4. Distribution Management:
Concept
The management of the efficient transfer of
goods from the place of manufacture to the point
of sale or consumption.
Distribution management encompasses such
activities as
Warehousing
Materials handling
Packaging
Stock control
Order processing
Transportation
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6. Different Channel Members
Resellers
Wholesalers
Retailers
Industrial Distributors
Specialty Service Firms
Agents and brokers
Distribution Service Firms
Others: Insurance companies, transportation
routing assistance
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8. The Importance of Distribution
Channels
Distribution channels often require the
assistance of others in order for the marketer to
reach its target market.
The higher the number of channels, the greater
the company’s market coverage and rate of
growth of its sales.
Increase the efficiency as the middlemen are
specialised agencies of distribution.
Distribution agents facilitate search for buyers
and sellers by keeping in touch with both.
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10. Starbucks – Market Coverage
A comedian quipped about Starbucks:“I don’t
know how fast they are growing but they just
opened one in my living room.”
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11. Function of Channel Members
Promotion:
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Undertake sales promotion activities through
media and personal contacts.
Negotiation: Negotiate prices and other terms and conditions
between buyer and seller.
Information: Middlemen collect information about demand,
competition, etc., from con-sumers and pass on to
manufacturers.
Ordering: Intermediaries collect small orders from consumers
and on that basis place large orders with manufacturers.
Physical possession: Middlemen take possession of goods
from producers and pass on possession to consumers.
Financing: Provide financial assistances, for example buy
goods in cash from producers and sell them to consumers on
credit.
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Risk taking: OFIntermediaries assume most of the risks
15. Wholesalers
Wholesalers are independently owned firm.
Take title to the merchandise they handle, the
wholesalers own the products they sell.
Purchase product in bulk and store it until they
can resell it.
Generally sell the products they have purchased
to other intermediaries, usually retailers, for a
profit.
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16. Distributors
Are similar to wholesalers.
Wholesalers
carry a variety of competing
products whereas distributors only carry
complementary product lines.
Usually maintain close relationships with their
suppliers and customers.
Take title to products and store them until they
are sold.
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17. Retailers
Takes title to, or purchases, products from other
market intermediaries.
Can be independently owned and operated, like
small “mom and pop” stores, or they can be part
of a large chain, like Wal-Mart.
Sell the products it has purchased directly to the
end user for a profit.
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18. Agents
Is an independent individual or company.
Main function is to act as the primary selling arm
of the producer.
Represent the producer to users.
Take possession of products but do not actually
own them.
Agents usually make profits from commissions or
fees paid for the services they provide to the
producer and users.
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20. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
Product Considerations:
Unit Value
Perish ability
Bulk and Weight
Standardization
Technical Nature
Product Line
Age of the Product
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21. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
Market Considerations:
Consumer or Industrial Market
Number and Location of Buyers
Size and Frequency of Order
Customer’s Buying Habits
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22. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
Company Considerations:
Market Standing
Financial Resources
Management
Volume of Production
Desire for Control of Channel
Services Provided by Manufacturer
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23. FACTORS INFLUENCING CHOICE
OF DISTRIBUTION CHANNELS
Middlemen Considerations:
Availability.
Attitudes.
Services.
Sales Potential.
Costs.
Customs and Competition.
Legal Constraints.
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25. FACTORS INFLUENCING CHOICE
OF CHANNEL MEMBERS
MARKET FACTORS
PRODUCT FACTORS
COMPETITIVE FACTORS
ENVIRONMENT FACTORS
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26. MARKET FACTORS
CONSUMERS
number of consumers
their geographic location
purchase pattern
INTERMEDIARIES
relative strengths and weaknesses of intermediaries
the differences in the types of functions performed
and facilities and privileges desired by them
COMPETITORS
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27. PRODUCT FACTORS
INDUSTRIAL / CONSUMER PRODUCT
direct channel is useful because of the relatively small
number of customers need for personalized attention,
customer training requirements and after sale servicing
PERISHABLE NATURE
direct channel is beneficial
SEASONALITY
intermediaries
are seldom prepared undertake the
function of inventory carrying
manufacturer build up indirect distribution channels.
TECHNICALITY
Direct channel relatively useful
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28. COMPANY FACTORS
FINANCIAL STRENGTH
is better placed to select and design its distribution
channel
PAST CHANNEL EXPERIENCE
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29. ENVIRONMENT FACTORS
COMPETITIVE FACTORS
Alternative distribution channel may be used as a
means of attaining competitive advantage
MIDDLEMAN FACTORS
Availability of Middleman
Attitude
of Middleman Services Provided by
Middleman
Sales potential of Middleman
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