A

PRESENTATION ON
DISTRIBUTION CHANNELS

S U B M ITT E D T O - SUBMITTED BY-

P R O F. M . R . R A N A SAHIL KANDHARI
28-MBA-09
DISTRIBUTION CHANNEL
DEFINED
Ø A set of interdependent
organizations (intermediaries)
involved in the process of
making a product or service
available for use or
consumption
ØA channel of distribution
comprises a set of institutions
which perform all of the
activities utilised to move a
product and its title from
 Role of Intermediaries
• Greater efficiency in making
goods available to target
markets.
• Intermediaries provide
– Contacts
– Experience
– Specialization
– Scale of operation
• Match supply and demand
 Channel Functions
• Information
• Promotion
• Contact
• Matching
• Negotiation
• Physical Distribution
• Financing
• Risk taking
 Distribution Channel
Functions

• Contact: finding and

communicating with prospective
buyers
•
• Matching: shaping and fitting the
offer to the buyer’s needs,
including such activities as
manufacturing, grading,
assembling, and packaging
 Distribution Channel
Functions

• Negotiation: agreeing on price and

other terms of the offer so that
ownership or possession can be
transferred
•
• Physical distribution: transporting
and storing goods
•
 Distribution Channel
Functions
• Financing: acquiring and using funds
to cover the costs of channel work


• Risk taking: assuming financial risks

such as the inability to sell
inventory at full margin
 Distribution Channel
Functions
• Information: gathering and
distributing marketing research
and intelligence information
about the marketing environment
•
• Promotion: developing and
spreading persuasive
communications about an offer

 Today’s system of exchange

Promotion

Contact

Negotiation

Transporting and storing

Users
Producers

Financing

Packaging

Money

Goods
 Channel Levels or
intermediaries

•Wholesaler
•Agent
•Retailer
•Internet
•
 Channel intermediaries -
Wholesalers
• Break down ‘bulk’
• buys from producers and sell small
quantities to retailers
• Provides storage facilities
• reduces contact cost between producer
and consumer
• Wholesaler takes some of the marketing
responsibility e.g sales force, promotions
•
 Channel intermediaries -
Agents
• Mainly used in international markets
• Commission agent - does not take
title of the goods. Secures orders.
• Stockist agent - hold ‘consignment’
stock
• Control is difficult due to cultural
differences
• Training, motivation, etc are
expensive
 Channel intermediaries -
Retailer
• Much stronger personal relationship
with the consumer
• Hold a variety of products
• Offer consumers credit
• Promote and merchandise products
• Price the final product
• Build retailer ‘brand’ in the high
street
•
 Channel intermediaries -
Internet
• Sell to a geographically disperse market
• Able to target and focus on specific
segments
• Relatively low set-up costs
• Use of e-commerce technology (for
payment, shopping software, etc)
• Paradigm shift in commerce and
consumption
 Customer
C u sto m e r M a Marketing
rk e tin g
C h a n n e lsChannels
 Six basic channel decisions
• Direct or indirect channels
• Single or multiple channels
• Length of channel
• Types of intermediaries
• Number of intermediaries at each
level
• Which intermediaries? Avoid
intrachannel conflict
 Selection consideration
• Market segment - must know the
specific segment and target customer
• Changes during plc - different channels
are exploited at various stages of plc
• Producer-distributor fit - their policies,
strategies and image
• Qualification assessment - experience
and track record must be established
• Distributor training and support
 E
lu
a
v
g
tin
e
h
jo
M
rA
sE
lu
a
v
g
tin
e
h
jo
M
rA
s
s
lu
c
x
E
iv
eE s
lu
c
x
e
iv lc
e
S
tivS tiv
lc
e s
te
In
ivIn iv
s
te
u
trb
DDis u
trb
is u
trb
DDis u
trb
is u
trb
DDis u
trb
is
n
oo
n n
oo
n n
oo
n
tIify
n
e
d g
jo
a
Mlv
rA
sId
tify
n
e g
jo
a
Mlv
rA
s
S
tin
e
h
C
g
a
b
lO
v
jc
&
s
o
rS
tin
e
h
C
g
a
b
lO
v
jc
&
s
o
r
A
ly
a
n
zig
o
C
e
m
u
s
rS
c
v
N
dA
ly
a
n
zig
o
C
e
m
u
s
rS
c
v
d
N
Channel Design
Channel Decisions
Design Decisions
 E
a
v
lu
tin
gEa
v
lu
g
tin
tM
o
a
iv
n
gM
tiv
o a
g
n

FEEDBACK
lS
e
tin
cgS
lc
etin
g
Decisions
Channel Management
 PRESENTATION EXTRACT
• We were able to comprehend the
nature of distribution channels, and
why marketing intermediaries are
used
• Understand the different marketing
intermediaries available to the
industry and the benefits each of
these intermediaries offers
• Know how to use the Internet as a
distribution channel
• Know channel selection and design
THANKS A LOT