ulsLrlbuLlon

ole of dlsLrlbuLlon ManagemenL

lf a CusLomer wanLs Lo buy a ColgaLe Lhen Lhe
role of ulsLrlbuLlon managemenL
Ma[or ole of lnLermedlary
ueflnlLlon of ulsLrlbuLlon ManagemenL
1he managemenL of all acLlvlLles whlch
faclllLaLes movemenL and coordlnaLlon of
supply and uemand ln Lhe creaLlon of Llme
and place uLlllLy ln goods
-eed for ulsLrlbuLlon Channels
ulrecL from company lf Lhey run house Lo house
campalgn
ulrecL from company lf lL has puL up a sLall ln a
consumer producL exhlblLlon Lo promoLe lLs
producLs
1he company dellvers lLs producL Lo ulsLrlbuLlon
cenLers whlch breaks and glve lL Lo dlsLrlbuLors
1he dlsLrlbuLors glve a convenlenL loL slze Lo
reLallers
1he dlsLrlbuLor could sell lL Lo Lhe wholesaler
who sell Lhe merchandlse Lo reLallers
ole of lnLermedlarles
1o accumulaLe rlghL klnd of goods aggregaLlng
and sorLlng Lo meeL cusLomer need aL Lhe olnL
of purchase
1o belleve ln rouLlne and slmpllfled LransacLlons
and work wlLh a large number of producLs so Lhe
dlsLrlbuLlon cosL geL mlnlmlzed
1o provlde lnformaLlon boLh Lo sellers and buyers
Lo help Lo manage Lhelr buslness beLLer
1o buy a large varleLy of goods and can compare
cosLs and prlces and make Lhe rlghL
recommendaLlon Lo Lhelr cusLomers
1o be aware of Lhe envlronmenL ln whlch Lhey
operaLe and hence lsolaLe Lhe companles from
dlrecL lmpacL of Lhe local condlLlons
1o reduce Lhe number of Louch polnLs 1he
company wlll noL be able Lo meeL Lhe demands
Lhousands of lLs consumers dlrecLly and hence
needs lnLermedlaLlon
re lnLermedlary necessary
WlLh Lhe advenL of lnLerneL companles llke
mazon deals dlrecLly wlLh Lhe cusLomers
Lg of 8aLa
Lg Cf Lureka lorbes
1echnlcal LqulpmenLs
CosL of ulsLrlbuLlon
1he ComblnaLlon works 8eLLer
1he naLure of Lhe company and lLs producLs
1he naLure and dlspersal of Lhe company
cusLomers
1he buslness goal of Lhe company
1he companles capablllLles and sLrengLh
ow ulsLrlbuLlon adds value
8uylng Colour 1v ome uellverlng and
lnsLalllng
ulsLrlbuLlon Mlx
lnvenLory
Warehouslng
CommunlcaLlon
ackaglng
1ransporL
Distribution
Objectives
STRATEGY
Channel
Design
Network
Strategy
STRUCTURE
ntermediate
Management
Warehouses
and Transport
Materials
Management
PROCESS
T Policies and
Procedures
Facilities and
Equipment
Channel
Management
IMPLEMENTATION
Channe| Management and Channe|
Strategy
Lach member of a channel ls a llnk ln a dlsLrlbuLlon neLwork
of organlzaLlons LhaL exLends from Lhe producer Lo Lhe end
users of producLs or servlces
lLhough some flrms perform all channel funcLlons Lyplcally
several organlzaLlons are llnked LogeLher ln a dlsLrlbuLlon
channel Lo carry ouL Lhe varlous acLlvlLles of sLorage
LransporLaLlon warehouslng maLerlal handllng servlce
SorLlng and repacklng organlzaLlons LhaL perform Lhese
markeLlng funcLlons beLween producers and end users are
called mlddlemen lnLermedlarles or resellers
D|str|but|on Channe| A|ternat|ves
1he people and organlsaLlons LhaL asslsL ln Lhe flow of goods
and servlces from producer Lo cusLomer are known as
markeLlng lnLermedlarles 1he followlng are Lhe common
Lypes of lnLermedlarles
Mlddlemen
genL or 8roker
Wholesaler
eLaller
ulsLrlbuLor
uealer
MerchanLs
laclllLaLlng (Cl genLs) genLs
SelecLlng Lhe 1ype of Channel
some flrms wlll dlsLrlbuLe dlrecLly oLhers wlll use
a number of lnLermedlarles
roducerconsumer (dlrecL) (dlrecL)
roducerreta||erconsumer
roducerho|esa|erreta||er consumer
roduceragentreta||erconsumer
roduceragentho|esa|ereta||erconsume
r
when would each of Lhese be consldered?
1ypes of Channels
1ypes of Channels
ulrecL MarkeLlng Channel (or Zero Level)
1hls Lype of channel has no lnLermedlarles ln Lhls dlsLrlbuLlon sysLem Lhe
goods go from Lhe producer dlrecLly Lo Lhe consumer eg Lureka lorbes
lndlrecL MarkeLlng Channel
Cnelevel Channel ln Lhls Lype of channel Lhere ls only one lnLermedlary
beLween producer and consumer 1hls lnLermedlary may be a reLaller or a
dlsLrlbuLor
lf Lhe lnLermedlary ls a dlsLrlbuLor Lhls Lype of channel ls used for speclallLy
producLs llke washlng machlnes refrlgeraLors or lndusLrlal producLs
0 Level
Producer Consumer
1 Level
Producer Consumer
Retailer
ConslderaLlons ln
Channel Cholce
Morket considerotions 1ype of markeL
concenLraLlon poLenLlal cusLomers order slze
9roduct considerotions Conslder unlL value
perlshablllLy Lechnlcal naLure of producL
ntermediories considerotions Servlces offered
avallablllLy aLLlLude domlnance
compony considerotions ueslre for channel conLrol
managemenL money and servlces seller can provlde
Lo supporL sales
1he roducL Llfe Cycle and
ulsLrlbuLlon
lnLroducLlon hase
dverLlslng cosLs Lyplcally are hlgh durlng Lhls sLage ln order
Lo rapldly lncrease cusLomer awareness of Lhe producL and Lo
LargeL Lhe early adopLers
uurlng Lhe lnLroducLory sLage Lhe flrm ls llkely Lo lncur
addlLlonal cosLs assoclaLed wlLh Lhe lnlLlal dlsLrlbuLlon of Lhe
producL
1hese hlgher cosLs coupled wlLh a low sales volume usually
make Lhe lnLroducLlon sLage a perlod of negaLlve proflLs
ulsLrlbuLlon ls selecLlve and scaLLered as Lhe flrm commences
lmplemenLaLlon of Lhe dlsLrlbuLlon plan
rowLh hase
ulsttlbotloo ulsLrlbuLlon becomes more
lnLenslve 1rade dlscounLs are mlnlmal lf
resellers show a sLrong lnLeresL ln Lhe producL
Matur|ty Stage
ulsttlbotloo -ew dlsLrlbuLlon channels and
lncenLlves Lo resellers ln order Lo avold loslng
shelf space
Dec||ne Stage
ulsttlbotloo ulsLrlbuLlon becomes more
selecLlve Channels LhaL no longer are
proflLable are phased ouL
1he Changlng role of eLallers and
Wholesalers
lnvenLory managemenL
More Cfferlngs by manufacLurer
lnLerneL
More focused cusLomers
1rade ulscounL
eLall CrganlzaLlon
ueflnlLlon
Crganlzed and unorganlzed SecLor
LlfesLyle and value lormaLs
ConfllcL and ConLrol
ln Channels
Channel confllcL Channel confllcL exlsLs when channel members
lnLerfere wlLh each oLhers' ob[ecLlves
orlzonLal confllcL orlzonLal confllcL lnvolves flrms on same level
grocery sLore vs drug sLore
verLlcal confllcL verLlcal confllcL lnvolves flrms aL dlfferenL levels
roducer versus ho|esa|er
roducer versus reta||er
Channel ower Channel ower ls Lhe ablllLy Lo lnfluence or
deLermlne behavlour of oLhers ln channel
ased on exert|se reards and sanct|ons
roducer/eLaller ConfllcL
Small suppllers' complalnLs abouL large
deparLmenL sLores
Cnerous loglsLlcal demands
ressure Lo cuL prlces
uemands Lo glve Lhe sLores excluslvlLy
lorclng suppllers Lo conLrlbuLe adverLlslng and
promoLlonal dollars Lo Lhe sLores
equlrlng suppllers Lo lnvesL ln elaboraLe
compuLerlzed lnvenLory sysLems
More ComplalnLs
mo// supp/iers comp/oints obout discounters
e|ng asked to su|y the|r goods on cons|gnment
e|ng asked to dea| d|rect|y |th the reta||ers'
headquarters and to g|ve to the reta||er an amount equa|
to the comm|ss|on that ou|d have gone to
manufacturers' agents
esponses from smo//er supp/iers
;u|t do|ng bus|ness |th b|g reta||ers hose demands are
too str|ct and out|and|sh
ecome a reta||er
Merge |th another manufacturer
hyslcal ulsLrlbuLlon
1he movemenL of producLs/servlces from
producer Lo consumers
Suppller
ManufacLurer
ulsLrlbuLlon Channel
CusLomers
1wo Channels
1he 1ransacLlon Channel
Concerned wlLh Lhe Lransfer of ownershlp
rlmary luncLlon ls negoLlaLe and sell
ulsLrlbuLlon Channel
rlmary Concern ls Lransfer or dellvery of
goods and servlces