CHANNELS OF DISTRIBUTION

RENUKA MEHRALECTURER INB.B.B.A.III

GCCBA-42

INTORDUCTION According to American Marketing Association,

“Distribution channel is a structure of intra-company organization units and extra-company agents and dealers, wholesale and retain , through which a commodity, product or service is marked.”

According to EW Cundiff and RS Still, “ Channel of distribution is the route taken by title to the goods as they move from the producer to ultimate consumers or industrial users.”

Marketing system comprising channels of distributionManufacturers and processo

rs

Marketing Intermediaries-retailers-agents-brokers

-wholesalers-dealers

End users

Perform functions like-Financial

-advertising-transportation-warehousing

-others

Characteristics of Channel of Distribution It is a pathway composed of intermediaries

through which products and services flow from manufacturers to customers.

Flow of goods is sequential and usually undirectional

constitutes a contractual organization Function performed by intermediaries include

buying , sorting out, accumulation, allocation , selling and transferring title of products to consumers.

Need Channel of Distribution Helps in making product visible to customer Provides valuable feedback to the producer

regarding consumer’s preference, taste , habits, fashion and consumer’s response to a product.

Further provides consumer services like credits, home delivery, warranties and guarantees

Functions of Distribution Members Research Contact Promotion Matching Sorting Accumulation Allocation

Contd. Negotiation Physical distribution Financing Risk taking

Importance of Channel of Distribution Cost saving in specialization Minimum total transactions Principle of searching Facilitates distributive system Reduce exchange time Creates time, place and ownership utility Stabilize Provides information

Types of Channel of Distribution

Direct Selling

Indirect

Selling

Channels

Direct Selling Personal Selling Direct Mailing Telemarketing

Indirect Selling Manufacturer- Retailer- Consumer Channel Manufacturer- Wholesaler-Retailer-Consumer

Channel Manufacturer- Agent -Wholesaler-Retailer-

Consumer Channel

Figure showing relationship

Marketing Channels for Consumer Products

Manufacturer Manufacturer

Manufacturer

Manufacturer

Agents

Wholesalers

Wholesalers

Retailers

Retailers

Retailers

Consumers Consumers

Consumers

Consumers

A

B C

D

Types of Marketing Intermediaries1) Merchant Intermediaries- they are further of

following types Wholesalers Retailers

2) Agent Intermediary

Wholesalers are of following types

Full functions wholesaler Limited function wholesalers Convertor Wholesaler Rack jobbers Drop shippers Limited line wholesalers Specialty time

Retailers

Small Scale Retailers Large scale retailers- for eg. Departmental store Multiple shops Supermarkets Mail order houses Franchising Consumer cooperatives

2) Agent Intermediary

Commission agents Brokers Factors Auctioneers Facilitators

Factors affecting Selection of channels Market Consideration The nature of the market Number of potential customers Size of order Geographic location of consumers

• Product Consideration Cost of the product Nature of product Technical nature of the product Range of product Level of services required Weight of products

• Company Consideration Financial soundness Volume of production Post-sale service ability Company reputation Company marketing policies

• Middlemen Consideration Functions performed by middlemen Financial ability Terms and conditions

• Environment consideration Economic Legal Fiscal Policies

Channel selection process

Identity target consumers

Determining consumer behavior

Ascertain channel alternatives

Evaluation of channel

alternatives

Locate potential customer

Select channel members

THANK YOU