The whole effort is to support and uplift beginners in marketing who search essentials in marketing. Reference Text - Principles of Marketing, 15th Edition, By Phillip Kotler and Gary Armstrong

1. DISTRIBUTION STRATEGIES AND
MARKETING CHANNELS
Mahesh Weeratunge
Senior Lecturer and Examiner

2. Recommended StudyText
Principles of Marketing
15th Edition
By
Phillip Kotler
Gary Armstrong
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3. Coverage… (Chapter 12,13)
■ Supply chain and value delivery system
■ The nature and importance of marketing channels
■ channel design decision
■ Marketing Logistic and Supply Chain Management
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4. Value Delivery Network
■ Delivering customer expected values and making customer happy is important part in building the
customer relationship.
■ Many individuals and organizations are responsible in between manufacturer and end user until
the product reach the final consumption point from the manufacturing point. Every individual or
organization responsible on this value delivery to bring customer satisfaction.They are CHANNEL
INTERMEDIARIES.
■ Value Delivery Network is defined as the network composed of the company, suppliers,
distributors and ultimately customers who partner with each other to improve the
performance of the entire system in delivering the customer value.
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5. Marketing Channels
■ Marketing channel also named as distribution channels.
■ Marketing channels are set of independent organizations that help make a product or
service available for use or consumption by consumer or business users.
■ Channel members are adding many values for the entire distribution mechanism for
both manufacturer as well as the consumer
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6. How Channel Members AddValue
■ Information – gathering and distributing information about consumers, producers and other actors and forces.
■ Promotion – Developing and communicating persuasive communication about offers
■ Contact – Finding and communicating with prospects
■ Matching – Shaping offers to meet consumers need
■ Negotiation – Reaching an agreements on pricing and other terms with the customers
■ Physical Distribution –Transporting and storing goods
■ Financing – Acquiring and using funds to cover the cost of the channel work
■ RiskTaking – Assuming the risk of carrying out channel work.
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7. Channel Levels
■ A layer of intermediaries that perform some work in bringing the product and its ownership closer to
the final buyer.
■ Direct Marketing Channels – A marketing channel that has no intermediary levels.
■ Indirect Marketing Channels – A marketing containing one or more intermediary levels
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9. Vertical Marketing SystemsVs
Conventional Marketing System
Vertical Marketing Conventional Marketing
A channel structure in which
producers, wholesalers and
retailers act as a unified system.
One channel member owns the
other, has contract with them or
has so much power that they all
cooperate.
A channel consisting with one of
more independent producers,
wholesalers and retailers each a
separate business seeking to
maximize its own profits for the
system as a whole
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10. Corporate, Contractual and Administered
VMS
■ Corporate VMS is – A vertical marketing system that combines successive stages of production
and distribution under single ownership – channel leadership is established through common
ownership.
■ Contractual VMS – A vertical marketing system in which independent firms at different levels
of production and distribution join together through contract.
■ Administered VMS – aVMS that coordinates successive stages of production and distribution
through the size and power of one of the parties
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11. Multichannel Distribution System
■ A distribution system in which a single firm sets up two or more marketing channels to
reach one or more customer segments.
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12. Major Distribution Strategies
■ Intensive Distribution – Making the product available as many outlets as possible.This
approach can be seen with most of the FMCG products and commodities
■ Exclusive Distribution – giving a limited number of dealers the exclusive rights to distribute
the company’s products in their territories. High value luxuries and the products with higher
brand values are working with this approach
■ Selective Distribution – the use of more than one but fewer than all of the intermediaries who
are willing to carry the company’s products. Pharmaceutical products through pharmacies,
hardware products through hardware retailers, electrical items through electrical retailers can
be considered in this nature.
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13. Marketing Channel Management
■ Marketing Channel Management refers to the active involvement of selecting the
channel intermediaries, developing and motivating channel intermediaries and
evaluating the effectiveness of the channel intermediaries.
– Selecting
– Managing and Motivating
– Evaluating
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14. Marketing Logistics and Supply Chain
Management
■ Marketing Logistics (or Physical Distribution) – Planning, implementing and controlling of the physical
flow of materials, final goods, and related information from point of origin to the point of consumption
to meet the customer requirements at a profit.
■ Supply Chain Management – Managing upstream and downstream value added flow of materials, final
goods, and related information among suppliers, the company, resellers and final consumers.
■ There are three major logistic functions
– Warehousing
– Inventory Management
– Transportation
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15. Retailer and Retailing
■ Retailing is all the activities involved in selling goods or services directly to the final consumers for the personnel
consumption or nonbusiness consumption. A business whose sales come primarily from retailing is retailor.
■ Type of retailers
– SpecialtyStore
– DepartmentStore
– Supermarkets
– ConvenientStore
– DiscountStore
– Off-price retailer
– Superstore
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