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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.
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Basic intermediaries:
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Managing intermediaries:PUSH STRATEGY:Focus is on carry, promote
and sellLow brand loyaltyImpulse item
PULL STRATEGYConsumer persuasionHigh brand loyaltyHigh
involvement product
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Factors governing the choice of channels of
distribution:productfactorsMarket factorsUnit
factorsEnvironmentfactors
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Cont.Product factors:Nature of productPerceived risk/product
valueTechnical natureProduct volumeMarket factorsMarket structureA.
concentratedB.DispersedPurchase deliberationsCust .wants high level
service
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Cont.
Unit factorsCo financial positionExtent of market controlco
'reputation
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Types of channels:Conventional/Non
integratednon.-conventional/integrateddirectindirecthorizontalvertical
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Direct channels:Zero level/direct marketing:
manufacturerconsumer
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One level/indirect channelmanufacturerretailerconsumer
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Two level:manufacturerwholesalerretailerconsumer
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manufacturerwholesalerconsumer
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3-level:manufacturerwholesalerjobberretailerconsumer
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INTEGRATED CHANNELS:
Those that work with full coordination rather than in loose
manner
Integrated mkt channels can be vertical and horizontal in
nature
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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
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CORPORATE VMS:Successive stages from production to distribution
are under single ownership.E.g.amartexBata have their own
manufacturing as well as retail outlets.WoodlandsRaymond'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.
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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
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Contractual VMS:Independent firms at different levels of
production & distribution integrating their programs on
contract basis.For e.g.Manufacturer sponsored retailer
franchiseManufacturer sponsored wholesaler franchise
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Horizontal marketing system:symbiotic marketing
2 or more unrelated cos Put together their resources or programs
to exploit an emerging market opportunityE.G.Supermarkets have
arrangements with local banks to offer in store bankingTie-up b/w
TVS whirlpool,onida to market washing machines
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Channel design decisions:
1.Analyzing customer desired service outputs.2.Establishing
channel alternatives3.Identifying major channel
alternatives4.Evaluating major channel alternatives
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Analyzing the customers desired service output: getting know
what your customer wantLot sizeSpatial convenienceWaiting and
delivery timeProduct varietyService back up
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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
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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
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Channel alternatives described by:
1.types of business intermediary2.No,of intermediaries3.Terms
&responsibility
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Channel management decision:1.Selecting the channel
members2.Training channel members3.Motivating the channel
members