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CHANNEL DESIGN, FUNCTIONS AND FLOW

Group Members-

Juhi Tandon Prateek Singh

Vivek Awasthi
Avichal Malhotra Tanmeet Kaur Dayvanshi Srivastava Shivom Varadarajan Praharsh Sairaha

What is Marketing Management


Marketing management is a business discipline which is

focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities.
Marketing management employs various tools from

economics and competitive strategy to analyse the industry context in which the firm operates.

Marketing Channel
A marketing channel is a set of practices or activities

necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption.

Roles of marketing channel in marketing strategies: Links producers to buyers. Performs sales, advertising and promotion.

Influences the firm's pricing strategy.


Affecting product strategy through branding, policies,

willingness to stock.

Channel Design
Designing a channel system involves four steps Analysing customer needs Cost and feasibility of meeting needs must be considered.

Establishing channel objectives.


Set channel objectives in terms of targeted level of

customer services.

Identifying major channel alternatives. Company sales force, manufacturers agency, industrial

distributors etc.

Evaluating major channel alternatives. Economic Criteria. Control Issues. Adaptive Criteria.

Channel design decision

This involves 7 phases as mentioned below-

Recognize need for channel design decision. Set and co-ordinate distribution objectives. Specifying Distribution tasks. Develop alternative channel structures. Evaluate Variables Affecting channel Structure. Choosing the Best Channel Structure. Select the Channel Members.

Functions of Channels
Provide Market Information-

Provide market intelligence and other information.

Feel the pulse of the market and provide accurate

information about market conditions, consumer preferences etc. Helps in planning marketing strategies.

Promotion Helps the manufacturers by taking on the job promotion. Develops and spreads communication about the product to

the customers.
Contacts
The intermediaries find the customers and do the

communication and selling to them.

Risk Taking
Channel absorb most of the business risks, especially the

risk of failure to sell goods, product obsolescence or changes in the prices of the goods. Products can be damaged in transit or in storage or deteriorate in quantity before sale. This risk is borne by dealers.

Selling

Promote products to potential customers. Channel also help

to provide pre-sale and aftersales service to the customers. Dealers also assist through point of purchase (pop) display to attract customers.
Breaking bulk

Channel break the bulk production and meet the small size needs of individual consumers. They also carryout grading and packaging in small lots according to customers requirements.

Marketing Channel Flow


It is a 'path' or 'pipeline' through which goods and services

flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor).
A marketing channel can be as short as being direct from

the vendor to the consumer or may include several interconnected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers.

Channel Flows
The Eight generic Channel flows Physical possession Ownership

Promotion
Negotiation Financing Risking Ordering Payment

Cost Incurred by various channel flows


Channel Flow
Physical Possession Ownership Promotion Negotiation Cost Storage and delivery costs Inventory Carrying costs Personal selling, sales promotion, advertising etc. Time and legal costs.

Financing

Credit terms, terms and conditions of sales. Guaranties,warrenties, repairs, Insurances etc. Order processing costs.

Risking

Ordering

Payment

Collections, bad debts costs.

Channel Dynamics
Vertical Marketing System- Process where producers, wholesalers ,retailers & distributors perform all marketing activities together.

Types of VMS Contractual VMS Administered VMS Corporate VMS

Horizontal Marketing System-

Two or more unrelated companies put together their

resources or programs to exploit emerging marketing opportunities & to attain common benefits. Each company lacks capital, technical know-how etc. to venture alone or is afraid of the risk. Companies might work with each other on temporary basis or create a joint venture company.

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