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DISTRIBUTION CHANNEL.

According to Philip Kotler Marketing/Distribution channels are set of interdependent organisations involved in the process of making product or service available for the use or consumption.

DISTRIBUTION CHANNEL.
Distribution channel is the chain of intermediaries through which a good or service passes until it reaches the end consumer. A distribution channel can include wholesalers, retailers, distributors and even the internet. Channels can be broken into direct and indirect forms.

LEVELS OF CHANNEL
By channel level we mean how many intermediaries are there between the producer and consumer. Distribution channels are usually of two types,
a. Direct marketing channel or Zero level channel. b. Indirect marketing channel.

Direct Marketing Channel

This type of channel has no intermediaries. In this distribution system, the goods go from the producer direct to the consumer. Companies use their own sales force to reach consumers. Also known as Zero Level Channel. Example - Eureka Forbes..

PRODUCER

CONSUMERS

Indirect Marketing Channel

These are typical channels in which a third party is involved in the distribution of products and services of a firm. It can be classified into following categories : a. One Level Channel. b. Two Level Channel. c. Three Level Channel.

In this type of channel there is only one intermediary between producer and consumer. This intermediary may be a retailer or a distributor. It is used for specialty products like washing machines, refrigerators. Insurance in which there is an insurance agent between insurance company and customer.
PRODUCER DISTRIBUTOR/ RETAILER CONSUMERS

A widely used marketing channel especially in the FMCG and the consumer durables industry which consists of a wholesaler and a retailer between producer and consumers. Examples : Medicines.

PRODUCER

WHOLESALER

RETAILER

CONSUMERS

This type of channel has three intermediaries in between producer and consumer namely Distributor, Wholesaler and Retailer. This type of pattern is used for the products like soaps, toothpaste.

PRODUCER

DISTRIBUTOR

WHOLESALER

RETAILER

CONSUMERS

DISTRIBUTION STRATEGIES.
Intensive Distribution A channel strategy that seeks to make products available in as many appropriate places as possible. This strategy is used for fast moving consumer goods and products, which are of high and frequent demand, like food items and daily use personal care product. For E.g. Titan Watches are available through different outlets World of Titan, Time Zone, Value Mart outlets, Sonata stores, Titan Signet club, Tanishq Boutiques and private multi-brand outlets.

 Selective Distribution A channel strategy that limits availability of products to a few selected outlets in a given market area. Gain adequate market coverage with more control and less cost. E.g. Nokia phones.
Exclusive Distribution Only one outlet in a market territory is allowed to carry a product or a product line. E.g. Avon Cosmetic products are distributed only through direct distribution channel.

IMPORTANCE OF DISTRIBUTION CHANNEL

Attention. Imaginative Distribution System. Difficult to replace. Value Addition. Information. Promotion. Financial support.

MARKETING MIDDLEMEN
The channel of distribution includes the original producer, the final buyer and any middlemen. The term middlemen refers to those institutions or individuals in the channel which either take title to the good or negotiate or sell in the capacity of an agent or broker. Also known as FUNCTIONAL MIDDLEMEN. The kinds of middlemen are : Agents Commission agents, Manufacturers agent, Selling agent.

 Brokers These are the agents who dont have direct physical control of the goods in which they deal. They represent either the buyer or the seller in negotiating purchase or sale for their principal. Dealers Firms that buys or resell products on retail or wholesale basis. Resident Buyers An agent or a person who specialises in buying on a fee or commission basis, chiefly for retailers. Retailers A merchant whose business is selling directly to the consumers. Wholesalers A distributor or middleman who sells mainly to retailers and institutions, rather than consumer

FACTORS INFLUENCING SELECTION OF DISTRIBUTION CHANNEL

NATURE OF PRODUCT. NATURE OF MARKET. NATURE OF FIRM. NATURE OF DISTRIBUTION.

SIZE OF THE PRODUCT

PERISHABILITY

NATURE OF PRODUCT

TECHNICAL NATURE

STANDARDISATION

NUMBER AND LOCATION OF BUYERS

SIZE AND FREQUENCY OF PURCHASE

NATURE OF MARKET

CONSUMER OR INDUSTRIAL MARKET

BUYING HABBITS AND PREFERENCES

MARKET STANDING

FINANCIAL RESOURCES

NATURE OF FIRM

VOLUME OF OUTPUT

MANAGERIAL COMPETENCE

AVAILABILITY OF MIDDLEMEN

ATTITUDE OF MIDDLEMEN

NATURE OF DISTRIBUTION

SALES POTENTIAL

COST OF CHANNEL