Module 3
Distribution Channels
Why Channel Intermediaries
Form Utility Time Utility Place Utility Create greater efficiencies Transform producers product assortment into assortment wanted by consumers Match supply with demand Services and ideas must be available to target market
Why Intermediaries (Contd)
An intermediary reduces the number of channel transactions
Number of contacts without a distributor MxC=3x3=9
Number of contacts with a distributor M x C = 3+ 3 =6
Channel Functions
Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking
Channel Flows
Physical Ownership Payment Information Promotion
Channel Levels
Channel Level
A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer Producer and Final Consumer in every channel
Direct Marketing Channel
Company sells directly to consumers and has NO intermediaries
Indirect Marketing Channels
Company sells through one or more intermediaries More levels increase customer contacts Fewer levels - more control and less complex
Consumer Marketing Channels
Channel 1 ManuManufacturer facturer Channel 2 ManuManufacturer facturer Channel 3 ManuManufacturer facturer Channel 4 ManuManufacturer facturer Retailer Retailer
Consumer Consumer
Consumer Consumer
WholeWholesaler saler WholeWholesaler saler Jobber Jobber
Retailer Retailer
Consumer Consumer
Retailer Retailer
Consumer Consumer
Business Marketing Channels
Channel 1 ManuManufacturer facturer Channel 2 ManuManufacturer facturer Channel 3 ManuManufacturer facturer Channel 4 ManuManufacturer facturer Manufacturers Manufacturers representative representative or sales branch or sales branch Manufacturers Manufacturers representative representative or sales branch or sales branch Business Business distributor distributor Business Business distributor distributor
Business Business customer customer Business Business customer customer Business Business customer customer Business Business customer customer
Types of Channels at Different Stage of PLC High Volume Channel Mass Merchandisers Lower Cost Channel
Channel Strategies
Exclusive Distribution Intensive Distribution Selective Distribution
Channel Dynamics
VMS: Vertical Marketing System HMS: Horizontal Marketing System (Symbiotic Marketing) MMS: Multichannel Marketing System Polarization
Hybrid Marketing Channel
Catalogues, telephone
Consumer Consumer segment 1 segment 1 Consumer Consumer segment 2 segment 2 Business Business segment 1 segment 1 Business Business segment 2 segment 2
Retailers Retailers Producer Producer Distributors Distributors Dealers Dealers
Sales force
As more retailers develop a web presence, they often move from a brick-andmortar to a click-and-mortar business model where customers expect channel integration. Can you identify any potential problems for these companies? Can you identify any unique marketing opportunities that such a change would offer these companies?
Choice of Channel of Distribution Market Consideration
a. b. c. d. a. b. c. d. e. f. g. a. b. c. d. e. Consumer or industrial market Number and location of buyers Size of order Customers buying habits Product Consideration Unit Value Perishability Bulk and Weight Standardization Technical Nature Product Line Age of the product Middlemen Consideration Availability Attitude Services Costs Sales Potential
The advent of print media, the telephone, radio, television, and the Internet have all provided new ways for marketers to get their message to their intended audience. As various technologies advance, these information channels offer more precise delivery of a message. Can you identify an emerging information distribution channel?
Exercise
A multinational is planning to launch its brand of Shoes in India. What channels of distribution it should adopt, to make an attempt in the crowded market?