DISTRIBUTION CHANNEL

DISTRIBUTION CHANNEL
POLICIES & STRATEGIES
POLICIES BASED ON INTENSITY OF
DISTRIBUTION.

INTENSIVE Distribution Policy

SELECTIVE Distribution Policy
EXCLUSIVE Distribution Policy
OTHERS
POLICY as regards CONDITIONS OF TRANSACTION

TERMS OF PAYMENT
POLICY OF RECIPROCITY
DUAL & MULTIPLE
POLICY OF FULL LINE FORCING

Definition Of Channels of
Distribution
Channel of distribution is a path traced in the
direct or indirect transfer of the title to a product
as it moves from a producer to ultimate
consumers or industrial users.(Cundiff & Still)
A Channel of distribution or marketing channel is
a structure of intra company organization,units
and intra company agents & dealers,wholesalers
& retailers through which a commodity product
or service is marketed(AMA)

OBJECTIVES OF
CHANNELS OF
DISTRIBUTION
Ensure availability of products at the point of
sale.
Build channel members loyalty.
Stimulate channel members to put greater
selling efforts.
Develop managerial efficiency in channel
organization.
Have an efficient & effective distribution
system(Readily,Regularly,Equitably,Fresh form)

IMPORTANCE OF
CHANNELS

INFORMATION
PROMOTION
CONTACT
MATCHING
NEGOTIATION
PHYSICAL DISTRIBUTION
FINANCING
RISK TAKING

UTILITIES & FUNCTIONS

OF DISTRIBUTION
CHANNELS

PLACE UTILITY
TIME UTILITY
POSSESSION UTILITY
EXCHANGE FUNCTION
DEMAND & SUPPLY CORELATION
ASSORTMENT MANAGEMENT
CORRECTION OF QUANTITY
DISCREPENCY

TYPES OF DISTRIBUTION
CHANNEL

FACTORS AFFECTING
SELECTION OF DISTRIBUTION
CHANNEL

Market
Consideration

Product
Company
Consideration consideration

Middlemen
Consideration

MARKET Considerations
Consumer/industrial Market
No. Potential
Order Size
Buying Habits of Consumers
Geographical Concentration of market

PRODUCT Considerations

Unit Value
Product Line
Standardized product
Technical Nature
Bulk & Weight
Perish ability

COMPANY Considerations
Volume Of Production
Financial Resources
Experienced & Competence of
Management
Services provided by the Channels
Desire for Control of Channels

MIDDLEMEN Considerations

Availability of Desired Middlemen

Financial Ability
Attitude of Middlemen
Sales Potential
Cost
Competition & Legal Constraints

DISTRIBUTION CHANNEL
CONFLICT

Product Range Mixes

Ordering Procedures
Delivery Schedules
Trading Terms &
Credit Arrangements
Packing & Handling
Special Packs & Pack
Sizes

Selling aids & Point of

Sales Material
Just in time Logistics
Growth in retail
universe contest
Credit
,Returns,Breakages &
empties
Joint Promotion
Trade off Opportunities

CHANNEL Conflict
CAUSES OF CONFLICT
FROM INTERMEDIARIES STANDPOINT
Manufacturer discriminates amongst its intermediaries as
regards granting of allowances & discounts & Charging of
prices.
Manufacturer forces slow moving product items along with
fast moving ones.
Manufacturer bypasses intermediary & attempts to take
over its functions
Manufacturer follows dual policy
Manufacturer hikes price & delays its communication,
makes frequent product changes & causes inventory
obsolescence.

From Manufacturers
Standpoint
Dealers do not perform agreed/desired functions.
Dealers violate Territorial restrictions
Dealers charge premium from customers when
products are in short supply.
Dealers resort to unjustified sales returns
Persistent customer complaints against dealers.
Dealers neglect companies brand & handles
competitors brand.
Dealers neglect after sales service.
Dealers fail to adhere to order size

RESOLVING CONFLICTS
CONFLICT MANAGEMENT STRATEGIES
Boundary Strategy
Inter Penetration Strategy
Supra Organizational Strategy

TYPES OF CONFLICT
Horizontal Conflict
Vertical conflict

IMPORTANCE OF
DISTRIBUTION CHANNELS
Provide Distribution efficiency to
manufacturers.
They provide products in required assortments.
Provide Salesmanship
Help in Merchandising the Products
Helps in implementing the Price
Mechanism.
Looks after physical distribution & Financing
Functions.
Acts as a Change Agent & Generate Demand.

Different Types Of
DISTRIBUTION CHANNELS
Distribution Channels

Non Integrated
Direct

Indirect
Administered

Integrated
Vertical
Contractual

Horizontal
Corporate

CONVENTIONAL
DISTRIBUTION CHANNEL
Manufacturer
Manufacturer
Manufacturer
Manufacturer

Consumer
Retailer
Wholesaler
Wholesaler

Consumer
Retailer Consumer
Semi
Retailer
wholesaler
Consumer

TYPES OF INTERMEDIARIES
Wholesalers
Full function wholesaler
Converter Wholesaler
Drop Shipper

Semi wholesaler
Retailers
Consumer co-operative
Stores
Fair Price Shops
Departmental stores
Chain Stores/multiple
Shops
Mail order Houses

Distributors & Dealers

Agent Intermediaries

Sole selling agents

Selling agents
Commission Agents
Brokers