MARKETING CHANNEL

Intro of Marketing Channel It is a set of practices or activities necessary to transfer the

ownership of goods, and to move goods, from the point of production to the point of consumption. It is a 'path' or 'pipeline' through which goods and services flow in one direction, and the payments generated by them flow in the opposite direction.

CHANNELS OF DISTRIBUTION A marketing channel or a distribution channel has been defined as a system of relationships exiting among businesses that participate in the process of buying and selling products and services Channel intermediates are those independent organizations that facilities the distribution of goods to the ultimate customer. According to Stanton A distribution channel consists of set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user

There are two basic types of channel distribution

A direct channel of distribution involves the movement of goods and services from produce to consumer without the use of independent middlemen. An indirect channel of distribution involves the movement of goods and services from producer to independent middlemen to consumer.

FACTORS IN THE CHOICE OF DISTRIBUTION CHANNELS-

Market Considerations Consumer or industrial market Number of potential customers size of order Buying Habit of customers Geographical concentartion of market.

Product consideration unit value. product line Standardised Technical Nature. bulk and weight pershability.

Company consideration Volume of production. Financial recourses. experience and competence of management services provided by the channels Desire for control of channels.

Middlemen Consideration Availability or desired middlemen. Financial ability Attitude of middlemen sales potential cost Competition and legal constraints.

DISTRIBUTION CHANNELS FOR CONSUMER PRODUCTS-

For consumer markets the various levels of channels possible are zero, one , two and three levels. A ZERO LEVEL- A Zero level channel represents a manufacturer directly selling his products to the final consumer. Door to door selling, mail order catalogs, telemarketing and manufacturerowned retails are some examples of zero level channels. Example- Tupperware and Eureka Forbes.

ONE LEVEL CHANNEL- It represents a single intermediary, such as a retailer buying goods directly from the producer and selling them to the final consumer. Example- Automobile dealers and petrol pump dealers

A TWO LEVEL CHANNEL- It represents two intermediaries, such as wholesalers purchasing goods from a producer and selling them to retailers, who in turn , sells them to the final consumer. Example- Fast Moving Products, HLL, Whirlpool, Videocon Philips etc

A THREE LEVEL CHANNEL It represents a producer, wholesaler, an Agent or Jobber , a retailer and the ultimate consumer.

Industrial markets too possess the same channel levels but with minor exceptions. The zero level channels Producers sell their products directly to the industrial customers

In the one level channel, the producer markets their products to industrial distributors, who in turn, sell them to Industrial Customer. In the Second level channel The manufacturer may use his representatives to market the product to the industrial distributor, who in turn sells the product to industrial customer. Organizations should determine the number of intermediaries they need at each channel level. Depending on the number of intermediaries required at each level, the three major choices of distribution available to the producers are

TYPES OF INTERMEDIARIESIntensive distribution- It is a form of distribution in which the manufacturer distributes his producers through as many outlets as possible. This type of distribution is used for those products that are characterized by low involvement of the customer and where customers look for location convenience. Example- Products like Chocolates, Biscuits, Shaving Blades, Soaps and detergents are distributed in this manner, so that they are easily available to the consumer at their nearest locations.

TYPES OF INTERMEDIARIESExclusive Distribution It is a form of distribution in which there are a limited number of intermediates between the producer and the customers. This type of want to deliver maximum service quality to the customers. It also ensures that the distributor do not sell competing products along with the producers products. These products will have higher brand value and are highly priced. Example- Automobiles, Apparels and Its accessories are sold through distribution pattern.Selective distribution- here the producer uses more than one distribution channel but, he is selective in whom he is dealing with. This enables them to maintain good relationships and work out strategies to work better. Example- Color Plus, Arrows, Zodiac, Lee etc.

AND BUSINESS MARKETS/ CHANNEL DESIGN-

IMPORTANCE OF DISTRIBUTION CHANNELS-

Distribution decisions have a broad impact on the marketing program used by a firm because middlemen can provide a wide variety of marketing functions. Middlemen perform a number of important functions in the distribution of products. The specialized efforts of distribution channels members generate following three kinds of utility for the consumers

IMPORTANCE OF DISTRIBUTION CHANNELSPLACE UTILITY- They facilitates transportation of the product from the manufacturers' place to a convenient location, which is easily accessible to the buyer , and thus creates place utility. POSSESSION OR OWNERSHIP UTILITY- The middlemen purchases the products from the manufacturers and ultimately exchange them for money with consumers who after buying them, gain their possession and title. Thus, ownership utility is created at the time of transfer of title from the channel members to the consumers. TIME UTILITY- Marketing Channels create time utility when they make products available for sale at a time when the consumer wants to purchase them.

FUNCTIONS OF DISTRIBUTION channelsProvide Market InformationPromotion Contacts Breaking Bulk Supply In assortments Price Negotiation Physical Distribution Risk Taking Fiancing Selling Flow of Distribution.

RETAILINGRetailer is one whose business is to sell to consumers wide variety of goods which are assembled at his premises as per the needs of final users. The term retail implies sale for final consumption rather than for resale or for further processing. A retailer is the last link between the final user and the wholesaler or the manufacturer.According to Professor William statonRetailing includes all activities directly related to the sale of goods and services to the ultimate consumer for personal or non business use.

CLASSIFICATION OF RETAILERS

SMALL SCALE RETAILERSUnit stores- Unit Stores are the retail stores run on proprietary basis dealing in general stores or single line stores such as drugs , clothes, grocery items, hardware, shoes books utensils the single line stores are mostly called as speciality shops as they may specialize in one line only. Street Traders- Street Traders are the retailers who display their stock on footpaths or the sidewalks of busy spots of cities and towns. The most prominent places are bus- stands railways stations, parks and gardens, squares and so on. They deal in light goods in demand.

CLASSIFICATION OF RETAILERS

CLASSIFICATION OF RETAILERSMARKET TRADERS- These retailers open their shops on fixed days or dates in specified areas. The time interval may be a week or a fortnight or a month. They do join fairs and festivals. They deal in general or special line stores. These retail outlets have fixed type of arrangements with built in flexibility.

HAWKERS AND PEDLARS- This class of retailers has been there in all the centers from the time immemorial. They do not have any fixed places of business. They carry the goods from one place to another on hand cart selling the goods from door to door. They keep on moving from locality to locality and business to business with the change in the season. Thus, ice candy seller has a brisk business in summer and may change over to corn flakes in rainy and winter seasons.

CLASSIFICATION OF RETAILERSCHEAP JACKS.- Cheap jack is a retailer who has fixed place of business in a locality but goes on changing his place to exploit the market opportunities. Change of locality is quite common in case of these retailers. These deal in cheap varieties of readymade garments, plastics shoes and the like. However the speed of change of locality is not as fast as that of hawkers and pendlars.

SYNDICATE STORES- It is an extension of the theory of mail order business on a small scale. Syndicate store are known for widest varieties of goods in a product line but of known brands. These retailers buy most of the unbranded varieties and try to sell under their names. These apply to readymade garments, toys, machinery, and toys machinery items and so on.

CLASSIFICATION OF LARGE SCALE RETAILERS-RETAILERSDEPARTMENTAL STORES- It is a large store dealing in a wide variety of goods under a single roof. It is essentially as urban retail outlet designed for mass selling dealing in almost Aspirin to Zip, mostly catering to the needs of higher income groups. It is a central location and unified control. It is known for orderly arrangement of products in separate departments and it lays emphasis on consumers services. The examples of this kind in India are ebony stores, Spencers, Super bazaar etc.

MULTIPLE SHOPS AND MALLS- A multiple shop or a chain store is a system of branch shops operated under a centralized management and dealing in similar lines of goods. It is chain of retail stores dealing in identical and generally restricted range of articles operating in different localities under central ownership and control. It works on the principle of centralized buying and administration and decentralized selling. The Attributes of multiple shops are cash and carry limited lines of articles- items are consumer durables- dencentralised selling in different localities. The examples of this line are Bata Shoes, Swastik Shoes, Flex Shoes, carona Shoes.

CLASSIFICATION OF RETAILERS

CLASSIFICATION OF RETAILERSMAIL ORDER HOUSES- As the title suggests, the seller contacts the buyer through some form of advertising. That is, the customers do not visit the sellers premises nor there is personal inspection of goods before the purchase. The transaction is settled through postal medium mostly the goods are sent through post parcel, the article must be well known , describable , command demand and are durable , in additional to high value. The examples of this kind are patent medicines and chemicals, jewellery, leather goods, readymade garments and so on. These units are confined to compensation areas. Thus, mail order sales limited of Mumbai deals in Bull worker a fit kit.

CLASSIFICATION OF RETAILERSConsumer Cooperatives- These are the retailer or stores owned by a group of consumers themselves on cooperative principles. It is an association of consumers to obtain their requirements by purchasing in bulk and selling through the stores to the member and non member consumers. It believes in wholesales buying and retail selling at reasonable prices than prevailing in the open common name chosen is Apan Bazaar or Janata bazaar or may be named after a locality say Bardez Bazaar in North Goa.

CLASSIFICATION OF RETAILERSFair Price Shop- These are the retail outlets started by the manufacturer in different cities and towns to sell at prices which are quite fair. This practice is very common with every states of cooperatives sector unit engaged in retail business to ensure regular equitable and adequate supple of essential commodities just or fair prices. These are designed to meet the requirement of the weaker sectors of the society for ration etc.

FUNCTIONS OF RETAILERS

TRENDS IN RETAILING

WHOLESALERSIt includes all the activities involved in selling goods and selling goods or services to those who buy for resale or business use. Wholesaling excludes manufacturers and farmers because they are engaged primarily in production, and it excludes retailers. Wholesale trader is one wholesales to other middlemen, institutions and individuals usually in fairly large quantities.

WHOLESALERS DEFINITION

According to American Management AssociationWholesaler sell to retailers or other merchants and / or individuals, institutions and commercial users but they do not sell in significant amounts to ultimate consumers.

WHOLESALERS FUNCTIONS