOGISTICS

15. Inbound & Outbound Logistics
• Inbound Logistics: is concerned with the smooth and
cost effective inflow of materials and other inputs (that
are needed in the manufacturing process) from
suppliers to the plant. For proper management of
inbound logistics, the management has to maintain a
continuous interface with suppliers (vendors).
• Outbound Logistics: (also called physical distribution
management or supply chain management); is
concerned with the flow of finished goods and other
related information from the firm to the customer. For
proper management of outbound logistics, the
management has to maintain a continuous interface
with transport operators and channels of distribution.

16. Significance of Logistics
• Cost reduction and profit maximization
• Efficient flow of manufacturing operations
• Efficient logistics creates a competitive edge
• Efficient logistics creates sound inventory
systems
Improved material handling
Optimum no. of warehouses

17. Key Activities involved in
Logistics
• Order processing
• Procurement
• Material Handling
• Inventory Management
• Packaging and Labeling
• Warehousing
• Transportation

18. Reverse Logistics
• Logistics or ‘forward logistics’ is the transfer
of a product from the point of its manufacture
to the point of its consumption, reverse
logistics is just the reverse of it i.e. taking the
goods in the opposite direction, away from the
end user
• Reverse logistics may happen due to several
reasons

19. Reverse logistics – causes
• Need for reverse logistics arises in the
following cases
Defective product being delivered
Wrong product being delivered
Product being returned for being repaired
Calling back sub standard products (by the
manufacturer)
Short term rental returns
Recycling of the product

20. Objectives of Reverse Logistics
• Recycling
• Disposal
• Repair
• Selling as second hand products

21. RETAILING
• Retailing is a distribution channel function where
one organization buys products from supplying
firms or manufactures the product themselves,
and then sells these directly to consumers (the
ones who intend to use the product)
• Some manufacturers also operate their own retail
stores
• A retailer is the seller with whom the customer
directly interacts

22. Importance of Retailing
• It is a convenient for of selling a product quantity
wise (breaking the bulk)
• Retailing offers convenience of place and location
to the customer
• It is the ultimate function of marketing i.e. to sell
the products to the consumers
• Retailing contributes to the economy
• Retailing creates a number of jobs
• Retailing dominates the distribution channel
• Retailing provides information to the
manufacturer

23. Types of Retailing
Retailing
Organized
Retailing
Unorganized
Retailing
Organized retailing - it is the form of retailing that takes place through
systematic processes. Large retail stores focus on overall customer
experience in the retailing function.
Unorganized retailing – it is the form of retailing in which there are no
systematic and pre-defined processes. Small kirana shops from which people
buy products of daily needs are best examples of unorganized retailing.

24. Classification of
Retail Stores / Retail formats

25. Wholesaling
• Definition: Wholesaling is the sale of
merchandise in bulk to a retailer for
repackaging and resale in smaller quantities at
a higher price.
• Wholesalers buy in bulk either from the
manufacturer or from the distributor.
Wholesaler influence the distribution channel
in a big way.

26. Importance of Wholesaling
• Breaks the Bulk – buy in bulk from
manufacturers / distributors and sells in smaller
quantity to retailers
• Maintains demand-supply stability – they
maintain stock to stabilize demand supply
• Provides storage facility – they take away the
burden of storage from the manufacturers
• Risk Bearing – wholesalers bears the risk of loss
due to fluctuating demand / damage during
storage or transit

27. Types of Wholesaling
• Various categories of wholesalers are:
 Manufacturer Wholesalers: These wholesalers engage
themselves in manufacturing activities to some extent.
They also purchase products from other manufacturers
and sell them along with their own products e.g.
Patanjali
 Retailer Wholesalers: They purchase goods in large
quantities from the manufacturers and sell them directly
to the consumers by opening their own retail shops. In
this manner they simultaneously act as wholesalers and
retailers. E.g. Big Bazar

28. Types of Wholesaling
• Pure Wholesalers / Merchant Wholesalers: they
concentrate fully on wholesale activities. They neither
manufacture nor retail goods directly to consumers.
They purchase goods in large quantities from different
manufacturers and supply to retailers in small lots
• Agent / Brokers: These are middlemen and serve as a
link between the manufacturers and the retailers.
Normally, they function on behalf of the manufacturer,
their task being to find buyers for the products of the
manufacturer. They receive commission from the
manufacturer for the work done by them.

29. Vertical Marketing System
• In vertical marketing system (VMS),
producers, wholesalers act as a unified system
and seek to maximize profits for the whole
channel.
• In VMS, one channel member own the other,
has contacts with them or controls them with
its power and influence
• Such systems occur to manage channel conflict
and control channel behaviour

30. Vertical Marketing System

31. Horizontal Marketing System
• Horizontal Marketing system (HMS) is a
channel arrangement in which two or more
companies at one level join together to follow
a new marketing opportunity
• E.g. Coca Cola and Nestle formed a join
venture to market ready to drink coffee and tea
worldwide.

32. Channel Conflict
• Channel conflict can be explained as any
dispute, difference or discord arising between
two or more channel partners, where one
partner’s activities or operations affect the
business, sales, profitability, market share or
similar goal accomplishment of the other
channel partner.

33. Reasons for Channel Conflict

34. Consequences of Channel Conflict