Chap 8 Distribution Management
Chap 8 Distribution Management
Chap 8 Distribution Management
7 Rs
Right product in
Right
Right
Right
Right
Right
Right
quantity in
condition at the
time and
place for the
customer at
cost
Distribution Channels
Are intermediaries or middlemen
Exist because producers cannot reach all their
consumers
Multiply reach and provide efficiency to the
marketing process
Facilitate smooth flow and create time, place
and possession utilities
Have the core competence and reach
Provide contact, experience, specialisation and
scales of operation
Example
Consumer wants to buy a tube of toothpaste
Made available at a retail outlet close to her
residence place
Made available at 8 pm on a Tuesday evening when
she wants it time
She can pay for the toothpaste and take it away
possession
The company distribution function has made
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Distribution Objectives
Influenced by the customer expectations
Defines the extent of time, place and
Set of activities.
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Set of Activities
Manner in which the company and its marketing
Organization.
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Distribution Organization
Extent of company support and
outsourcing to be decided
Budget for the cost of the distribution
effort
Select suitable channel partners C&FAs,
and distributors
Setting clear objectives for the partners
Agree on level of financial commitments by
the channel partners.
Policy and procedure..
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KPIs.
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CSFs
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procedure
Serious commitment of the channel partners
Fairness in dealings
Clearly defined customer service policy
High level of integrity
Equitable distribution at times of shortage
Timely compensation of channel partners
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added re-sellers
Agents and brokers
Franchisees
Electronic channels
Wholesalers
Retailers
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C&FAs / C&SAs
C&FA: carrying and forwarding agent and
Distributors, Dealers,
Stockists, Agents
Name denotes the extent of re-distribution
done by them
Distributors invest in the products buy
products from the company
Are on commission, margins or mark-up
May or may not get credit but extend credit
Distributors cover the markets as per a beat
plan. All others merely finance the business.
Distributors could be exclusive for a company
Agents bring buyer and seller together
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Wholesalers
Operate out of the main markets
Deal with a number of company products of
their choice
Are not on contract with any company
Sell to other wholesalers, retailers and
institutions
Negotiate about 15 days credit from
company distributors also provide credit
to their customers
Operate on high volumes and low margins
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Retailers
The final contact with consumers
Operate out of their shops and sell a large
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Industrial Products
Customers may also direct from company sales force
Producer
Producer
Agent/middleman
Industrial Distributor
Industrial Distributor
Industrial Customer
Industrial Customer
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Consumer Products
Retailers may also direct from company sales force
Producer
Producer
Producer
Distributor
Distributor
Wholesaler
Retailer
Retailer
Retailer
Customer /
consumer
Customer/
Consumer
Customer/
Consumer
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Patterns of Distribution
Determines the intensity of the distribution
Intensity decides the service level provided
Types of distribution intensity:
Intensive
Selective
Exclusive
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Distribution Intensity
Intensive: distribution through every
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Intensive Distribution
Strategy is to make sure that the product is
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Selective Distribution
A few select outlets will be permitted to keep
the products
Outlets selected in line with the image the
company wants to project
Preferred for high value products
Tanishque jewelry
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Exclusive Distribution
Highly selective choice of outlets may be
Channel strategy
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