8 Distribution Management and Marketing Mix
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Transcript of 8 Distribution Management and Marketing Mix
Distribution Management and Marketing Mix
Chapter 8
Krishna Havaldar
Distribution Management
This aspect of the marketing function provides Place Time Possession
Form
Utility to the customer
Placeutility Time
utility
Possessionutility
Form
Distribution Management
Consumer wants to buy Colgate PLACE: Make it available at retail shop close
to his residence (alternative places) TIME: He wants it at 8 pm on Tuesday (not a
office time) (At customers chosen time POSSESSION: He pays and take it home FORM: He wants a single packet, and not a
carton.
Distribution Management
The management of all activities which facilitates 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 lives
Broad range of activities concerned with the efficient movement of finished products from the end of the production line to the consumer and in some cases it also includes the movement of raw materials from the source of supply to the beginning of the production line.
Supply chain, and weak link
Supplier’s Supplier
Supplier Company Customer Customer’s
Customer
Supplier’s Supplier’s Supplier
Customer’sCustomer’s Customer“Who could be this weak link?”
Need for distribution channels
How else can we distribute ? door-to-door? through exhibitions? through C&F agents? through wholesalers? through distributors? . . . .
Need for distribution channels
Functions of Intermediaries: To accumulate right kind of goods, aggregating and sorting to meet
consumer needs at POP To believe in routine and simplified transaction and work with large
no of products, so that the distribution costs could get minimized. To provide information both to the sellers and the buyers to help
them manage their business better To buy a large variety of goods and can compare costs and prices
and make the right recommendations to their customers To be aware of the environment in which they operate and hence
isolate companies from the direct impact of these local conditions To reduce the no of touch points. The company will be able to meet
demands of thousands of customers directly and hence needs intermediation.
Help manufacturer to effectively run trade and consumer promotions Provide credit facilities to their buyers
“Are intermediaries necessary?”
Philip Kotler
Marketing Channels and Value Networks
Philip Kotler
Role of Marketing Channels
M
M
M
M
M
MC
C
C
C
C
CD
M: ManufacturerD: DistributorC: Customer
No of contactsM x C = 3X3 = 9
No of contacts M + C = 3+3 = 6
Gather info about potential and current customers, competition, and other actors and forces in the marketing environment
Develop and disseminate persuasive communications to stimulate purchasing
Reach agreement on terms Place orders Invest in business Assume risks Inventory control Manage financial transactions Delivery and ownership transfer
Philip Kotler
Channel Functions and Flows
“Direct distribution or Indirect distribution?”
Philip Kotler
Channel Levels: Consumer Marketing Channel
Manufacturer Manufacturer Manufacturer Manufacturer
Consumer Consumer Consumer Consumer
Retailer Retailer Retailer
Wholesaler
DistributorDistributor
0- level 1- level 2- level 3- level
Direct
Discrepancies and Distribution channels (Wroe Alderson) Distributional channel members take care of four
discrepancies that exist in the market place Spatial discrepancy
Helps reduce the distance between the producer and the consumer
Temporal discrepancy Helps speed up time in meeting the requirement of the
consumer Need to break the bulk
Reduce large quantities into acceptable lot sizes for the consumer
Need to provide assortment Provide variety to the consumer to choose from
Financial support Helps fund the activities of reaching the product to the
consumer
How does distribution add value? Distribution channel strategy
Customer service level ABC analysis of service level and then plan
Setting distribution objectives Availability, finance, requirements
Set of activities expected by them Provide forecast to them Arrange dispatches Develop beat plan Market visits to sell proceeds Collections Promotions Build long term relationships with A class dealers
The distribution organization Extent of company support Affordability Selecting channel partners Set system for monitoring Ensuring financial investment
Policy and procedure Key performance indicators (KPIs) Critical success factors (CSFs)
Distribution channel
Distribution channel can broadly be classified as Sales channel
Delivery channel
Service channel
Patterns of Distribution
Intensive distribution As many outlets as possible Ex. FMCG products of HLL
Selective distribution Only few carefully selected outlets Outlets that matters the most Ex. Consumer durables
Exclusive distribution More selective Only one outlet in a market Own outlets or franchisee outlets Ex. McDonalds, Automobiles