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Distribution Channels

Distribution channels involve making products available to customers through intermediaries. Channels add value by providing place, time, and possession utilities to customers. Longer channels involve more intermediaries and higher margins. Channels are evaluated based on factors like product characteristics, market conditions, and manufacturer objectives and resources. Effective channels provide good coverage of target markets efficiently while helping manufacturers with tasks like financing. Managing channels requires selecting and training members, motivating cooperation, evaluating performance, and modifying arrangements in response to changes in conditions or conflicts between members.

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163 views27 pages

Distribution Channels

Distribution channels involve making products available to customers through intermediaries. Channels add value by providing place, time, and possession utilities to customers. Longer channels involve more intermediaries and higher margins. Channels are evaluated based on factors like product characteristics, market conditions, and manufacturer objectives and resources. Effective channels provide good coverage of target markets efficiently while helping manufacturers with tasks like financing. Managing channels requires selecting and training members, motivating cooperation, evaluating performance, and modifying arrangements in response to changes in conditions or conflicts between members.

Uploaded by

Richa Garg
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DISTRIBUTION CHANNELS

Sapna Juneja

Activities involved in making products available to customers when and where they want to purchase them. A Distribution channel is an institution through which goods and services are marketed. Channels give place and time utilities to consumers. In order to provide these and other services, channels charge a margin. The longer the channel the more margins are added.

The Distribution Functions


SALES SPECIALIST FOR PRODUCERS Provides market information Interprets consumers wants Promotes producers products Creates assortments Stores products Negotiates with customers Provides financing Owns products Shares risks

I N T E R M E D I A R Y

PURCHASING AGENT FOR BUYERS Anticipates wants Subdivides large quantities of a product Stores products Transports products Creates assortments Provides financing Makes products readily available Guarantees products Shares risks

Promotion Through the Channel


Vs.

Classic Push Promotional Strategies


Cooperative advertising Promotional allowances Displays and selling aids In-store promotions Contests and incentives Special promotional deals and merchandise campaigns

Advertising Promotions Used in case of High Brand Loyalty

High Involvement
Difference between Brands

0-level channel Manufacturer 1-level channel Manufacturer 2-level channel Consumer

Retailer

Consumer

Mfg

Wholesaler Wholesaler
Jobber

Retailer

Consumer

3-level channel Mfg

Retailer

Consumer

INDUSTRY MARKETING CHANNELS


PRODUCERS OF BUSINESS GOODS

Representative

Sales Branch

Industrial distributors

Industrial distributors

BUSINESS USERS

Service Channels
PRODUCERS OF SERVICES

Agents

ULTIMATE CONSUMERS OR BUSINESS USERS

Market factors- competitors, geography, Economy. Product factors- life cycle, size & weight, product value, consumer perceptions, product complexity. Manufacturer factors- company objective & Resources, Desire for control,Breadth of product life. Organization objectives mass appeal and rapid marketing. buying habit of customers- Understanding consumer needs and criteria for buying Channel Availability - Channels may not be available

Channel Design Decisions


Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Identifying Major Alternatives

Intensive Distribution

Selective Distribution

Exclusive Distribution

Evaluating the Major Alternatives

Lot size Waiting and Delivery Time

Spatial Convenience
Product Variety Service Backup

Effective coverage of target market Efficient and cost-effective distribution Minimum Consumer Exertion Partnering the firm in financing and subdistribution task Helping the firm to carry on manufacturing uninterrupted

Economic criteria

Sales, costs, profitability

Control issues Adaptive criteria

The administration of existing channels to secure the cooperation of channel members in achieving the firms distribution objectives

Selection of Channel Members Training of Channel Members

Motivation of Channel Members


Evaluation of Channel Members Modification of Channel Arrangement

No. of line carried Size and quality of sales force Location of stores Future growth potential Type of clientele Growth and profit record Financial strength Service reputation

MOTIVATING CHANNEL MEMBERS

Find out needs and problems Offer support consistent with channel member needs Provide leadership

Sales-quota attainment Average inventory level Customer delivery time Cooperation in promotion Cooperation in training programs Treatment of damaged and lost goods

Channel not working as planned Consumer buying pattern change Market expands New competition arises Innovative distribution channels emerges Change in PLC stage

Channel conflict is generated when one channel members action prevent another channel member from achieving its goal

Horizontal Conflict

Vertical Conflict
Multichannel Conflict

Goal incompatibility Unclear roles and rights Difference in perception Difference in Expectations Intermediaries dependence on the manufacturer Communicational difficulties

Superordinate goals Exchange people

Joint membership
Co-optation Mediation/ Arbitration

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