Physical channel of distribution consists of each and every individual or set of organization involved in transferring the good or service to the final consumer.

1. PHYSICAL CHANNEL OF
DISTRIBUTION
Vijyata | Assistant Professor | Ranchi Women’s College
| Ranchi University

2. DEFINITION
The set of interdependent organizations involved in
the process of making a product or service available
for use or consumption by the consumer or
business user.-' The channel of distribution is
therefore all those organizations through which a
product must pass between its point of production
and consumption

3. Information
flow
Promotion
Negotiation
Matching
Financing
Breaking
Bulk
Risk
taking
Persuasion
Transfer
of title
MARKETING
CHANNEL
FUNCTIONS

4. DISTRIBUTION CHANNEL LEVELS ( Consumer)
MANUFACTURER
CONSUMER CONSUMER
RETAILER
MANUFACTURER
CONSUMER
WHOLESALER
MANUFACTURER
CONSUMER
WHOLESALER
MANUFACTURER
RETAILER
JOBBER
RETAILER
Fig: Customer Marketing Channels
Zero-level
One-level
Two-level
Three
level

5. DISTRIBUTION CHANNEL LEVELS (Industrial)
MANUFACTURER
INDUSTRIAL
CONSUMER
INDUSTRIAL
CONSUMER
Industrial Distributor
MANUFACTURER
INDUSTRIAL
CONSUMER
Manufacturer’s
Representative or
Sales Branch
MANUFACTURER
INDUSTRIAL
CONSUMER
Manufacturer’s
Representative or
Sales Branch
MANUFACTURER
Industrial Distributor
Fig: Industrial Marketing Channels

6. FOUR TYPES OF CHANNEL ORGANIZATION
Manufacturer
Wholesaler
Retailer
Consumer
Consumer
Manufacturer
Retailer
Wholesaler
CONVENTIONAL
CHANNEL DESIGN
VERTICAL
MARKETING
SYSTEM
Manf.1 Manf.2
W2
R2
Cons.2Cons.1
HORIZONTAL
MARKETING
SYSTEM
Manufacturer
Retailer
Cons.2Cons. 1
Busi.
Cons.1
Wholes
aler
Retailer
HYBRID
MARKETING
SYSTEM

7. A conventional distribution channel consists of one or
more independent producers, wholesalers and
retailers. Each is a separate business seeking to
maximize its own profits, even at the expense of
profits for the system as a whole. No channel member
has much control over the other members and no
formal means exists for assigning roles and resolving
channel conflict
CONVENTIONAL DISTRIBUTION
CHANNEL

8. A vertical marketing system (VMS) consists of producers,
wholesalers and retailers acting as a unified system.
One channel member owns the others or has contracts
with them, or wields so much power that they all
cooperate. The VMS can be dominated by the producer,
wholesaler or retailer. They achieve economies through
size, bargaining power and elimination of duplicated
services.
VERTICAL MARKETING SYSTEM (VMS)

9. VMS
CORPORATE
VMS
CONTRACTUAL
VMS
Wholesaler-
sponsored
voluntary chains
Retailer Co-
operatives
Franchise
Organization
Manufacturer
sponsored retailer
franchise system
Service firm
sponsored retailer
franchise system
Manufacturer
sponsored wholesaler
franchise system
ADMINISTERED
VMS

10. CORPORATE VMS:
In a corporate VMS, co-ordination and conflict
management are attained through common ownership
at different levels of the channel. Petrol distribution
through chains of petrol stations owned by the oil
company is an example of delivery and control achieved
by such a system

11. ADMINISTERED VMS :
An administered VMS co-ordinates successive
stages of production and distribution, not
through common ownership or contractual ties,
but through the size and power of one of the
parties.
Eg. – Nestle Maggi, Cadbury ,pepsi ,coke

12. CONTRACTUAL VMS :
A contractual VMS consists of independent
organizations at different levels of production and
distribution, which join together through contracts
to obtain more economies or sales impact than
each could achieve alone. It is primarily done by
means of, Wholesaler’s sponsored chains,
Retailer cooperatives or Franchise.

13. FRANCHISEE:
A franchise is a contractual association between a franchisor - a
manufacturer, wholesaler or service organization - and an
independent channel member (the franchisee), which buys the right
to sell the franchisor's branded product or service
- Manufactured-sponsored Retailer Franchise system : Car company
and Car Dealer
- Manufactured-sponsored Wholesaler Franchise system : Soft drink
company and distribution firm
- Service –firm Sponsored retailer Franchise system : Play schools,
study centres

14. HORIZONTAL MARKETING SYSTEM
In HMS, two or more companies at one level join
together to follow a new marketing opportunity.
By combining their capital, production capabilities or
marketing resources, companies can accomplish
more than any one company working alone.
Companies might join forces with competitors or
non-competitors.

15. HYBRID MARKETING SYSTEM
Multichannel distribution systems
adopted by companies is often called hybrid
marketing channels. Such multichannel
marketing occurs when a single firm sets up
two or more marketing channels to reach
one or more customer segments.

16. THANK
YOU…
Write to me at Vijyata.rwc@gmail.com or comment
in the comment box