Lec On 28 Aug Distribution & Channel Decisions_2

Channel Management Decisions:  Selecting  Training  Motivating  Evaluating  Modifying

1

Channel Dynamics:  Vertical 

Marketing Systems:

Producers, Wholesalers, Retailers etc. acting as a unified system

 Horizontal 

Marketing Systems

Two or more unrelated companies come together to exploit emerging marketing opportunity 

Eg: Banks & Car manufacturers’ tie-ups

 Multi

Channel Marketing Systems/Dual Marketing 

Firms using two or more marketing channels to reach its customers 

Eg: Sale of airline tickets online as well as through agents

2

Channel Conflict  These  

Unclear areas of work/responsibility Mistrust

 To     

conflicts arise because:

avoid conflicts:

Encourage “Cooptation” Have Exclusive Dealing Have Exclusive Territories Tying agreements Clear contracts 3

Market Logistics:  Planning,

implementing & controlling the physical flow of material & final goods from pt. of origin to pt. of use.  Major Market Logistics Decisions: 

Order Processing  

  

Real Time Replenishment Batch Method

Warehousing Inventory Management Transportation 4

Inventory Management Concepts  Reorder

Point: Based on order & demand forecasts  Order Lead Time: Period b/n the date when order is placed & when raw material is available for production  Usage Rate: Ave. rate at which raw materials are used for production  Safety Stock: Stock maintained as a buffer for unforeseen circumstances 5

Economic Order Quantity:  EOQ

is that level of reordering the inventory wherein the overall cost of inventory management is minimized  EOQ = √2C D/C o h 

Where: 

D = Demand per unit time Co = Ordering cost



Ch = Holding cost per unit time



6

Warehousing:  Warehouse:

Place where goods are kept for a limited time period  Two Types of Warehouse: 



Storage Warehouse: Relatively long term storage of inventory/raw material Distribution/Transit Warehouse: For temporary storage during transit of inventory

7

Functions of a Warehouse:  Receiving  Storing  Packing  Marking  Shipping  Documentation

& Recording

 Stock

Mixing  Transloading/Cross Docking 8

Wholesalers Vs. Retailers 

Wholesalers    





B2B Selling Large Transactions Visual Merchandising is not important Location is important keeping tax benefits, other low costs in mind At times, have to give goods on credit to their buyers Retailer oriented promotion



Retailers    

 

B2C Selling Small Transactions Visual Merchandising is important Location is important keeping customer’s accessibility in mind Do not have to give goods on credit Customer oriented promotion 9