Sales and Distribution Management, 2e

Dr Tapan K. Panda, Great Lakes Institute of Management, Chennai Dr Sunil Sahadev, University of Sheffield, UK

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Chapter 15
Distribution Channel ManagementAn Introduction

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Role of distribution channels

To adjust the discrepancy of assortment through the process of sorting, accumulation, allocation, and assorting To minimize the distribution costs through routinising and standardizing transactions to make exchange more efficient and effective To facilitate the searching process of both buyers and sellers by structuring the information essential to both the parties To provide a place for both parties to meet each other and reducing uncertainty

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

How do distribution channels contribute

Intermediaries can improve the efficiency of the exchange process Channel intermediaries adjust the discrepancy of assortment through the performance of the sorting process Marketing intermediaries hang together in channel arrangements to provide for the routinisation of transactions Channels facilitate the searching process

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Discrepancies in the process of exchange

Spatial discrepancy Temporal discrepancy Need to break the bulk Need to provide assortment

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

The cost and control aspects of intermediation

Cost efficiency

Control

Direct Distribution

Indirect distribution

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Distribution channel strategy

Setting distribution objectives in terms of the customer requirements

Finalizing the set of activities that are required to be performed to achieve the channel objectives
Organizing the activities so that the responsibility of performing the activities is shared among the entities who are meant to perform these activities Developing policy guidelines for the smooth functioning of the channel on a day to day basis

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Distribution channel management

(contd.)

Distribution channel management encompasses all activities dealing with the distribution function of the firm

The distribution strategy provides guidelines for decision making

The distribution management function can be viewed as happening in two phases: the ex ante phase and the ex poste phase

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Distribution Channel Management (contd.)

The ex ante phase involves all the activities that are associated with the design and establishment of the distribution channel. These activities actually take place before the distribution channel actually starts functioning. The exposte phase involves managing the day to day activities of the channel wherein the behavior of the individual channel members are coordinated

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management

Channel Management tasks

Design of the channel structure Establishing the channel Distribution Channel Strategy Channel Objective Activity Finalization Organizing the activities Developing Policy Guidelines

Ex ante Phase

Motivating Channel Members Ex Poste Phase Resolving Conflicts among channel members

Copyright 2011 Oxford University Press

Chapter 15: Distribution Channel Management