DISTRIBUTION MANAGEMENT

Marketing Channels

Need for Marketing ChannelsMarketing channels have marketing intermediaries such

as retailers, wholesalers, agents , brokers, travelling agents etc

For understanding the need for marketing channels, we have to understand the functions of marketing

FUNCTIONS OF MARKETING CHANNELSHelps in physical distribution: Transporting and storing

goodsPromotes Communication: Promotes company’s productsProvides InformationPlays key role in title transformationSupports relationship management

Decisions Involved In Setting Up A ChannelThe following factors need to be taken into

consideration on setting up a channel:1. Understanding the customer profile Purchase habit differ from individual to individual Individual who face shortage of time, make

purchase through the net and those who have abundant time would like to go through shopping experience

Some people like to have variety of goods while others want unique or specialized products

Hence marketers should understand who are his customer and how they purchase and how often they purchase etc.

Decisions involved in setting up a channel2. Determining the objectives of channel developmenta. Reach: Company will adopt intensive distribution channel in

this caseb. Profitability: Companies will restructure the channel to reduce

the cost and thereby maximize the profitc. Differentiation: In this situation, the companies will go for new

format of channelsEg. Internet selling

3. Identify type of channel members: This involves selecting the appropriate channel members such as merchants, agents, resellers etc

Merchants buy the product, take title and resell the merchandize

Agents are employed to find the customers but not to take title of the products

Facilitators are appointed to aid the distribution but do not negotiate or take the title of the product

Decisions involved in setting up a channel4.Determining the intensity of distribution:Intensity of distribution means how many

middlemen will be used at the wholesale and retail level in a particular territory

If channels are more, it will increase the cost and if channels are less, company may not be able to reach the target customers

Therefore company should adopt optimum number of intermediaries

On the basis of number of intermediaries, company can adopt one of the following strategies:

Decisions involved in setting up a channel

a. Intensive Distribution

A strategy in which company stocks goods in more number of outlets

The intention is to make the goods available near the customer

Decisions involved in setting up a channel

b. Selective Distribution

A strategy in which company stocks goods in limited number of retail outlets

E.g.. Television sets

Decisions involved in setting up a channelc.Exclusive

DistributionA limited number of

dealers will be given exclusive right to distribute its products in their territories

Decisions involved in setting up a channel5. Assigning the responsibilities to channel membersCompany should define the territory of channel members,

at which price the products should be sold, what service should be performed etc

6.Selecting the criteria to evaluate channel membersChannel can be evaluated on the basis of a method called

SCPCAa. Sales (S): The ability of the channel member to generate

the sales for companyb. Cost (C): The cost incurred for developing the channelc. Profitability (P): Various alternatives and its profitabilityd. Control ( C): How much control each channel member

desirese. Adaptability (A): The channel alternatives should be

flexible enough to meet the changing requirements

CHANNEL MANAGEMENT STRATEGIESManaging and motivating

channel memberNow channel members are

treated as partnersThe members are

integrated with the company to reduce cost, increase the efficiency and helps customer service

Companies are adopting Partner Relationship Management (PRM) software to add value to their supply chain

INTRODUCTION TO LOGISTICS MANAGEMENT

INTRODUCTION TO LOGISTICS MANAGEMENT“The tasks involved in planning, implementing, and

controlling the physical flow of materials, final goods and related information from points of origin to points of consumption to meet customer requirements at a profit”. (Philip Kotler)

From the above definition, it is clear that logistics management involves moving of the products and materials from suppliers to the factor ( inbound logistics) and moving the product from the factory to resellers and to customers (outbound logistics)

The above stream of study involving the suppliers and reverse distribution (returning products to factory) in the logistics management is considered as SCM

INTRODUCTION TO LOGISTICS MANAGEMENTSCM is the process of flow of goods, information and

fund from supplier’s supplier to consumer (supplier’s supplier-supplier-factory-intermediaries-consumers) effectively and efficiently

Ref example Page No: 219MAJOR LOGISTICS FUNCTIONSWarehousing: Warehousing is used not only for storing goods but

also as a hub where goods come to the facility and cross docked

Many companies now use specialized players in warehousing and hence warehousing itself grew like separate industry

Eg. Barista and Safe Express

Major Logistics Functionsb. Inventory Managementc. Transportation

> air transportation> Water> Surface> Pipelines> Internet carriers

Introduction to RetailingCharacteristics1. Direct interaction with customers2. Purchase in small quantity3. Tool of marketing communicationFUNCTIONS4. Sorting5. Breaking bulk6. Holding stock7. Channels of communication8. Transportation

Types of retailing1. Store retailing

1. Specialty stores2. Department stores3. Supermarkets4. Convenience stores5. Discount stores6. Off-price retailers7. Super stores

2. Non store retailing

WholesalingFUNCTIONS1. Selling2. Bulk breaking3. Warehousing4. Transportation5. Credit and risk taking6. InformationTYPES OF WHOLESALERS7. Merchant wholesalers8. Brokers and agents