Channel of distribution:

It is an organized network or a system of agencies

&institutions which in combination ,perform all the
activities required to link producers with users to
accomplish the marketing task.

MARKETING CHANNELS: are the sets of
interdependent organization involved in the process
of making a product or service available for
the use or consumption.
Basic intermediaries:
Intermediaries
merchants agents facilitators
Managing intermediaries:
PUSH STRATEGY:
Focus is on carry,
promote and sell
Low brand loyalty
Impulse item

PULL STRATEGY
Consumer persuasion
High brand loyalty
High involvement
product

Factors governing the choice of
channels of distribution:
product
factors
Market
factors
Unit
factors
Environment
factors
Cont.
Product factors:
Nature of product
Perceived risk/product
value
Technical nature
Product volume
Market factors
Market structure
A. concentrated
B.Dispersed
Purchase
deliberations
Cust .wants high level
service





Cont.

Unit factors
Co financial position
Extent of market
control
co 'reputation
Types of channels:
Conventional/
Non integrated
non.-conventional/
integrated
direct
indirect
horizontal
vertical
Direct channels:
Zero level/direct marketing:





manufacturer
consumer
One level/indirect channel
manufacturer retailer
consumer
Two level:
manufacturer
wholesaler
retailer
consumer
manufacturer
wholesaler
consumer
3-level:
manufacturer wholesaler
jobber retailer
consumer
INTEGRATED CHANNELS:

Those that work with full coordination
rather than in loose manner

Integrated mkt channels can be vertical
and horizontal in nature
VERTICAL MARKETING SYSTEM:

ALL the channel members act as part of
a Unified system in one of them owing
the other so have the power to make
them all corporate
CORPORATE VMS:
Successive stages from production to
distribution are under single ownership.
E.g.
amartex
Bata have their own manufacturing as well as
retail outlets.
Woodlands
Raymond's owns their own retail stores while
producing textiles and woolens.
Giant food stores operates an ice making facility,
soft drink boiling operations, ice-cream plant
that supplies them everything.

Administrative VMS:

Seeks control over successive stages from
production to distribution through size and
power of one of the channel members.
E.g. HLL,P&G,nestle,maruti are brand and
market leaders

Contractual VMS:
Independent firms at different levels of
production & distribution integrating their
programs on contract basis.
For e.g.
Manufacturer sponsored retailer franchise
Manufacturer sponsored wholesaler
franchise


Horizontal marketing system:
symbiotic marketing


2 or more unrelated cos
Put together their resources or programs to
exploit an emerging market opportunity
E.G.
Supermarkets have arrangements with local
banks to offer in store banking
Tie-up b/w TVS whirlpool,onida to market
washing machines
Channel design decisions:

1.Analyzing customer desired service
outputs.
2.Establishing channel alternatives
3.Identifying major channel alternatives
4.Evaluating major channel alternatives



Analyzing the customers desired
service output: getting know
what your customer want
Lot size
Spatial convenience
Waiting and delivery time
Product variety
Service back up

Establishing objectives and
constraints:

Obj.are stated in the terms of services.
Channel objective vary with Product
characteristics.
For e.g.
perishable product timely and fast delivery

Bulky product Minimize the shipping distance
and amount of handling.

High unit value service ,training, installation


Identifying major alternatives:

Channel alternatives for a cellular car phone
maker:
1.Co could sell car phones to automobile
manufacturers to be installed as original
equipment.
2.Could sell it car phones to auto dealers.
3.Could sell it to retail automotive
equipment dealer.
4.Trough mail order catalogs
Channel alternatives described by:

1.types of business intermediary
2.No,of intermediaries
3.Terms &responsibility
Channel management decision:
1.Selecting the channel members
2.Training channel members
3.Motivating the channel members