Professional Documents
Culture Documents
Learning Objectives
Role of Distribution Management in the Marketing Mix Why Distribution Channels are required Distribution Channel Strategy Overview of Distribution Channel members Intensity in the Distribution effort
Example
Consumer wants to buy a tube of toothpaste Made available at a retail outlet close to her residence Place Made available at 8 pm on a Tuesday evening when she wants it Time She can pay for the toothpaste and take it away Possession The company distribution function has made all this possible.
Players Involved
The company and its distribution network
Direct Company to consumer Company to a CFA / Distribution center to Distributors to Retailers Distributor to Wholesaler to Retailer
All these intermediaries help the process of Exchange of the product or service.
Distribution Management
Management of all activities which facilitate movement and co-ordination of supply and demand in the creation of time and place utility in goods The art and science of determining requirements, acquiring them, distributing them and finally maintaining them in an operationally ready condition for their entire life.
A distribution channel
6
Distribution Channels
Are Intermediaries or Middlemen
Exist because producers cannot reach all their consumers Multiply reach and provide efficiency to the marketing process Facilitate smooth flow and create time, place and possession utilities Have the core competence and reach Provide contact, experience, specialisation and scales of operation
Types of Channels
Sales: Motivates buyers, shares information between company and its consumers, negotiates fair bargains for consumers and finances the transactions Delivery channel meant only for physical part of the distribution Service channel performs after sales service
Channel members
9
CFAs
CFA: Carrying and Forwarding Agent Both are Transporters who work between the Company and its Distributors Collect products from the company, store in a central location, break bulk and despatch to distributors against indents Goods belong to the Company
11
Wholesalers
Operate out of the main markets Deal with a number of company products of their choice Are not on contract with any company Sell to other wholesalers, retailers and institutions Negotiate credit from company distributors also provide credit to their customers Operate on high volumes and low margins
13
Retailers
The final contact with consumers Operate out of their shops and sell a large assortment and variety of goods Located closest to consumers Buy from company, distributors or wholesalers Highest margins in the network Provide personalised services to their customers
14
Industrial Products
Customers may also direct from company sales force
Producer Producer Agent/Middleman
Industrial Distributor
Industrial Distributor
Industrial Customer
Industrial Customer
15
Consumer Products
Retailers may also direct from company sales force
Producer 105-108 Producer Producer 100
Distributor
Distributor 105
Wholesaler 108
Retailer 120
Retailer
Retailer 120
Customer / consumer
Customer/ Consumer
Customer/ Consumer
16
Patterns of Distribution
Determines the Intensity of the distribution Intensity decides the Service Level provided Types of distribution intensity:
Intensive Selective Exclusive
17
Distribution Intensity
Intensive: Distribution through every reasonable outlet available FMCG Selective: Multiple, but not all outlets in the market Consumer Durables Exclusive: May be only one outlet in a market - Car Dealers
18
Intensive Distribution
Strategy is to make sure that the product is available in as many outlets as possible Preferred for FMCG
19
Selective Distribution
A few select outlets will be permitted to keep the products Outlets selected in line with the image the company wants to project Preferred for high value products
Tanishque Jewelry
20
Exclusive Distribution
Highly selective choice of outlets may be even one outlet in an entire market Could include outlets set up by Companies Titan, Bata Producer wants a close watch and control on the distribution of his products.
Channel strategy
21
22
23
Distribution Objectives
Influenced by the customer expectations Defines the extent of time, place and possession utility which the customer can expect out of the channel network
Set of activities.
24
Set of Activities
Manner in which the company and its marketing channels go about achieving the customer service levels Some of these steps could be:
Sales forecasts Despatch plans Market coverage beat plans Journey plans for service engineers Collection of sales proceeds Carrying out promotional activities
Distribution Organization
Extent of company support and outsourcing to be decided Budget for the cost of the distribution effort Select suitable channel partners C&FAs, and distributors Setting clear objectives for the partners Agree on level of financial commitments by the channel partners.
Policy and procedure..
26
27
28
Key Learnings
Companies use distribution channels to reach their large customer base The channel members could be nominated like distributors or freelance like retailers Distribution channels provide the time, place and possession utility for consumers for the company products Distribution channels could be sales, service or delivery focused
31
Key Learnings
Companies could also choose the intensity of distribution based on their products and distribution objectives Distribution could be intensive, selective or exclusive The distribution strategy takes care of service levels, objectives, activities, organisation to deliver the service, measurement of performance and critical success factors
32