Common Channel Of Distribution Saurabh

DISTRIBUTION STRATEGY SAURABH SHUKLA ROLL NO- 52 SYMMS - III

Common Channel of Distribution Consumer

products. Organizational products.

Consumer channel PRODUCER

CONSUMER

Indirect channel PRODUCER

PRODUCER

PRODUCER

RETAILERS

WHOLESELLERS

AGENTS

CONSUMER

RETAILERS

WHOLESELLERS

CONSUMER

RETAILERS

CONSUMER

Organizational products PRODUCER

ORGANATIONA L BUYER

Direct channel PRODUCER

PRODUCER

PRODUCER

DISTRIBUTERS

ORGANATIONAL BUYER

AGENTS

AGENTS

ORGANATIONAL BUYER

DISTRIBUTERS

ORGANATIONAL BUYER

CHANNEL OF DISTRIBUTION STRATEGY Step in channel Strategy Selection

Type of channel Arrangement Conventional

Vertical Coordinated Ownership Contractual Administrated

Desired Intensity of Distribution Intensive

selective

Exclusive

Selection of a Channel configuration

DISTRIBUTION CHANNEL OBJECTIVE & MEASUREMENT CRITERIA PERFORMANCE OBJECTIVE

POSSIBLE MEASURE

APPLICABLE PRODUCT CHANNEL LEVEL

Product Availability Coverage of relevance retailer

% of effective distribution

Consumer produces at retail level

In-store positioning

% of shelf spacing and display space

Consumer produces at retail level

Coverage of Geographic material Frequency of sale call by Industrial products costumer type, available delivery Consumer product whole sale time level,

Promotional Effort Effective POP Promotion

%of using special display and POP Consumer product at retail level. mt, weighted by imp. By store.

Effective personal delling support.

% of sale people time devoted to If product consumer durable at all product, no. of sales people level consumer communication receiving training and product good at wholesale level. character and application.

Customer Service Installation , training

No of service tech. training, Ind. Product part those involving maintain of customer complaints. high technology consumer durable at retail level.

MANAGING THE CHANNEL Includes

activities choosing how to assist and support intermediaries, developing operating policies, providing incentives, selecting promotional programmers and evaluating channel results. These consume a lot of time, since the channel is not modified frequently. Finding competence and motivated intermediaries is critical to implement channel strategy sucessfully.

1) 2) 3) 4) 5) 6) 7) 8)

Channel leadership Management structure systems Physical distribution management Channel relationship Commitment and trust among marketers Conflict resolution Channel performance Legal and ethical consideration



Channel leadership

Some form of inter organization management is needed to assume that the channel has satisfactory performance as a competitive entity. One firm may gain power over other channel, organizations because of its specific characteristics. Example:- size, experience and environmental factor and other obliquity to capitalize on such factor.

Management structure systems Channel co-ordination and management offer responsibilities of sales org. the structure and system may vary from informal arrangement to highly structured operating system. 

Physical distribution management The objective is improving the distribution of suppliers; good in process, and finished goods. the decision to integrate physical distribution with channel function. physical distribution is a key channel function and thus an important part of channel strategy and mgmt. 

Channel relationship Degree of collaboration Transactional in conventional channels but may become ma collaborative in VMS. 

Commitment and trust among marketers Poor in conventional channels less concentrated than in VMS. Conventional only may have more bargaining power by same channel members than others. 

Conflict resolution Differences in objectives, priorities and corporate culture– conflict looking at a proposed channel by each participating organization may identities areas. Example:- incompatitables objective that are likely to lead to major conflicts. In such case management may seen to another channel partner. Effective communication before and after establishing the channel sel. 

Channel performance How well each member is meeting the objectives? Overall performance of the channel. Profit contribution Revenues costs Market share Customer satisfaction Rate of growth 

Criteria for evaluating overall performance Product ob

Types of Distribution channels Major: Conventional & VMS Conventional group of vertically linked independent organizations, each trying to look out for itself, with linked concern for the total performance of the channel. Informal relationship members - not closely coordinate. Focus on buyer-seller transaction rather than close collaboration through the channel

Vertical

Marketing System

◦ Is the Management (or coordination) of the distribution channel by one organization. Programming & Coordination of channel activities & functions -> directed by the firm i.e. Channel Manager. ◦ Operating rules & guidelines indicate the function & responsibilities of each participant. Management assistance & services are supplied to participating organization by the firm that is the channel leader.

Vertical Marketing System Three types

Ownership Ownership of dist. Channel from the source ofsupplyto end-user involves substantial capital investment by channel Coordinator.

C F a p & i

Product / Service

Ownership Contractual

Contractual VMS Including

various formal arrangements between channel participant including franchising & voluntary chain of Independent retailers. (Fast foods lodging etc. ; Automobile dealerships, wholesaler sponsored retail chains (foods & doing W/S)

Administered VMS are

of the channel members has the capacity to influence channel members. (Financial strength, brand Image, sp. Skills, the global feature describe how DeBeers images worldwide dish of rough diamonds through marketing channel)

Relationship / VMS Single

firm does not exert substantial charm shares char of Administered VMS close collaboration involved.

Distribution Intensity How

many retail stores / Industrial Product dealers carry a particular brand in a geographical Area? It is in many of retail outlets in a trading area. It is intensive. If one retailer/dealer in trading area distributes the product, then management is following Exclusive type.(Lexus, Caterpillar) Selective falls in between (Rolex, coach leather goods)

Choosing the sight distribution Intensity depends  Including whichon distributing intensities are feasible

(Consider size & characteristics of marketing target product & requests likely to be imposed by prospective intermediaries, e.g. they may evaluate exclusive sales territories)  Selecting the alternatives that are compatible with proposed market target & marketing program positioning strategy.  Choosing the alternative that  Offers the best strategic fit  Meet Managements performance expectations  Is sufficiently attractive so that intermediaries will be motivated to perform that assigned functions.

Channel Configuration End-User

consideration (where the end-user might expect to purchase) Product Characteristic: Complexity, special application requests. Manufacturers Capabilities & resources: Large producers more flexible Required functions Strange, servicing, transportation Availability & skills of Intermediaries

Selecting the Channel strategy: Management Chooses

the types of channel to

used. Determine the desired intensity of distribution. Selects the channel configuration

Choice of Channel Strategy  Market

Access Market target decisions needs to be closely coordinated into channel strategy information about Customers in the Market target can help eliminate unsuitable Channel strategy alternatives. Multiple Market targets require more than single channel of distribution.  Value-Added competencies  Financial considerations  Flexibility & Control considerations  Adequacy of existing distribution systems changes may suppose with customer satisfaction & organizational effectiveness.

Illustrative channel Strategy Evaluation

Evaluation Criteria M arket access Sales Forecast (2yrs) Forecast Accuracy Estimating Costs