Channels of Distribution

And there role in marketing

Marketing channels and distribution
 Marketing channels are set of
interdependent organizations
involved in the process of making
the product or service available for
use or consumption.
 They are the set of pathways a
product or service follow after
production.
 Importance of channels
 Decisions about the marketing channels
are among the most critical management
decisions.
 They just not serve markets, they make
market.
 Channels chosen affects all other
marketing decisions.
 Firm’s sale depends upon training and
motivation of dealers.
Classification of channels/channel
levels
Channels of distribution

0-level 1-level 2-level 3-level

 0-level 1-level 2-level 3-level

manufacture Manufacturer manufacturer manufacturer

wholesaler wholesaler

jobber
retailer
retailer
retailer

consumer consumer
consumer consumer
 intermediaries
 Intermediaries are the middlemen
and signify those individuals in the
channels that either take title to take
goods and sell at profit.
 They are directly involved in process
of flow of goods from manufacturer
to consumer.
 Types of intermediaries
1. Merchant middlemen
i. Wholesalers
ii. Retailers
2. Agents
i. Brokers
ii. Commission agents
iii. Selling agents
iv. Factors
v. Clearing agents
vi. auctioneer
 wholesalers
 Functions of wholesalers:
1) Assembling and buying.
2) Warehousing.
3) Transporting.
4) Financing.
5) Risk bearing.
6) Grading, packing and packaging.
7) Dispersing and selling.
8) Providing market information.
 Services of wholesalers
1.Service to manufacturers-
 Economies of scale.
 Saving in time and trouble.
 Better use of capital.
 Price stabilization.
2. Services to retailers-
i. Saving in cost and time.
ii. Economy in transport an packing.
iii. Better use of limited factors.
iv. Expert knowledge.
Types of wholesalers
Fullfunction
Converter
Drop shipper
 retailers
 Retailingincludes all activities directly
related to the sale of goods and
services to the ultimate consumer for
personal or non-personal use.
 functions
1. Buying and assembling.
2. Warehousing.
3. Selling.
4. Grading and packing.
5. Financing.
6. Advertising.
Services of retailer
 To manufacturer and wholesaler
1. Offer opportunity.
2. A big relief.
3. Provision of information.
4. Reduce the risk of loss.
 To the consumers
1. Largest choice.
2. Relief from storage.
3. Extra service.
4. Supply of information.
 Agent middlemen
 Agent middlemen are those channel
components who help in the transfer of
goods from the hands of ultimate users
without acquiring the ownership of
these goods.
 They operate for a commission.
 Types of middle agents
1. Commission agents.
2. Brokers.
3. Factors.
4. Auctioneers.
5. Selling agents.
6. Clearing agents.
 Factors governing the choice of
channel of distribution
FACTORS

Products Market Institutional

Unit factors
factors factors factors

Environmental factors
PRODUCT FACTORS
1. Product nature.
2. Technical nature: simple or
complex.
3. The length of product line.
4. The market position: market
position of manufacturer.
The market forces-
1. The existing market structure.
2. The nature of purchase
deliberations.
3. Availability channel.
4. competitior's channels.
 Institutional factors
1. The financial ability of channel
members.
2. The promotional ability of channel
members.
3. The post-sale service ability.
 Unit factors
1. The company’s financial position.
2. The extent of market control
desired.
3. The company reputation.
4. The company marketing policies.
 Factors governing the choice of
intermediary
1. Economic factors
2. The legal restrictions.
3. Fiscal policies.
4. The financial position.
5. The facilities available.
Thank you
A presentation by-
Raveena kaushal
Bba 3rd sem
Soms bhaddal