distribution or placing

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-Deboleena Panja

13-12-2012

INDIAN INSTITUE OF MANAGEMENTRAIPUR

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PLACING

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DISTRIBUTION MANAGEMENT: CONCEPT

Distribution Management: Concept

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Aims at delivering various products to different types of buyers when & where they want those and at a reasonable price.

Distribution Management: Concept

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The management of the efficient transfer of goods from the place of manufacture to the point of sale or consumption.Distribution management encompasses such activities as WarehousingMaterials handlingPackagingStock controlOrder processingTransportation

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CHANNEL MEMBERS

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Different Channel Members

ResellersWholesalersRetailersIndustrial DistributorsSpecialty Service FirmsAgents and brokersDistribution Service FirmsOthers: Insurance companies, transportation routing assistance

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ROLE OF DISTRIBUTION CHANNELS

The Importance of Distribution Channels

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Distribution channels often require the assistance of others in order for the marketer to reach its target market.The higher the number of channels, the greater the companys market coverage and rate of growth of its sales.Increase the efficiency as the middlemen are specialised agencies of distribution. Distribution agents facilitate search for buyers and sellers by keeping in touch with both.

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Channel Efficiency

Starbucks Market Coverage

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A comedian quipped about Starbucks:I dont know how fast they are growing but they just opened one in my living room.

Function of Channel Members

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Promotion: Undertake sales promotion activities through media and personal contacts.Negotiation: Negotiate prices and other terms and conditions between buyer and seller.Information: Middlemen collect information about demand, competition, etc., from consumers and pass on to manufacturers.Ordering: Intermediaries collect small orders from consumers and on that basis place large orders with manufacturers.Physical possession: Middlemen take possession of goods from producers and pass on possession to consumers.Financing: Provide financial assistances, for example buy goods in cash from producers and sell them to consumers on credit.Risk taking: Intermediaries assume most of the risks involved in the distribution of goods.

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LEVELS OF CHANNELS

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TYPE OF INTERMEDIARIES

Wholesalers

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Wholesalers are independently owned firm.Take title to the merchandise they handle, the wholesalers own the products they sell.Purchase product in bulk and store it until they can resell it.Generally sell the products they have purchased to other intermediaries, usually retailers, for a profit.

Distributors

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Are similar to wholesalers.Wholesalers carry a variety of competing products whereas distributors only carry complementary product lines.Usually maintain close relationships with their suppliers and customers.Take title to products and store them until they are sold.

Retailers

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Takes title to, or purchases, products from other market intermediaries.Can be independently owned and operated, like small mom and pop stores, or they can be part of a large chain, like Wal-Mart.Sell the products it has purchased directly to the end user for a profit.

Agents

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Is an independent individual or company.Main function is to act as the primary selling arm of the producer.Represent the producer to users.Take possession of products but do not actually own them.Agents usually make profits from commissions or fees paid for the services they provide to the producer and users.

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FACTORS INFLUENCING CHOICE OF DISTRIBUTION CHANNELS


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Product Considerations:Unit ValuePerish abilityBulk and WeightStandardizationTechnical NatureProduct LineAge of the Product


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Market Considerations:Consumer or Industrial MarketNumber and Location of BuyersSize and Frequency of OrderCustomers Buying Habits


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Company Considerations:Market StandingFinancial ResourcesManagementVolume of ProductionDesire for Control of ChannelServices Provided by Manufacturer


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Middlemen Considerations:Availability.Attitudes.Services.Sales Potential.Costs.Customs and Competition.Legal Constraints.

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FACTORS INFLUENCING CHOICE OF CHANNELS MEMBERS

FACTORS INFLUENCING CHOICE OF CHANNEL MEMBERS

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MARKET FACTORSPRODUCT FACTORSCOMPETITIVE FACTORSENVIRONMENT FACTORS

MARKET FACTORS

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CONSUMERSnumber of consumerstheir geographic locationpurchase patternINTERMEDIARIESrelative strengths and weaknesses of intermediariesthe differences in the types of functions performed and facilities and privileges desired by themCOMPETITORS

PRODUCT FACTORS

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INDUSTRIAL / CONSUMER PRODUCTdirect channel is useful because of the relatively small number of customers need for personalized attention, customer training requirements and after sale servicing

PERISHABLE NATUREdirect channel is beneficial

SEASONALITYintermediaries are seldom prepared undertake the function of inventory carrying manufacturer build up indirect distribution channels.

TECHNICALITYDirect channel relatively useful

COMPANY FACTORS

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FINANCIAL STRENGTHis better placed to select and design its distribution channelPAST CHANNEL EXPERIENCE

ENVIRONMENT FACTORS

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COMPETITIVE FACTORSAlternative distribution channel may be used as a means of attaining competitive advantage MIDDLEMAN FACTORSAvailability of Middleman Attitude of Middleman Services Provided by Middleman Sales potential of Middleman

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THANK YOU

distribution or placing

Marketing

factors influencing

channel members

distribution

indian institue

distribution

distribution

channels

middlemen