This document discusses distribution management and marketing mix. It defines distribution channels as sets of interdependent organizations that make products available for consumption. Effective distribution provides customers with place, time, and possession utilities. The document outlines various distribution channel members like retailers, wholesalers, distributors, and their roles. It also discusses distribution patterns like intensive, selective and exclusive distribution. Finally, it discusses developing an effective distribution strategy by defining customer service levels, objectives, network structure, policies, and key performance indicators.

1. Distribution Management &
Marketing Mix
Sales and Distribution Management

2. The Marketing Mix
Product
Price
Promotion
Place
Distribution channels help in the ‘place’ aspect of the
marketing mix
Distribution provides place, time and possession utility to
the consumer

3. Example
Consumer wants to buy a tube of toothpaste
Made available at a retail outlet close to her residence –
place
Made available at 8 pm on a Tuesday evening when she
wants it – time
She can pay for the toothpaste and take it away –
possession
The company distribution function has made all
this possible.
The situation would be similar if a customer wants
to buy a refrigerator or medicines or even an
electric motor

4. Players Involved
The company and its distribution network
Direct company to consumer
Company to a C&FA / distribution center to
distributors to retailers
Distributor to wholesaler to retailer
All these intermediaries help the process of
‘exchange’ of the product or service.

5. Distribution Management
Management of all activities which facilitate
movement and co-ordination of supply and demand
in the creation of time and place utility in goods
The art and science of determining requirements,
acquiring them, distributing them and finally
maintaining them in an operationally ready condition
for their entire life.

6. Distribution Channels Defined
Are sets of interdependent organizations involved in
the process of making a product or service available
for use or consumption
– Stern & Ansary
Whether selling products or services, marketing
channel decisions play a role of strategic importance in
the overall presence and success a company enjoys in
the marketplace.

7. Distribution Channels
Are intermediaries or middlemen
Exist because producers cannot reach all their
consumers
Multiply reach and provide efficiency to the
marketing process
Facilitate smooth flow and create time, place and
possession utilities
Have the core competence and reach
Provide contact, experience, specialization and
scales of operation

8. Types of Channels
Sales channel motivates buyers, shares information
between company and its consumers, negotiates fair
bargains for consumers and finances the transactions
Delivery channel meant only for physical part of the
distribution
Service channel – performs after sales service

9. Listing of Channel Members
Company own sales team
C&FAs and CSAs
Distributors, dealers, stockists, value-added re-sellers
Agents and brokers
Franchisees
Electronic channels
Wholesalers
Retailers

10. C&FAs / C&SAs
C&FA: carrying and forwarding agent
C&SA: carrying and selling agent
Both are on contract with a company
Both are transporters who work between the company and its
distributors
Collect products from the company, store in a central location,
break bulk and dispatch to distributors against indents
Goods belong to the company
C&SA also sells the goods on behalf of the company but remits
proceeds after sale

11. Distributors, Dealers, Stockists, Agents
Name denotes the extent of re-distribution done by
them
Distributors invest in the products – buy products
from the company
Are on commission, margins or mark-up
May or may not get credit – but extend credit
Distributors cover the markets as per a beat plan. All
others merely finance the business.
Distributors could be exclusive for a company
Agents bring buyer and seller together

12. Wholesalers
Operate out of the main markets
Deal with a number of company products of their
choice
Are not on contract with any company
Sell to other wholesalers, retailers and institutions
Negotiate about 15 days credit from company
distributors – also provide credit to their customers
Operate on high volumes and low margins

13. Retailers
The final contact with consumers
Operate out of their shops and sell a large assortment
and variety of goods
Located closest to consumers
Buy from company, distributors or wholesalers
Highest margins in the network
Provide personalized services to their customers

14. Industrial Products
Customers may also directly purchase from company sales force
Producer Producer
Industrial Distributor
Industrial Customer
Industrial Distributor
Industrial Customer
Agent/middleman

15. Consumer Products
Retailers may also direct from company sales force
Producer
Customer /
consumer
Retailer
Producer
Distributor
Customer/
Consumer
Retailer
Producer
Distributor
Retailer
Customer/
Consumer
Wholesaler

16. Patterns of Distribution
Determines the intensity of the distribution
Intensity decides the service level provided
Types of distribution intensity:
Intensive
Selective
Exclusive

17. Intensive Distribution
Distribution through every reasonable outlet
available – FMCG
Strategy is to make sure that the product is
available in as many outlets as possible
Preferred for consumer, pharmaceutical
products and automobile spares

18. Selective Distribution
Multiple, but not all outlets in the market
A few select outlets will be permitted to keep the
products
Outlets selected in line with the image the company
wants to project
Preferred for high value products
Tanishq jewelry
Keeps distribution costs lower

19. Exclusive Distribution
Highly selective choice of outlets – may be even one
outlet in an entire market - car dealers
Could include outlets set up by companies – Titan, Bata
Producer wants a close watch and control on the
distribution of his products.

20. Distribution Channel Strategy
Derived from the corporate strategy and the
marketing strategy
Steps for designing the distribution strategy are:
Defining customer service levels
Distribution objectives and steps
Structure of the network required
Policy and procedure to be followed
Define Key performance indicators
State Critical success factors

21. Customer Service Levels
Defined by the nature of the industry, the products,
competition and market shares.
Affordability also decides the service level
It should at least match competition.
Customer expectations have no limit

22. Distribution Objectives
Influenced by the customer expectations
Defines the extent of time, place and possession
utility which the customer can expect out of the
channel network

23. Set of Activities
Manner in which the company and its marketing channels
go about achieving the customer service levels
Some of these steps could be:
Periodic Sales forecasts
Dispatch plans
Market coverage beat plans
Journey plans for service engineers
Collection of sales proceeds
Carrying out promotional activities
The company also decides as to who is to perform which
task

24. Distribution Organization
Primary aim: determine who will do what
Major Decision points:
Extent of company support and outsourcing to be
decided
Budget for the cost of the distribution effort
Select suitable channel partners – C&FAs, and
distributors
Setting clear objectives for the partners
Agree on level of financial commitments by the channel
partners.

25. Policy and Procedure
Define policy and implementation guidelines
through Operating Manuals
Policy guidelines include
Code of conduct for channel members
System for redressal of complaints
Any additional subsidies etc
Handling institutional business
Service policy for engineering products

26. Key Performance Indicators
Consistent achievement of targets by product
groups, periods and territories
Achievement of market shares
Achievement of profitability
Zero complaints from customers
No stock returns
Ability to handle emergencies and sudden spurts
in demand

27. Key Performance Indicators
Balanced sales achievement during a period –
no period end skews
Market coverage with ready stocks
Excellent management of accounts receivables
Minimize losses on account of stock-outs
Minimize damages to products

28. Critical Success Factors
The distribution strategy also needs the support and
encouragement of top management to succeed
Some of the CSFs could be:
Clear, transparent and unambiguous policy and procedure
Serious commitment of the channel partners
Fairness in dealings
Clearly defined customer service policy
High level of integrity
Equitable distribution at times of shortage
Timely compensation of channel partners