CHANNELS OF DISTRIBUTION RENUKA MEHRA LECTURER INB.B.B.A.III GCCBA-42
Dec 22, 2015
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
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
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
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
Channel selection process
Identity target consumers
Determining consumer behavior
Ascertain channel alternatives
Evaluation of channel
alternatives
Locate potential customer
Select channel members