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CHAPTER 11 DISTRIBUTION

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

LEARNING OBJECTIVES
Various functions performed by distribution channel intermediaries
Types of distribution channels: Consumer, Industrial and Service channels Three components of the channel strategy: How to select channels, decide distribution intensity and degree of integration
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Learning Objectives (Contd.)

Channel management: Issues regarding intermediary selection, training, motivation, evaluation and conflict management Hybrid distribution channels to maximize effectiveness and efficiency Decisions regarding physical distribution

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

FUNCTIONS OF CHANNEL INTERMEDIARIES


Reconciling the needs of producers and customers
Improve efficiency by reducing the number of transactions and creating bulk for transportation

Improved accessibility
Providing specialist services
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

TYPES OF DISTRIBUTION CHANNELS


Consumer channels
Manufacturer to consumer

Manufacturer to retailer to consumer


Manufacturer to wholesaler to retailer to consumer Manufacturer to agent to wholesaler to retailer to consumers
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Types of Distribution Channels (Contd.)

Industrial channels
Manufacturer to industrial customers Manufacturer to agent to industrial customer

Manufacturer to distributor to industrial customer


Manufacturer to agent to distributor to industrial customers
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Types of Distribution Channels (Contd.)

Service channels
Service provider to consumer or industrial customer Service provider to agent to consumer or industrial customer Service provider via internet to consumer or industrial customer

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

CHANNEL STRATEGY
Channel selection
Marketing factors
Buyers expectations Willingness of channel intermediaries Profit margins demanded by wholesalers and retailers Location and geographic concentration of customers
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Channel Strategy (Contd.)

Manufacturer factors
Financial and managerial resources Mix of products Independent channel intermediaries versus manufacturer control

Product factors

Competitive factors

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Channel Strategy (Contd.)

Distribution intensity

Intensive distribution
Selective distribution Exclusive distribution

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Channel Strategy (Contd.)

Channel integration Conventional marketing channels

Conventional marketing channels


Channel Ownership

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

CHANNEL MANAGEMENT
Selection
Identifying Sources

Developing selection criteria


Motivation

Training
Evaluation
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Channel Management (Contd.)

Managing conflict
Sources of channel conflict
Differences in goals
Differences in desired product lines Multiple distribution channels Inadequacies in performances of channel members and manufacturer
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Channel Management (Contd.)

Avoiding and resolving conflict


Developing a partnership approach Training in conflict handling Market portioning Improved performance Channel ownership Coercion
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

HYBRID DISTRIBUTION SYSTEM


Avoid chaos and maximize efficiency
Which channel is supposed to serve which customers? Which channel does what tasks of the sales function, and for which customers? Which channel gets compensated for which customers and for what tasks?
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Hybrid Distribution System (Contd.)

Each time a channel is added, the existing relationships, responsibilities, and compensation structures among various channel members are altered Customers reactions to these new relationships and responsibilities are very important Confusions and conflicts among various channels should be addressed
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

PHYSICAL DISTRIBUTION
Focuses on an efficient movement of goods from manufacturers to intermediaries and the consumer Provide intermediaries and customers with the right products, in the right quantities, in the right locations, at the right time
Effective physical distribution saves cost and improves customer service levels
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Physical Distribution (Contd.)

Concerns the balance between cost reduction and meeting customer service requirements Analyze the market in terms of customer service needs and price sensitivity There may be possible conflicts between elements of physical distribution itself

Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

Elements of the physical distribution system


Customer service Order processing Inventory control Warehousing Transportation mode Materials handling
Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

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