Distribution

DISTRIBUTION 1

DISTRIBUTION

DISTRIBUTION 2

DISTRIBUTION / PLACE – ISSUES

At the end of this module the learning outcomes are:

1. What are the roles and functions of channel partners?

2. Various types of channel levels.

3. What are considerations in channel design decisions

DISTRIBUTION 3

SUGGESTED READINGS

1. Marketing management by Kotler, Millineium edition, chapter 16.

2. Marketing management by Ramaswami and Namkumari, chapter 21.


DISTRIBUTION 4

DISTRIBUTION ISSUES – PLACE Why do you use

- Dealers- Stockist- Distributors etc…

How does the product becomes available to customer


DISTRIBUTION 5

Marketing channels

Set of interdependent organizations involved in the process of making a product for use or consumption

Example- Dealers- Distributors- Retailers- Agent


DISTRIBUTION 6

Marketing channel- Hindustan lever – Lifebuoy

Goes to villages 5 lakhs villages in India Can Lever set up 5 lakhs offices? Do they have such resources? No Probably no company in this world has Need of partner Help you to reach your target customers

Role of channel partner required.


DISTRIBUTION 7

CHANNEL FUNCTIONS & ROLES

1. Information gathering / feedback- Potential / current customers- Competitors- Used by companies to alter marketing

mix- Can take actions to counter competition


DISTRIBUTION 8

2. Supply products in assortments Example – Pepsi

Pepsi supplies in case of 24 bottles- Crate

Suppose consumer requires- 1 Pepsi

Shopkeeper- Provides 1 Pepsi

Breaks products in assortments


DISTRIBUTION 9

3. Risk sharing- Channel members- Buy goods from producers- If the goods do not sell?- Who bears the risk- Channel partner

Risk sharing is critical


DISTRIBUTION 10

4. Helps merchandise the product Merchandising Attractive display Increases

- Awareness- Interest

Music world Wide display of music Can try Attractive display Décor Invested in space, display Sales personnel, warehouse, trucks


DISTRIBUTION 11

5. Provides salesmanship

6. Assists in sales promotion

7. Provides pre-sale and after-sale service.

- TV servicing in rural areas- Company or channel- Done by channel partner


DISTRIBUTION 12

7. Extend credit to select customers- Buy now, pay later.

8. Helps in test marketing- Testing products before launch- Use channel premises


DISTRIBUTION 13

CHANNEL LEVEL No of channel partners between

producer & consumer Various levels are

1. Zero – level

2. One – level

3. Two - level

4. Three – level


DISTRIBUTION 14

1. Zero – channel No channel partners Producer directly to customers

Examples Eureka Forbes

- Door – to – door selling Boeing

- Directly to Indian airlines


DISTRIBUTION 15

2. One – level channelOne intermediary

Example Competent motors

· Channel partners for Maruti3. Two - level channel· Two intermediary Example Onida black & white TV

· Onida sells to distributor in each district· Retailer buy from distributor


DISTRIBUTION 16

4. Three – level channel Three intermediaries

Example – Hindustan lever

Company

Stockist …. (district level) Wholesaler …… (town level) Retailer…… (village level)


DISTRIBUTION 17

Analysing customer’s Desired Service output levels

- What kind of service levels are expected by target customers

- Five Service Output levels 1. Lot Size 2. Waiting time 3. Spatial convenience 4. Product variety 5. Service backup


DISTRIBUTION 18

1. Lot size No of units the channel permits a typical customer

to purchase on one occasion Example Purchase of Air-conditioners A. Maruti

Prefer a channel from where it can buy 100 Air – Conditioners

B. Household Buying a lot size of 1 Air – conditioner. Shop


DISTRIBUTION 19

2 Waiting time Average time customers of that channel

have to wait for receipt of the goods. Customer normally fast delivery channels

Bread / Newspaper Customer want newspaper every day

morning Will you wait for newspaper till evening ?


DISTRIBUTION 20

3. Spatial convenience Degree to which the marketing channel makes it

easy for customer to purchase the product. Maruti Baleno vs Honda City

Maruti About ten dealers in Dealers in Delhi Honda

About 2 dealers Maruti offers greater spatial convenience than

Honda Repair and search cost lower in Maruti.


DISTRIBUTION 21

4. Product variety Variety Normally customers prefer variety More choice

Example Shoppers Stop vs. Snowhite Wide variety in Shoppers Stop Snowhite – only garments


DISTRIBUTION 22

5. SERVICE BACKUP Add – on services

- Credit - Deliver at home - Installation - Repairs

Provided by the channel Higher the service backup, greater the work

provided by the channel.


DISTRIBUTION 23

6. MAJOR CHANNEL ALTERNATIVES

Has three elements

1. Types of intermediaries

2. Number of intermediaries

3. Terms and responsibilities of intermediaries


DISTRIBUTION 24

A. Types of Intermediaries

1. Company salesforce Sales personnel from company directly Products are complicated / not

understood

Boeing Aircrafts Complex Can take one yr to finalize the sale Own sales force Trained


DISTRIBUTION 25

2. Dealers Appoint middleman in different territories

Example – LG Sells TV through multibrand dealer outlets

- Pankaj Electronics 3. Canteen stores department (CSD)

Buys on behalf of defence services in India Defence personnel can buy

LG BPL supplies in CSD canteens all over India Defence personnel buy from CSD departments.


DISTRIBUTION 26

DISTRIBUTION CHANNELS

CEAT Tyres

1. Company Salesman Supply to large Automobile Manufacturers

- Maruti, Ford, Hyundai

2. Dealers Multibrand Shops all over India

3. Ceat exclusive showrooms Exclusive shops dealing with Ceat tyres

only

DISTRIBUTION 27

B. Number of Intermediaries

Three types of strategies

1. Exclusive distribution

2. Selective distribution

3. Intensive distribution


DISTRIBUTION 28

1. Exclusive distribution Limiting the use of intermediaries Not allowing competing brands Maintain control Total commitment of intermediary

Maruti Exclusive dealers Huge investments by dealers Maruti provides support


DISTRIBUTION 29

2. Selective Distribution Use of more intermediaries Compared to exclusive Need more visibility More control Less cost

Shahnaz Hussain Herbal products Not available from every Grocery shop Available at select outlets Maintain Image


DISTRIBUTION 30

3. Intensive Distribution

As many outlets as possible

Multiple channels

Consumers widespread

Reach critical

Problems of control

Example

Lux Soaps, Lifebuoy, Colgate


DISTRIBUTION 31

C. Terms and responsibilities of channel Members Profitable relationship

- Producer - Channel partner

Rules of the game Channel partner responsibilities

- Prices - Discounts - Terms & conditions of sale

– Credit policies – Defective return policies – Merchandise

Do’s and Dont’s


DISTRIBUTION 32

- Territorial Limit - Scope of each other’s activities

Both work united Conflicts happen when their roles are not

clear


DISTRIBUTION 33

Channel-Design Decisions

Economic Control

Adaptive

Criteria for Channel Alternative Evaluation

DISTRIBUTION 34

Channel-Management Decisions

Modification

The Channel Development Process

Motivation

Selection

Evaluation

Training

Channel Member

Channel Channel

Distribution

Education

Transcript of Distribution