CHANNEL OF DISTRIBUTION

Meaning : Channel of distribution

A set of interdependent organizations (intermediaries)
involved in the process of making a product or service
available for use or consumption.
A channel of distribution or trade channel is the path or
route along which goods move from producers to
ultimate consumers or industrial users.
 In otherwords, it is the distribution network through
which a producer puts his product in the hands of
actual users. The channel of distribution includes the
original producer, the final buyer and any middlemen-
either wholesaler or retailer.
Consumer marketing channel
Industrial marketing channel
Role of middleman in distribution of goods
The middlemen perform the following marketing functions :
Searching out buyers and sellers (contacting & Mechandising), matching goods to
the requirements of market.
 Offering goods in the form of assortments or packages.
 Persuading and influencing the prospective buyers to favour a certain product and
its maker (personal selling/sales promotion).
 Implementing pricing policies in such a manner that would be acceptable to buyers
and ensure effective distribution.
 Providing feed back information, marketing intelligence and sales forecasting
services for the regions to their suppliers.
 Looking after the process of distribution where necessary.
 Participating actively in the creation and establishment of a market for a new
product.
 Offering pre and after sale services to consumers.
 Communicating the use of technique of the product to the users.
Role of wholesaler and retailer in distribution of goods
Role of Wholesaler
 Buying and assembling
 Selling and dispersing
 Transportation
 Storage
 Packing and grading
 Advertising and sales promotion
Role of Retailer
 Wide choice to consumers
 Home delivery
 Assurance of regular supply
 Credit facility
 Close interaction with customers
 Availability of goods in small quantities and at convenient locations
 Channel design
The channel design is normally meant to give a clear idea about:
The number of channel entities in the channel network,
The way in which they are linked,
The roles and responsibilities of the entities in the network
The rewards for participating in the activities and also
Clear cut guidelines for the major activities to be performed during
the normal functioning of the channel.
Designing a suitable channel system will require
A) defining the customer need
B) clarifying the channel objectives
C) Cost of Channel
D) Evaluating Various alternatives
 Channel conflict
Conflict is generated when actions of any channel
member come in the way of the system achieving its
objectives
Three broad categories of channel conflict are:
Goal conflict – understanding of objectives by various
channel members is different
Domain conflict – understand responsibilities and
authority differently
Perception conflict – reading of the market place is
different and proposed actions vary
 Four Stages of conflict

LATENT

PERCEIVED

FELT

MANIFEST

Each stage is progressively more severe than the earlier one

 Conflict Resolution Styles
Avoidance Styles are a combination
of assertiveness and
Aggression co-operation.

Accommodation

Compromise

Collaboration

Least effort and Maximum effort and

results Best results
 Distribution intensity
There are three broad options-Intensive, selective and exclusive
distribution
Intensive distribution aims to provide saturation coverage of the
market by using all available outlets. It is usually required where
customer have a range of acceptable brands to choose from.
Selective distribution involves a producer using a limited number
of outlets in a geographical area to sell products. An advantage of
this approach is that the producer can choose the most appropriate
or best performing outlets and focus effort(e.g.training) in them.
Exclusive distribution is an extreme form of selective distribution
in which only one wholesaler, retailer or distributor is used in a
specific geographical area.
 Channel policies
Defines how the channel is required to operate.
Normally framed by the channel principal to guide the operations of
the channel system
If not framed properly could prove the starting point of channel
conflicts.
Some subjects of channel policies could be as seen in the next slide:
Markets to be covered
Customer coverage
 pricing
Product portfolio to be handled
Selection, termination of channel members
 Ownership of the channel
 Conclusion
Distribution channel is the link between manufacturer
and consumer.
It reduces the cost to company because if company
decides to take responsibility to bring goods to
consumer cost will increase.
All intermediaries are perfect in their job of
distribution,so overall distribution will be proper and
goods will reach to maximum customers.
THANK YOU….
Submitted by
SUNNY PRAKASH SINHA
REG. NO.- 0906247129
MBA 2ND YEAR(SEC-B)
REGIONAL COLLEGE OF MANAGEMENT
AUTONOMOUS,BHUBANESWAR