To understand the role of distribution management in the marketing mix To understand why distribution channels are required To study

how distribution channels add value to the marketing mix To get a brief introduction to distribution channel strategy To get an overview of distribution channel members

To understand different kinds of distribution networks To understand about channels of rural markets To understand the different levels of intensity in the distribution effort

The management of all activities which facilitates movement and coordination 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.

Place Utility

Time Utility

Possession Utility

The manufacturing sector cannot contribute to the growth of GDP without the support of the distribution systems in operation to help the manufacturing sector reach the goods and services to the end user. In the past, companies undertook many distribution related operations and many companies believed that they can perform the task themselves.

As markets expanded with population, companies started realizing that direct distribution to an extended clientele was unmanageable and expensive. Intermediaries are able to perform these functions and deliver benefits at a lower cost

Link between the manufacturer and his customers Any channel member other than the manufacturer or end user Their primary job is to re-distribute the products of the company in a manner that it reaches the ultimate consumer and gets used. Help in the smooth flow of goods and services

Help the process of exchange of goods and services at a certain margin to themselves

Manufacturing Plant Carrying and Forwarding Agent (C&FA)

Distributors

Retailers

Consumers

Direct from the company via house to house campaign Direct from the company if it has a stall in a consumer product exhibition

The company delivers the product in bulk to a C&FA or a distribution center, which breaks bulk and gives to distributor, distributor sells convenient lot sizes to retailers and retailers sells to consumers
The distributor sells to a wholesaler who then sells to a retailer

To accumulate the right kind of goods, aggregating and sorting to meet consumer needs at the point of purchase To believe in routine and simplified transactions and work with a large number of products (at the wholesaler and retailer level), so that distribution cost is 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 compare costs and prices and make the right recommendations to their customer To be aware of the environment in which they operate, hence, isolate the companies from the direct impact of these local conditions To reduce the number of touch points for the company

Not always With the advent of internet, companies like Amazon and Dell can directly deal with consumers Technically complicated products (i.e. medical equipment)

Company 1

Company 2

Company 3

Intermediary

Large number of Consumers

Placing goods or services where they are needed and when they are needed is the job of distribution channels. The route between producers and consumers that goods companies take to reach their end-users or customers are called marketing channels, trade channels or distribution channels.

Marketing Channels are the distribution network through which the producers products flow to the market Marketing Channel may be defined as the external contractual organization which the company operates to achieve its distribution objective. A distribution channel is a set of independent organizations involved in the process of making a product or service available for use or consumption by the customer or industrial user.

Depending on The nature of the company and its products The nature and dispersal of the companys customers The business goals of the company The companys capabilities and strengths Speed with which a company wants to increase its sales and coverage of the market Nature of competition and how it operates Companys market shares

Distribution channels take care of 4 discrepancies that exist in the market place:
Spatial Discrepancy Temporal Discrepancy Need for Breaking the Bulk Need for Assortment

The distribution function adds value to the selling function by providing time, place and possession utility to the consumer

Corporate Strategy

Marketing Strategy

Distribution Strategy

Defining customer service levels Defining distribution objectives to achieve these service levels Outlining the steps or activities required to achieve the objectives Deciding on the structure of the network to implement these activities A clearly defined policy and procedure for the network to carry out its daily activities Stating the Key Performance Indicators

Industrial Products Consumer Products Consumer Durables Pharmaceutical Products Textiles/Paper Chemicals and Fertilizers Automotive and Engineering Services Cellular Services IT Hardware IT Software

1. 2. 3.

Objective Questions Conceptual Questions Discussion of individual companys distribution channel