Professional Documents
Culture Documents
Submitted By:
Abhishek Mukherjee
Arnab Kundu
Rajarshi Saha
Shauvik Ghosh
Sumit Agarw al
10/21/16
(12PGP056)
(12PGP065)
(12PGP088)
(12PGP095)
(12PGP099)
IIM Raipur PGP 2012-14
10/21/16
Distribution &
Distribution Channel
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DISTRIBUTION
DISTRIBUTION
CHANNEL
C
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Functions of Distribution
Channel
Physical Distribution
Ordering
Transfer of Goods/ Services
Information sharing
Payments
Financing
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Distribution Channel
Relationships
Co-operation
Conflict/ Disagreement
Power (Legitimate/
Coercive)
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Team Work
Distribution Channels
M
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UF
A
CT
U
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R
GENT
ETAILER
C
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S
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ETAILER
HOLESALER
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DISTRIBUTION
MANAGEMENT
DEFINITIONS
The process of getting theproductsfrom
themanufacturerorsupplierto theuser.
Distribution is the process of making a product
or service available for use or consumption by
a consumer or business user, using direct
means,
or
using
indirect
means
with
intermediaries.
Themanagementofresourcesand
processes
used to deliver aproductfrom aproduction
location to thepoint-of-sale,
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includingstorageatwarehousinglocationsor
Continued
Distribution
management
also
includes
determination
ofoptimalquantitiesof
a
product
for
delivery
to
particularwarehousesor
points-of-sale
in
order toachievethe most efficient delivery
tocustomers.
Thesaleof
a
largeamountofstockby
asingleentityover aperiodof time rather
than all at once, toavoidadversely affecting
itsmarket price.
Distribution management
an overarching
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DISTRIBUTION CHANNEL
DEFINED
Sets of interdependent organizations involved in the
process of making a product or service available for
use or consumption.
WHY?
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.
Provide contact, experience, specialization and
scales of operation.
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DISTRIBUTION/ CHANNELSAND
CHANNEL MEMBERS
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TYPES OF CHANNELS
Sales channel motivates buyers,
shares information, between company
and its consumers, negotiates fair
bargains for consumers and finances
the transaction.
Delivery channel meant only for
physical part of the distribution.
Service channel performs after sales
service.
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LISTING OF CHANNEL
MEMBERS
Company own sales team.
C&F Agents and C&S Agents.
Distributors, dealers, stockiest,
added re-sellers.
Agents and brokers
Franchisees
Electronic Channels
Wholesalers
Retailers
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value-
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TYPE OF INTERMEDIARIES
AGENTS
Is an independent individual or company
Main function is to act as the primary selling
arm of the producer
Represent the producer to users
Take possession of products but do not
actually own them
Agents usually make profits from commissions
or fees paid for the services they provide to
the producer and users
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C&FA /C&SA
C&FA carrying and forwarding agent.
C&SA carrying and selling agent.
Both are on contract with a company.
Both are transporters who work between the
company and its distributors.
Collect products from company, store in
central location, break bulk and dispatch to
distributors.
C&SA also sells the goods on behalf of the
company but remits proceeds after sales.
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DISTRIBUTORS
Are similar to wholesalers.
Could be exclusive for a company.
Wholesalers carry a variety of competing
products whereas distributors only carry
complementary product lines
Usually maintain close relationships with their
suppliers and customers
Take title to products and store them until they
are sold.
Are on commissions, margins, or mark-up.
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WHOLESALERS
Wholesalers are independently owned firm.
Take title to the merchandise they handle, the
wholesalers own the products they sell.
Purchase product in bulk and store it until they
can resell it.
Generally sell the products they have
purchased to other intermediaries, usually
retailers, for a profit.
Operate on high volumes and low margins.
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RETAILERS
Takes title to, or purchases, products from
other market intermediaries
Can be independently owned and operated,
like small mom and pop stores, or they
can be part of a large chain, like Walmart
The final contact with consumer.
Located closest to consumers.
Provide personalized services to their
customers.
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Level 0
Level 1
Level 2
Level 3
Level 0
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Level 1
Level 2
Level 3
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Level 00
Level
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Level 11
Level
Level 22
Level
Level 33
Level
23
Level 00
Level
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Level 11
Level
Level 22
Level
Level 33
Level
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FAC T O R S I N F L U E N C I N G C H O I C E
OF DISTRIBUTION CHANNELS
Product Considerations:
Unit Value.
Perish Ability.
Bulk and Weight.
Standardization.
Technical Nature.
Product Line.
Age of the Product
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Market Considerations:
Consumer or Industrial Market.
Number and Location of Buyers.
Size and Frequency of Order.
Customers Buying Habits.
Company Considerations:
Market Standing.
Financial Resources.
Management.
Volume of Production.
Desire for Control of Channel.
Services Provided
by PGP
Manufacturer.
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Middlemen Considerations:
Availability.
Attitudes.
Services.
Sales Potential.
Costs.
Customs and Competition.
Legal Constraints.
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FAC T O R S I N F L U E N C I N G C H O I C E
OF CHANNEL MEMBERS
MARKET FACTORS.
PRODUCT FACTORS.
COMPETITIVE FACTORS.
ENVIRONMENT FACTORS.
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FAC T O R S I N F L U E N C I N G
CHOICE OF CHANNEL
MEMBERS
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PAT T E R N S O F D I S T R I B U T I O N
Determines
the
intensity
of
distribution.
Intensity decides the service level
provided.
Types of distribution intensity:
Intensive
Selective
Exclusive
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INTENSIVE DISTRIBUTION
Distribution
through
every
reasonable outlet available FMCG
Strategy is to make sure that the
product is available in as many
outlets as possible.
Preferred for consumer products,
pharmaceutical
products
and
automobile parts.
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Intensive Distribution
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SELECTIVE DISTRIBUTION
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Selective Distribution
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EXCLUSIVE DISTRIBUTION
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Exclusive Distribution
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CHANNEL DESIGN
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P&G
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39
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EXAMPLE CASELETS
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D I S T R I BUT I O N
S T R ATE G Y O F A M U L
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Retailing
Amul Exclusive parlours have reached to total
tally of 6,315
Revenue from the retailing business has
witnessed an encouraging growth with an
annual turnover of `460 crores
Started allotting milk stalls at important
railway stations which is around 170 so far.
Have the India's largest chain of Ice cream
parlours with a total tally of 600.
introduced the casual dine-in format "Cafe
Amul"
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Distributio
n
Amul has more than 7,000 distributors servicing
more than a million retail outlets.
Rolled out Hub-n-Spoke model of distribution to
explore the huge potential markets of small
towns and rural areas
Have more than 150 super distributors covering
more than 2,500 small towns overcoming the
challenges posed by inadequate cold chain
facilities
They have about 8,500 channel partners.
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D I S T R I BUT I O N
S T R ATE G Y O F C I P L A
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D I S T R I BUT I O N
S T R ATE G Y O F N O K I A
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Nokia's mother
warehouse
(Gurgaon)
Network
operator
Large
distributors
Mobile store,
Agents and
Dealers
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Network owned
outlet s
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D I S T R I BUT I O N
S T R ATE G Y O F
A M W AY
Raw Material
Amway Manufacturing and
Distribution
Amway Business Owners (ABO's)
End Consumers
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62
D I S T R I BUT I O N
S T R ATE G Y O F
WALMART
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D I S T R I BUT I O N
S T R ATE G Y O F P F I Z E R
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D I S T R I BUT I O N
S T R ATE G Y O F A RVI N D
MILLS
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AIRTEL
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Distribution channels
In Urban Areas
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D i s t r i b u t i o n - Ru r a l
Same procedure is followed in the rural areas but the
distribution system is completely different from Urban
Area and the margin is also different. Companys
supply system to the territory manager follows the
same procedure as followed in the urban areas. The
product is at first distributed to the Rural
Super(RS).They have a margin of .7%.Products are
supplied
from
the
RS
to
the
Rural
Distributors(RD).They have a margin of 1.1%.As per
the same Urban system, few FSB works under each
RD and they supply the products to the individual
retailers. The retailers have a margin of 2.5% and
2.7%.
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Stock system in
distribution
The complete stock maintenance
procedure is categorically divided in
two parts : Stock to be maintained by Distributor
Stock to be maintained by Retailer
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Distribution network
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D I S T R I B U T I O N S T R ATE G Y
OF MOTHER DAIRY
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PHILIPS
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PHILIPS
DISTRIBUTION
SALIENT
The televisions
and audio products consists
of 1,300 dealers
nationally, the high volume
FEATURES
mass products are sold through 100
distributors
These 100 odd sub-distributors will work as
per advance payment basis.
Dealer health monitor(measuring the dealer
performance ) .The purpose is to improve
sales by increasing POP, merchandising small
schemes at the non
performing counters
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PHILIPS
DISTRIBUTION
PhilipsSALIENT
utilized its lighting network
DVD players
FEATURES
to sell
The
80 super stockists with 2,100
distributors below them began to sell Philips
appliances which included electric irons and
mixer-grinders along with DVD players.
Philips began to train its shop-floor assistants
about product features on a regular basis.
Philips is also communicating with retailers
directly rather than delegating it to
distributors, feedback
from retailers.
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PHILIPS
DISTRIBUTION
SALIENT
FEATURES
Philips is having large distribution networks
with high penetration levels in the semi
urban and rural regions
Philips did product wise mapping exercise in
over 540 districts throughout India
Philips plans to serve over 4,200 towns in
semi-urban region.
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Philips Products
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Volkswagen products
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D I S T R I BUT I O N
S T R ATE G Y O F N E S T L E
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THANK YOU!!!
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