A set of independent organisations involved in the
process of making a product or service available for
use or consumption by the consumer or business
FUNCTION OF MARKETING CHANNEL
Carrying of inventory
After – sale service
Extending credit to customer
MARKETING CHANNEL STRATEGY
GROWING IN IMPORTANCE. WHY???
Search for sustainable competitive advantage.
Growing power of retailers in marketing channel.
Need to decrease the cost of distribution.
Increased role and power of Technology.
New stress on growth.
CHANNEL FUNCTIONS & FLOW
VERTICAL CHANNEL CONFLICT
Conflict between different levels with
in the same channel.
e.g.- HUL came into conflict with its
distributers in Kerala on the issue of
HORIZONTAL CHANNEL CONFLICT
Conflict between members at the same
level with in the channel.
e.g.- Conflict between two same retail
Conflict exists when the manufacturer
has established two or more channels
that sale same product.
e.g.- Reebok has its own store and
other licensed store who also sale
CAUSES OF CHANNEL CONFLICT
Differences in perception.
Intermediaries' dependence on the
STRATEGIES TO MANAGE
Adoption of super ordinate goals.
Exchange of employees.
Joint membership in trade association.
Diplomacy, mediation, or arbitration.
The process or channel or flow which makes
the product or service available for use by the
customer can be regarded as a distribution
To meet the satisfaction level of the consumer by
delivery of products to different types of customers
when and where they required at a reasonable cost
can be considered as one of the major function of
Bridge the gap between production and consumption.
Responsible for promoting, awareness regarding the
Creating contacts and maintaining liaison with existing
Understanding customer need and adjusting the offer
Price negotiation as per the customer demand of the
Scale of operation
Purpose – Match supply from producers to demand from
STEPS IN DISTRIBUTION PLANNING
Develop Distribution Objective
Evaluate Internal and External Environmental influences
Choose a Distribution Strategy
• Conventional, Vertical, or Horizontal system
•Intensive, exclusive or selective distribution
•No. Of channel levels
Develop Distribution Tactics
•Selecting channel members
•Managing the channel
•Physical distribution planning
CHOOSING A DISTRIBUTION SYSTEM
• MIDDLEMAN – independent link between producers and consumers
• MERCHANT MIDDLEMAN – actually buys goods and takes title/ownership
• AGENT – business unit that negotiates purchases and sales but does not take
• WHOLESALER – a merchant who primarily stores and handles goods in large
• RETAILER – merchant middleman who sells to final consumers
• BROKER – middleman who serves as a go-between for the buyer and seller
• MANUFACTURER’S AGENT – an agent who operates by contract serving a
• DISTRIBUTOR – wholesale middleman in lines with selective or exclusive
• JOBBER – a middleman who buys from manufacturers and sells to retailers
• FACILITATING AGENT – a firm that performs distribution tasks other than
buying, selling and transferring
HOW INTERMEDIARIES REDUCE THE NUMBER
OF CHANNEL TRANSACTIONS
TYPES OF DISTRIBUTION STRATEGIES
1. Exclusive distribution
2. Selective distribution
3. Intensive distribution
1. EXCLUSIVE DISTRIBUTION
SITUATION WHERE SUPPLIERS AND DISTRIBUTORS ENTER
INTO AN EXCLUSIVE AGREEMENT THAT
ONLY ALLOWS THE NAMED DISTRIBUTOR TO SELL A
Limiting the use of intermediaries
Not allowing competing brands
Huge investments by dealers
2. SELECTIVE DISTRIBUTION
TYPE OF PRODUCT DISTRIBUTION THAT LIES BETWEEN INTENSIVE
DISTRIBUTION AND EXCLUSIVE DISTRIBUTION, AND IN WHICH
ONLY A FEW RETAIL OUTLETS COVER A SPECIFIC GEOGRAPHICAL
AREA. CONSIDERED MORE SUITABLE FOR HIGH-END ITEMS SUCH
AS 'DESIGNER' OR PRESTIGE GOODS.
Use of more intermediaries compared to exclusive
Need more visibility
**SHAHNAZ HUSSAIN HERBAL PRODUCTS
Not available in every Grocery Shop
Available at selected outlets
3. INTENSIVE DISTRIBUTION
A MARKETING STRATEGY UNDER WHICH A COMPANY SELLS THROUGH
AS MANY OUTLETS AS POSSIBLE, SO THAT THE CONSUMERS ENCOUNTER
THE PRODUCT VIRTUALLY EVERYWHERE THEY GO: SUPERMARKETS,
DRUG STORES, GAS STATIONS, AND THE LIKE.
As many outlets as possible
Problems of control
**LUX SOAPS, LIFEBUOY, COLGATE, SOFT DRINKS
Channel Management involves the strategy, development and
alignment of channels, or customer interfaces, across your
marketing, sales and service processes. Channels typically
include the Internet, call centers, retail stores, phones and text
FUNCTIONS OF INTERMEDIARIES IN DISTRIBUTION
The functions of intermediaries are :
6. Payment collection.
8. Risk taking.
9. Title transfer.
Owning the Channel
Channel Structure and
Managing Conflict to
Getting It, Using It,
Influence with Channel
Making the Plan
Value and Resource Scarcity
Value and Market
Core of Transaction
Specific Human Assets
Preparing a Marketing Plan
Factors in Deriving
Value via Channels of
Search, Adjustment of
ion of Transactions
Reduction in Number
What Is The Work Of
Three types of
Implementation Channel Design:
Channels or Refine
Distributor and Agent
Selection Criteria Recruiting and
Recruiting as a
Business and Operational
Business Policies that
Bond Your Channel to
Managing Conflict to
Forms of Channel
Conflict Assessing the Degree
and Nature of Channel
When Conflict Is
When Is Conflict
Major Sources of
Differing Perceptions of
Clashes Over Domains
Styles of Conflict
Legal Constraints on
Product Line Policies
Direct Delivery of
Delivery of Value via
Innovations in Methods of
Channels for Services