Channels of distribution

CHANNELS OF DISTRIBUTION

Vijayakumar A B

CONTENTS

INTRODUCTION MEANING DEFINITION CHARACTERISTICS NEED AND IMPORTANCE TYPES

Consumer Marketing ChannelsIndustrial Marketing ChannelsMarketing Flow in Marketing Channels

INTERMEDIARIES CHANNEL DESIGN DECISION CONCLUSION

INTRODUCTON

The channel of distribution is the pathway taken by goods and services as they flow from the point of production to the point of consumption and includes a

sequence of marketing agencies.

MEANING

The word ‘channel’ has its origin to the French word used for ‘canal'. thus channel is a route through which the

goods passes from one end to another.

DEFINITION

According to William.j.Stanton,’A channel of distribution for a product is

the route taken by the title to the goods as they move from the producer to the

ultimate consumers or industrial users.’

CHARACTERISTICS OF CHANNEL OF DISTRIBUTION

ROUTE OR PATHWAY FLOW COMPOSITION FUNCTION REMUNERATION

NEEDS AND IMPORTANCE

Bridge between the producers and the final consumers or industrial users.

Helps to move the goods from one place to another.

Bring the goods to the final consumers or users.

Help in the transfer of title to goods. Goods available to the consumers in

convenient unit or size,package,etc.

TYPES OF CHANNELS OF DISTRIBUTION

DIRECT SELLING INDIRECT

SELLING

ACCORDING TO R.S.DAVAR,

PRODUCER-TO ULTIMATE CONSUMER PRODUCER-RETAILER-ULTIMATE

CONSUMER PRODUCER-WHOLESALER-RETAILER-

ULTIMATE CONSUMER.

According to Philip kotler,

PRODUCER-ULTIMATE CONSUMER PRODUCER-RETAILER-ULTIMATE

CONSUMER PRODUCER-WHOLESALER-RETAILER-

ULTIMATE CONSUMER PRODUCER-WHOLESALER-JOBBER-

RETAILER-ULTIMATE CONSUMER

According to William .j.stanton

PRODUCER-ULTIMATE CONSUMER PRODUCER-RETAILERS-ULTIMATE

CONSUMERS PRODUCER-WHOLESALER-RETAILER-

ULTIMATE CONSUMER PRODUCER-AGENT-RETAILER-ULTIMATE

CONSUMER PRODUCER-AGENT-WHOLESALER-

RETAILER-ULTIMATE CONSUMER

Wholesale shops

Retail shops

Consumer marketing channels

Industrial Marketing Channels

Manufacturer

Industrial Custome

r

Manufacturer

Industrial Distributor

Industrial Customer

Manufacturer

Manufacturer Representative

Industrial Distributors

Industrial Customer

Manufacturer

Manufactures sales branch

Industrial Distributors

Industrial Customers

Marketing Flow in Marketing Channels

Physical Flow

Title Flow

Suppliers

Transporters, wholesalers

Manufacturer

Transporters, wholesalers

Dealers

Transporters

Customer

Supplier

Manufacturer

Dealer

Customer

Payment Flow

Promotion Flow

Suppliers

Advertising

Agency

Manufacturer

Advertising

Agency

Dealers

Customer

Suppliers

banks

Manufacture

r

Banks

Dealers

Banks

Customer

INTERMEDIARIES OR MIDDLEMEN

The channels of distribution includes manufacturers or

producers, middlemen and the final consumers or users. but it refers primarily to the intermediaries or

middlemen between the manufacturers or producers and

the consumers or users.

MEANING

Middlemen or intermediaries are the connecting links

between the manufacturers or producers and the final

consumers or users.

TYPES OF MIDDLEMEN AGENT MIDDLEMEN OF

MERCANTILE AGENTS MERCHANT

MIDDLEMEN

ROLE OR FUNCTIONS OF MIDDLEMEN

TO PROVIDE THE CONNECTING LINK BETWEEN THE MANUFACTURERS AND THE FINAL CONSUMER.

THEY ADD PLACE,TIME,AND POSSESSION UTILITIES TO GOODS.

THEY REDUCES THE MARKETING ACTIVITIES TO AN OPTIMUM NUMBERS.

THEY UNDERTAKE THE FUNCTIONS OF STORAGE AND TRANSPORTATION OF GOODS ON BEHALF OF THE PRODUCER-SELLERS AND THE BUYERS.

THEY ASSUME MARKETING RISKS ALSO.

CONSIDERAQTION IN THE SELECTION OF INTERMEDIARIES OR FACTORS INFLUENCING THE

CHOICE OF INTERMEDIARIES OR MIDDLEMEN

THE TYPE AND EXTENT OF MARKET SERVED BY THE INTERMEDIARY.

THE PRODUCT LINE IN WHICH THE INTERMEDIARY SPECIALISES.

THE FINANCIAL POSITION OF THE INTERMEDIARY. THE MARKET REPUTATION ENJOYED BY THE

INTERMEDIARY. THE SELLING POLICIES OF THE INTERMEDIARY

COMPATIABLE WITH THOSE OF THE PRODUCER. THE CONTINUED RELATIONSHIP FOR A LONG TIME

BETWEEN THE PRODUCER AND THE INTERMEDIARY. THE SALES ORGANISATION,i.e,THE UTILITY AND

EFFICIENCY OF THE SALES FORCE OF THE INTERMEDIARY. OTHER FACILITIES,SUCH AS STORAGE

FACILITIES,DELEVARY VANS,Etc.POSSESSED BY THE INTERMEDIARY.

CHANNEL DECISION OR CHANNEL DESIGN DECISION

IT REFERS TO DECISION-MAKING IN REGARD TO TYPES OF

DISTRIBUTION CHANNELS OR TRADE CHANNELS TO BE

ADOPTED BY A CONCERN FOR THE MARKETING OF ITS

PRODUCTS.

IMPORTANCE OF CHANNEL DECISION

CHANNEL DECISIONS HAVE A GREAT IMPACT ON DECISION-MAKING IN ALL AREAS OF MARKETING.

TO DETERMINE THE SIZE OF THE SALES FORCE,THE TYPE OF SALES FORCE,THE SIZE AND THE COMPLEXITY OF THE MARKETING DEPARTMENT AND THE COST OF MARKETING.

IT INFLUENCE PRICING DECISION,ADVERTISING DECISION.

A FIRM’S CHANNEL DECISIONS INVOLVE LONG-TERM COMMITMENT TO OTHER FIRMS.

FACTORS AFFECTING TRADE CHANNEL DECISIONS OR FACTORS AFFECTING CHANNELS

OF DISTRIBUTION

PRODUCT FACTORS OR CHARACTERISTICS. CUSTOMER CHARACTERISTICS. MIDDLEMEN CHARACTERISTICS. SUPPLY CHARASTERISTICS. DISTRIBUTION POLICIES OF THE PRODUCER

OR MANUFACTURER. CHANNELS OF RIVALS. COMPANY CHARACTERISTICS. ECONOMIC CONDITIONS AND LAWS OF THE

COUNTRY. COSTS OF THE MARKETING CHANNELS.

CONCLUSION

Channels of distribution for a product begins with the producer and ends with the ultimate consumer.

The importance of channels of distribution is clear from the role they play and the function they perform in the marketing of goods. And finally middlemen plays a important role in channels of distribution.