Channel Of Distribution

Channel of distribution:

It is an organized network or a system of agencies &institutions which in combination ,perform all the activities required to link producers with users to accomplish the marketing task. MAR KET ING CH ANNELS: are the sets of interdependent organization involved in the process of making a product or service available for the use or consumption.

Basic intermediaries: Intermediaries

merchants

agents

facilitators

Managing intermediaries: • PUSH STRATEGY: • Focus is on carry, • •

promote and sell Low brand loyalty Impulse item

• • • •

PULL STRATEGY Consumer persuasion High brand loyalty High involvement product

Factors governing the choice of channels of distribution: product factors

Market factors

Unit factors

Environment factors

Cont…. • • • • •

Product factors: • Market factors Nature of product • Market structure Perceived risk/product A. concentrated value B.Dispersed Technical nature Purchase Product volume deliberations Cust .wants high level service

Cont…. • • • •

Unit factors Co’ financial position Extent of market control co 'reputation

Types of channels: Conventional/ Non integrated

non.-conventional/ integrated

direct

vertical indirect

horizontal

Direct channels: • Zero level/direct marketing: manufacturer

consumer

One lev el/in dire ct ch annel

manufacturer

retailer

consumer

Two level: manufacturer

wholesaler

retailer

consumer

manufacturer

wholesaler

consumer

3-level: manufacturer

wholesaler

jobber

retailer

consumer

INTEGRATED CHANNELS: • Those that work with full coordination rather than in loose manner

• Integrated mkt channels can be vertical and horizontal in nature

VERTICAL MARKETING SYSTEM: • ALL the channel members act as part of a Unified system in one of them owing the other so have the power to make them all corporate

CORPORATE VMS: • Successive stages from production to distribution • • • • • •

are under single ownership. E.g . amartex Bata have their own manufacturing as well as retail outlets. Woodlands Raymond's owns their own retail stores while producing textiles and woolens. Giant food stores operates an ice making facility, soft drink boiling operations, ice-cream plant that supplies them everything.

Administrative VMS: • Seeks control over successive stages from

production to distribution through size and power of one of the channel members. • E.g. HLL,P&G,nestle,maruti are brand and market leaders

Co ntr ac tual VM S: • Independent firms at different levels of

production & distribution integrating their programs on contract basis. • For e.g. • Manufacturer sponsored retailer franchise • Manufacturer sponsored wholesaler franchise

Ho rizo nta l m ar keti ng sy ste m: sy mbi otic m ar keti ng • 2 or more unrelated co’s • Put together their resources or programs to • • • •

exploit an emerging market opportunity E.G. Supermarkets have arrangements with local banks to offer in store banking Tie-up b/w TVS whirlpool,onida to market washing machines

Ch annel d esig n d ecis ion s: 1.Analyzing customer desired service outputs. 2.Establishing channel alternatives 3.Identifying major channel alternatives 4.Evaluating major channel alternatives

Analyzing the customers desired service output: getting know what your customer want • Lot size • Spatial convenience • Waiting and delivery time • Product variety • Service back up

Esta bl ish ing o bj ectiv es an d co nstr ai nts : Obj.are stated in the terms of services. Channel objective vary with Product

characteristics. For e.g. perishable product timely and fast delivery

Bulky product

Minimize the shipping distance and amount of handling.

High unit value

service ,training, installation

Identifying major alternatives: Channel alternatives for a cellular car phone maker: 1.Co’ could sell car phones to automobile manufacturers to be installed as original equipment. 2.Could sell it car phones to auto dealers. 3.Could sell it to retail automotive equipment dealer. 4.Trough mail order catalogs

Channel alternatives described by: 1.types of business intermediary 2.No,of intermediaries 3.Terms &responsibility

Channel management decision: 1.Selecting the channel members 2.Training channel members 3.Motivating the channel members