Distribution Channels - 2

DISTRIBUTION CHANNELS - 2MKT 405: Distribution ManagementM Wahidul IslamSummer 2014

Elements of Distribution Managemen

t

Planning, Forecasting

& Budgeting

Sales Force Managemen

t

Product Pricing and Promotion

Product Visibility

Distribution Channels

Channel Information

Systems

Warehousing and

Logistics

DISTRIBUTION CHANNEL MEMBERS

Owned or Contracted

Company Owned Distribution

Center

Carrying and Forwarding

Agents

Consignment Selling Agents or General Selling

Agents

Direct Marketing Sales force

Franchises

Exclusive / Shared

Distributors/ Dealers / Stockiest

Value Added Resellers

Wholesalers

Retailers

CHANNEL FORMATS Who plays the major / dominant role in the

distribution channel is also a big deciding factorProducer

DrivenCompany Owned

Retail Outlets

Licensed Outlets

Consignment Selling Agents

Franchisers

Distributors

Seller Driven

Existing Retailers

Wholesalers

Modern Store Formats

Specialty Stores

Factory / Discount Stores

Agents / Dealers

D2D Sales People

Service Driven

Couriers

Credit Card Companies

Financial Institutions

3P Logistic service providers

OthersMultilevel marketing

Kiosks

TV home shopping networks

Catalogue shopping

Internet based sellers

HOW TO DECIDE WHICH DISTRIBUTION CHANNELS TO USE? Product type

Industrial / Textile / Chemicals and Fertilizers Automotive

FMCG Pharmaceutical Telecommunication IT hardware Services Consultancy

Requirement of after-sales service?? Who is driving the channel? Ability to influence consumer’s buying

decision

Producer

Direct Marketing

TeamCentral

Distributor

Regional / Market Specific

Distributor

Wholesalers

Retailers

Customers

Authorized ResellerCSAs / GSAs

Own Branded

Store

INDUSTRIAL PRODUCTS General natures

Technical Mostly B2B

Need of more personal interaction with the customer

Relationship management very important

Examples: Production Raw Materials, Steel Mills

Producer

Agent

Industrial Distributor

Customers

Critical Question:How do you manage the relationship with the Customer?

PHARMACEUTICAL PRODUCTS Highly technical Doctors one of the key

stakeholders End Users / Customers

virtually have no communication with the manufacturer

Examples: Medicine Companies

Producer

Distributor

Retailer / Chemist

Customers

DoctorsWholesaler

Critical Question:Can the producer influence Customers buying decision?

CONSUMER PRODUCTS Target is to reach as many

customers as possible Every possible route is

selected Most evolved distribution

flow / channels format

Examples: Lux, Clear, Low Cost Ball Pen, Mineral Water etc.

FMCG Products

Producer

Distributor

Different forms of Retail

Customers / Consumers

Wholesaler

Critical Question:Which distribution flow is right for my product?

Is my Consumer buying my product?

CONSUMER DURABLES Similar to Consumer

Products But needs to be

maintained / serviced Targeted Customer / End

Users based Usually high-end

Examples: Samsung, NOKIA, Sony, Mercedes Benz, QUBEE

Producer

Market Specific

Distributor

Different forms of

Retail

Customers / End Users

Product Service Team

Critical Question:Which is more important? Distribution Flow or Service? After

Sales Service??

SERVICES Customer Experience is the most

important factor, leading to high coordination of Sales and After Sales Customer Service

The customer interaction is directly with Company Representative, usually

Usually customer goes through a process of service experience Purchase > Experience > Post

Evaluation Franchises / Agents are carefully

chosen, and are closely controlled

Examples: DHL, Hospitals, Airlines’ Telecommunication?? GP??

Service Provider

Customers

Different Forms of Service Outlets

Critical Question:Does a distribution flow exist as there is no physical

movement of services?

NEW FORM OF DISTRIBUTION FLOWS Mixture of Service and Physical

DistributionOnline MarketingTele-shoppingCatalogue Marketing (New or Old)KiosksOthers????

ONLINE MARKETING

TELE-SHOPPING

CATALOGUE MARKETING

CATALOGUE MARKETING

KIOSK / VENDING MACHINE

KIOSK / VENDING MACHINE

The Facebook Vending MachineThe Google Vending Machine

REFERENCES Chapter 8 – Distribution Management and the

Marketing Mix Havaldar K. and Cavale V. M. (2011) Sales and

Distribution Management – Text and Cases (2nd Edition) Delhi: Tata McGraw-Hill Education Private Limited

Chapter 9 – Marketing Channels Havaldar K. and Cavale V. M. (2011) Sales and

Distribution Management – Text and Cases (2nd Edition) Delhi: Tata McGraw-Hill Education Private Limited

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