mrketing distribution channels

• Presented By• A.S.Gera

Marketing channel: system of marketing institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a distribution channel

A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected intermediaries such as wholesalers, distributors, agents & retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer Is also called channel of distribution or marketing channel.

OrderingOrdering

PaymentsPayments

CommunicationCommunicationTransferTransfer

NegotiationNegotiation

FinancingFinancingRisk TakingRisk Taking

PhysicalDistribution

PhysicalDistribution

InformationInformation

ExclusiveDistributionExclusive

DistributionSelective

DistributionSelective

DistributionIntensive

DistributionIntensive

Distribution

Evaluating the Major Alternatives

• Answering key questions helps to determine customer needs:– Do consumers want to buy from nearby

locations or are they willing to travel?– Do consumers want many add-on

services?

• Firm must balance needs against costs and consumer price preferences.

Setting Channel Objectives

• Channel objectives are influenced by:– Cost– Nature of the company– The firm’s products– Marketing intermediaries– Competitors– Environment

Identifying Major Alternatives

• Types of Intermediaries– Company sales force– Manufacturer’s agency– Industrial distributors

• Number of intermediaries– Intensive distribution– Exclusive distribution– Selective distribution

• Responsibilities of intermediaries

Evaluating the Major Alternatives

• Economic Criteria:– A company compares the likely sales, costs, and

profitability of different channel alternatives.

• Control Issues:– How and to whom should control be given?

• Adaptive Criteria:– Consider long-term commitment vs. flexibility.

Channel Management Decisions

• Selecting channel members• Managing and motivating channel members– Partner relationship management

• Evaluating channel members

Intensity Of Distribution

• Market Intensity planning has four steps:– Deciding on the company’s value proposition to its

customers– Deciding on the best channel design and network strategy

for reaching the customer– Developing operational excellence in sales forecasting,

warehouse management, transportation management and materials management.

– Implementing the solution with the best information systems, equipment, policies and procedures.

Goals of the Intensity Of Distribution

• Goals of the Intensity System:– Deliver a targeted level of customer service at the least

cost.

• Major Intensity Functions:– Warehousing– Inventory management – Transportation– Logistics information management

Channel Design Decisions

• Designing International Distribution Channels– Global marketers usually adapt their channel

strategies to structures that exist within foreign countries

– Key challenges:• May be complex or hard to penetrate• May be scattered, inefficient, or totally lacking

G-5

Channel motivation.

• There are many devices for achieving such motivation. Perhaps the most usual is `incentive':

• The supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors' sales personnel, so that they are tempted to push the product

• Different Forms of Incentive/Reward 1.Margin 2.Gifts 3.Tour Packages 4.Certificates