Channels of

Distribution

Distribution Channel
The chain of businesses or intermediaries through which a
good or service passes until reaches the end consumer.
A distribution 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.

Each intermediary receives the item at one pricing point and

moves it to the next higher pricing point until it reaches the
final buyer. Also called channel of distribution or marketing
channel .

DISTRIBUTION CHANNELS
Producer

Consumer
Channel of Distribution 1
Retailer

Producer

Consumer

Channel of Distribution 2
Producer

Wholesaler

Retailer

Consumer

Channel of Distribution 3

Producer

Agent

Wholesaler
Channel of Distribution 4

Retailer

Consumer

Distribution channel
of
FMCG Goods

Definition of FMCG Goods

FMCG are products that have a quick shelf turnover, at
relatively low cost and dont require a lot of time and
financial investment to purchase. The margin of profit
on every individual FMCG product is less.
Examples: Lux soaps, Colgate, Surf excel, Pepsi, Maggi
etc.

Characteristics of FMCG goods

From the consumers' perspective:
Frequent purchase
Low involvement (little or no effort to choose the item
Products)
Low price

From the marketers' angle:

High volumes
Low contribution margins
Extensive distribution networks
High stock turnover

Dabur
Factory
Carry & Forward
agent

Super Stockist

Stockist

Institute &
Modern
trade

Rural Stockist
(INDIRECT)

Wholesaler

Retailer

Wholesaler

Consumer

Retailer

Profit Margins
Carrying & Forwarding Agent

1.5%

Super Stockist

2 - 2.8%

Distributor/ Stockist

5.8%

Re- Distributor / Sub Stockist

3.8%

Wholesaler

1.5 2%

Retailer

78%

SAMPLE PRICES AT VARIOUS LEVELS

Dabur Amla hair Oil 100ml
C&F
agent

Super
Stockist

Distributor
/Stockist

Sub-Stockist

Wholes Retailer
aler

Landing
Price

33.60

34.08

34.08

34.70

36.05

36.77

Selling
Price

34.08

34.70

36.05

36.05

36.77

39-45
MRP 45

Typical Distribution of P&G Products

Manufacturers (PGHH Ltd.India)
Marketing Agents - State wise

Retailers/Wholesalers/Distributors
Chemists Shops, Provision Stores ,
Retail Outlets, Big Markets etc

Distribution Channel At The Bidadi

Plant Bangalore
Targeted Customer In &
Around Bangalore City

Bidadi Plant

Hebbal
Depot

Delivery
Trucks

WHITE GOODS

 Heavy consumer durables such as air

conditioners, refrigerators, stoves, etc., which
used to be painted only in white enamel
finish.
Despite their availability in varied colors now,
they are still called white goods. See also
brown goods.

TYPES
Major appliances may be divided as:
Refrigerators
Stoves
Washing equipment
Miscellaneous like AC, Computer, Television,
Water heater, Amplifiers.

Distribution
Network
White Goods
Producer

Distributor Or
Dealer

Service back
up

Retailer

Own or
Franchise

Customers

SAMSUNG DISTRIBUTION CHANNEL

Company Manufacturing
Unit

C&F Agent

Distributor

Franchised
Outlets

Big Retailers

Small
dealers/retailer

Digital
Plazas

Digital
Homes

Customers

Retailer Chains

Digital
Worlds

B2B CHANNEL

Business to Business (B2B) marketing refers to a market where

other businesses, not end consumers, are the purchasers of the
goods and services.

B2B describes commerce transactions between

businesses, such as between a manufacturer and a wholesaler,
or between a wholesaler and a retailer

For example, a chair manufacturer may buy steel for the frame from one

company, wood from another, and the fabric from another

CHANNEL STRUCTURE FOR

SELLING THE REFRIGERANT
GAS

Manufacturer

Direct Channels

Direct
Sales

Online
Marketing

Indirect channels

Telemarketing

Manufacturers
Representatives
Industrial
Distributors

Customer Segments

Distribution channel at CEAT Tyres

CEAT has one of the largest distribution network for tyres in India. It has divided the
Indian sub continent into 33 regions and has set up a Regional Office for each region.
Clearing and Forwarding agents (C&FAs) are attached to them. Often the larger regions
have 2 or 3 or more C&FAs to cover the region properly. The total number of C&FAs
across the country is 112.
The basic operating structure of the Ceat Ltd comprises of the following entities:
Factory
RDC
C&FA
Dealers
CEAT has three level distribution structure. The factory supplies goods to the RDCs
(Regional Distribution Centers) and from these RDCs the goods are transferred to CFAs
(Carrying and Forwarding Agents) which act as godowns for distribution to the dealers.

Distribution Network

Services Sector

Producer

Franchise/
Agent

Customers

Distribution Channel
for Insurance

 Insurers market various insurance covers either directly or through various

distribution The marketer in the distribution network is in direct interface
with the prospect and the customer.
An increasing number of insurers are using multiple distribution channels
as they continue to balance the needs of different groups of consumers
against the cost of distributing their products and services. When it comes
to insurance distribution channels, one size does not necessarily fit all.

Channels In the Insurance Markets

Personal Distribution Systems
Agencies of different models and brokerages, banc assurance,
and work site marketing

Direct response distribution systems

Client purchases the insurance directly
Internet, telemarketing, direct mail, call centers, etc..,

Types of Insurance
Life Insurance
Health Insurance
Agriculture Insurance
Vehicle Insurance

DISTRIBUTION CHANNELS

Insurance
Company

Consumer
Channel of Distribution 1

Insurance
Company

Agents
Channel of Distribution 2

Consumer

Direct Channel

Internet
Insurance
Companies

Consumer
Direct
Marketing

Indirect Channels
Insurance
Brokers

Banc
assurance

Insurance
Company

Trade
Specific

NGOs

Post
Offices

Customer

Bharati Axa Life Insurance

Distribution Head

Direct Sales

Brokers

Consumer

Life
Advisors

Other
Channels

Cellular Services
Idea Cellular
Service Provider

Hardware

Software

Own Sales
Team

Services

Franchise/
Dealers

Consumers

Hardware Services
DELL

Service
Provider

Services Back
Up
Own Sales
Team

Dealer/
Reseller

Customers

Franchisee/Own/
Reseller

Hospitality Sector

Marketing Intermediaries of Hotel Industry

Travel Agents
Tour Wholesalers
Specialists
Hotel Reps
Concierges

National, State, and

Local Agencies
Consortia and
Reservation Systems
Global Distribution
Systems
Internet

Distribution Network
Airlines
Airlines
Computer
Reservation
Systems
Brick-and-Motor
travel agents

Online Travel
Agents

Clients

Direct DistributionCall center or

website

Conclusion:
Selecting a distribution channel is an important aspect of
building a competitive advantage for businesses of every
size.
The right distribution channel ensures that customers in
different locations around the country, or around the
world, can buy your products and get the right level of
service from your company.