channels of distribution- ammireddy (completed)

8/13/2019 Channels of Distribution- Ammireddy (Completed)

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A STUDY ON

CHANNELS OF DISTRIBUTIONWith reference to

AMMIREDDY OILS LIMITEDANAPARTHI

Project report submitted to Andhra University, Visakhapatnamin partial

Fulfillment for the Award of the Degree in

MASTER OF BUSINESS ADMINISTRATIONBy

CH.VENKATA AMMIREDDYRegd.No. 208!"0000

Under the esteemed guidance of

S#$. %.SUBHA MBA

F&'()$* +, #&,&ge#e,$ -$(d+e-

DEPARTMENT OF MANA%EMENT STUDIESADITYA INSTITUTE OF P.% STUDIES

(Affiliated to Andhra University)

SURAMPALEM200820"0


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ADITYA INSTITUTE OF P.G.STUDIES

(Approved by AICTE, Affiliated to A.U

SU!A"PA#E" $ %&&'& E.G.DIST (AP

)ONAFIDE CE!TIFICATE

This is to certify that the project entitled *a +tdy o- Ca--el+ of

Di+tribtio-/ I- *A""I!EDDY OI#S #I"ITED, ANAPA!T0I/ is the

bonafide record of work done by "r. C0.1e-2ata A33ireddy

!e4.No.567%'86666% during the period 566795686 in partial fulfillment of the

requirement for the award of the Degree of "ASTE! OF )USINESS

AD"INIST!ATION in Aditya I-+titte of P.G. Colle4e affiliated to

AND0!A UNI1E!SITY.

Project Guide: Head f the Department:

S"T. G.SU)0A !"#"$" S!I.:.NAGEND!A ;U"A! !"#"$""%

&aculty in $ditya P"G"'ollege" Head of the Department"


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DEC#A!ATION

( hereby declare that the project work entitled )C0ANNE#S OF

DIST!I)UTION/ with reference to A""I!EDDY OI#S#td* ANAPA!T0I is

originally prepared and submitted by me to AND0!A UNI1E!SITY%

+(,$-H$P$T.$! in partial fulfillment of the requirements for the award of the

degree of "ASTE! OF)USINESS AD"INIST!ATION" The empirical findings

in the report are based on the data collected by me while preparing this project" (t has

not been submitted to any other uni/ersity or publication at any time before"

(C0.1EN;ATA A""I!EDDY

Regd.No.208!"0000

P#ACE

&(.D(.G,

,1GG2,T(.,

,1!!$70

'.'31,(.

)I)#IOG!AP0Y


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C0APTE! 8

INT!ODUCTION


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INT!ODUCTION

(n the present of competiti/e era there is no organi9ation which is an e4ception to

marketing" ne can call it as propaganda or an appeal it is an attempt to create an image in

the minds of ultimate customers" (t is in fact a bunch of all such acti/ities that con/erts the

will of a customer to effecti/e demand"

!arketing deals with identifying and meeting human and social needs" !arketing is

typically seen as that task of creating% promoting and deli/ering goods and ser/ices to

consumers and business" ,o marketing is one of those most important pillars of an

organi9ation"

!arketing boasts a rich array of concepts and tools" !arketing channels are one of

those important concepts" !arketing channels to reach a target market% that marketer uses

three kinds of marketing channels" They are communication channels% distribution channels%ser/ice channels" The marketer use distribution channels to display sell or deli/er that

physical products or ser/ices to that buyer or user"

The organi9ation uses direct and indirect distribution marketing" They include

distributors% whole sellers% retailers and agents" Production is made to satisfy the needs of

that customer" ,o it must reach to that ultimate customer" The way through which goods

mo/e from producer to that customers is a )C0ANNE#S OF DIST!I)UTION/.


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SCOPE OF T0E STUDY

This kind of research helps to put into practice the theoretical aspects"

The study of this type of nature aims to gi/e information about competitors demandfor oil"

.ature of research methods used% findings of the in/estigation% conclusion and

recommendations"

/erall scope of the study is to understand dealers perceptions towards the $3"


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NEED OF T0E STUDY

2dible oil is one of the essential commodities to all categories of people in the

society" The oil is a part of nutritional diet to the human beings" 'onsumption of poor

quality edible oil leads to human ailments" ,o it is /ery important to a common man to

choose good quality oils for the preparation of edible items"

!arketing of oils is so much important now days for bringing awareness among the

target audience" therwise they go for inferior brands by lea/ing the superior ones"

(n the (ndian market the demand for the edible oils is /ery high when compared with

its supply" ,o it is easy to the producer to earn profits by producing these products" (f the

producer scans the market en/ironment he will find sample opportunities he can earn more

profits if he carefully ser/es the customers"

,treaming lining the channels of distribution and le/els of satisfaction is one areawhere the manufacturer decisions ha/e drastic impact on the costs incurred" The decision

made on the distribution channels can make or break an organi9ation" (n this contest it

essential to study the concept of distribution channels and le/el of satisfaction in $3"

=&rom these two points say that the study of marketing of oil would be helpful not

only to the producer but also to the dealers"


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!ESEA!C0 AND "ET0ODO#OGY

!ESEA!C0 DESIGN%

Decisions regarding what% where% when% who how much by what means concerning an

enquiry or research study constitute a research design %> $ research design is the

arrangement of the conditions for collecting and analysis of the data in a manner that it aims

to combine rele/ance to the research purpose with economy in procedure" (n fact% the

research design is the conceptual structure within which research is conducted" (t constitutes

the blue print for the collection% measurement and analysis of data as such the design

includes an outline of what the researcher will do from writing the hypothesis and its

operations and implications to the final analysis of the data"

The research methodology is a way to systematically sol/e the research% problems" (t

may be understood as the science of studying how research is done scientifically"

We study /arious steps that are generally adopted by a researcher in studying his

research problems along with the logic behind them it is necessary for the researcher to

know not only about the research method but also about the methodology"

DESC!IPTION OF !ESEA!C0 DESIGN96


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02$7

+2G2T$#32 (3 P7D1'T(.

A7s" (n lacks6

KE;L F"LB

KL;I K"C

KI;F F"BC

KF; L"CC

K; I"FL

K;BCCC "L

BCCC;CK "EC

BCCK;CB LE"CC

BCCB;C LI"CC

BCC;CE LL"CC

BCCE;CL L"CC

BCCL;CI IC"CC

BCCI;CF I"CC

$bo/e table shows information relating to production of /egetables oil in our

country" (t is e/ident from the table that the production of /egetable oil has been gradually

increasing"

The growth was made possible by the efforts of technology% mission on oil seed"

7eali9ing the importance of the oil seeds crops and the role of edible oil in the food and

nutrition surety and to check the foreign e4change balances from falling oil seeds was


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brought under the technology mission in KI by go/ernment of (ndia" The annual growth

rate of production was KCJ between KF; and KB;% the o/erall growth of oil seed

production M soya bean% sunflower% rapeseed and castor grew at a faster rate between KF;

to KL;I"production of sunflower seed increased byKKLJ i"e" from "L million tones to

I"K million tones and production of castor increased by KCCJ i"e" from C"B million tones to

C"C million tones" Whereas groundnut seed registered on o/erall growth of KLL only during

the same period"

(t is interesting to note that all these there oil seeds increased to FBJ in oil seeds

production from KIC to KC" 'onsequently the share of ground nut in the basket of oil

seeds fell down from ELJ to L"LJ during the same period" $gain it is noted that out of

these three oil seeds% two of them i"e" soybean and sunflower were relati/ely unknown and

non;e4istent crops respecti/ely in our country"

I"PO!TANCE OF T0E P!ODUCTUi"e"% they will tend to

7ecommend the product to the customer and thus sell large quantities*

'arry larger in/entories and selections*

Pro/ide more ser/ices

Thus% for e4ample% 'ompaq in its early history instituted a policy that all computers

must be purchased through a dealer" n the surface% 'ompaq passed up the opportunity tosell large numbers of computers directly to large firms without sharing the profits withdealers" n the other hand% dealers were more likely to recommend 'ompaq since theyknew that consumers would be buying these from dealers" When customers came in askingfor (#!s% the dealers were more likely to indicate that if they really wanted those% theycould ha/e themU)#ut first% lets show you how you will get much better /alue with a'ompaq">

Di+tribtio- opport-itie+:
http://www.consumerpsychologist.com/dist_Distribution_Objectives.htmlhttp://www.consumerpsychologist.com/dist_Distribution_Objectives.html


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Distribution pro/ides a number of opportunities for the marketer that may normallybe associated with other elements of the marketing mi4" &or e4ample% for a cost% the firmcan promote its objecti/e by such acti/ities as in;store demonstrations distribution Ae"g"% ha/ing products sold both throughcon/entional channels and through the (nternet or factory outlet stores6" Partnerships and

joint promotions may in/ol/e distribution" Ae"g"% #urger -ing ,ells clearly branded Hersheypies6"

De?idi-4 o- a +trate4y (n /iew of the need for markets to be balanced% the same distribution strategy is

unlikely to be successful for each firm" The question% then% is e4actly which strategy shouldone use@ (t may not be ob/ious whether higher margins in a selecti/e distribution settingwill compensate for smaller unit sales" Here% /arious research tools are useful" (n focusgroups% it is possible to assess what consumers are looking for an which attributes are moreimportant" ,canner data% indicating how frequently /arious products are purchased anditems whose sales correlate with each other may suggest the best placement strategies" (tmay also% to the e4tent ethically possible% be useful to obser/e consumers in the field using

products and making purchase decisions" Here% one can obser/e factors such asAK6 How much time is de/oted to selecting a product in a gi/en category@AB6 How many products are compared@A6 What different kinds of products are compared or are substitutes Ae"g"% fro9en

yogurt /s" cookies in a mall6%AE6 What are )complementing> products that may cue the purchase of others if

placed nearby@'hannel membersUboth wholesalers and retailersUmay ha/e /aluable information%

but their comments should be /iewed with suspicion as they ha/e their own agendas andmay distort information"

Ca--el Str?tre a-d "e3ber+ip I++e+

Paths to the customer.
http://www.consumerpsychologist.com/dist_Channel_Structure.htmlhttp://www.consumerpsychologist.com/dist_Channel_Structure.html


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&or most products and situations% it is generally more efficient for a manufacturer togo through a distributor rather than selling directly to the customer" This is especially thecase when consumers need to ha/e /ariety and assortmentAe"g"% consumer would like to buynot just toothpaste but also other personal hygiene products% and e/en other grocery productsat the same place6% when products are bought in small volumesor at low /alue Ae"g"% a candy

bar sells for less than OK"CC6% or e/en intermediaries ha/e skills or resources that themanufacturer does not Aa sales force% warehousing% and financing6" .e/ertheless% there aresituations when these conditions are not metUmost typically in industrial settings" $s ane4treme case% most airlines are perfectly happy only being able to buy aircraft andaccessories from #oeing and would prefer not to go through a retailerUparticularly sincethe planes are often highly customi9ed" !ore in the VgrayV area% it may or may not beappropriate to sell microcomputers directly to consumers rather than going through adistributorUthe costs of pro/iding those costs may be roughly comparable to the marginthat a distributor would take"

Potential channel structures.

'hannel structures can assume a /ariety of forms" (n the e4treme case of #oeingaircraft or commercial satellites% the product is made by the manufacturer and sent directlyto the customers preferred deli/ery site" The manufacturer% may% howe/er% in/ol/e a brokeror agent who handles negotiations but does not take physical possession of the property"When deals take on a smaller magnitude% howe/er% it may be appropriate to in/ol/e retailer;;

but no other intermediary" &or e4ample% automobiles% small planes% and yachts are frequentlysold by the manufacturer to a dealer who then sends directly to the customer" (t does notmake sense to deli/er these bulky products to a wholesaler only to mo/e them again" n theother hand% it would not make sense for a 'alifornia customer to fly to Detroit% buy a car

there% and then dri/e it home" $s the need for /ariety increases% a wholesaler may then beintroduced" &or e4ample% an office supply store needs to sell more merchandise than any onemanufacturer can produce" Therefore% a wholesaler will buy a /ery large quantity of binders%file folders% staplers% and reams of paper% glue sticks% and similar products and sell this insmaller quantitiesUsay BCC staplers at a timeUto the office supply store% which% in turn%may go to another wholesaler who has acquired telephones% typewriters% and photocopiers"

.ote that more than one wholesaler le/el may be in/ol/edUa local wholesaler ser/ing the(nland 2mpire may buy from each of the two wholesalers listed abo/e and then sell all% ormost% of the products needed by local office supply stores" &inally% e/en in longer channels%agents or brokers may be in/ol/ed" This% in particular% will happen when the owner of asmall% entrepreneurial company has more e4perience with technology than with businesses

negotiations" Here% the manufacturer can be freed% in return for paying the agent% from suchtasks% allowing him or her to focus on what he or she does well"


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Criteria i- +ele?ti-4 ?a--el 3e3ber+.

Typically% the most important consideration whether to include a potential channelmember is the cost at which he or she can perform the required functions at the needed le/elof ser/ice" &or e4ample% it will be much less e4pensi/e for a specialty foods manufacturer toha/e a wholesaler get its products to the retailer" n the other hand% it would not be costeffecti/e for Procter 5 Gamble and Wal;!art to in/ol/e a third party to mo/e theirmerchandiseUWal;!art has been able to de/elop% based on its information systems and

huge demand /olumes% a more efficient distribution system".ote the important ca/eat thatcost alone is not the only considerationUpremium furniture must arri/e in the store on timein perfect condition% so paying more for a more dependable distributor would be indicated"&urther% channels for perishable products are often inefficiently short% but the additional costis needed in order to ensure that the merchandise mo/es quickly" .ote also that image isimportantUWal;!art could /ery efficiently carry 7ole4 watches% but this would destroy/alue from the brand"

Pi44y9ba?2i-4

$ special opportunity to gain distribution that a manufacturer would otherwise lack

in/ol/es Vpiggy;backing"V Here% a manufacturer enlists another manufacturer that alreadyhas a channel to a desired customer base% to pick up products into an e4isting channel" &ore4ample% a manufacturer of rhino serous and hippopotamus shampoo might be able to reach9oos by approaching a manufacturer of crocodile teeth cleaning supplies that already reachesthis target" (n the case of reciprocalpiggy;backing% the shampoo manufacturer might then%in turn% bring the teeth cleaning supplies through its e4isting channel to e4otic animal/eterinarians"


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Parallel Di+tribtio-"

!ost manufacturers find it useful to go through at least one wholesaler in order toreach the retailer% and it is simply not efficient for 'olgate to sell directly to pathetic littleVmom and popV neighborhood stores" Howe/er% large retail chains such as -;!art and

7alphs buy toothpaste and other 'olgate products in such large /olumes that it may beefficient to sell directly to those chains" Thus% we ha/e a VparallelV distribution networkwhereby some retailers buy through a distributor and others do not" .ote that we may also

be tempted to add a direct channelUe"g"% many clothing manufacturers ha/e factory outletstores" Howe/er% note that the full ser/ice retailers will likely object to being VundercutV inthis manner and may decide to drop or gi/e less emphasis to the brand" (t may be possible tominimi9e this contract by precautions such as AK6 ha/ing outlet stores located in /acationareas not within easy access of most people% AB6 presenting the merchandise as being slightlyirregular% and


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DIFFE!ENT TYPES OF C0ANNE# PO#ICIES

channels of distribution- ammireddy (completed)

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