Distribution

Kamal K. Gupta
Assistant Professor
Ajay Kumar Garg Institute of Management
Ghaziabad
 Role of Marketing Channels
• Intermediaries bring in pooled financial
resources
• Break bulk and create assortment for the
customer
• Cost-effective due to specialisation
Functions of Marketing Channels
• Gather information about potential and current customers, competitors,
and other actors and forces in the marketing environment
• Develop and disseminate persuasive communications to stimulate
purchasing
• Reach agreements on price and other terms so that transfer of
ownership or possession can be effected
• Place orders with manufacturers
• Acquire the funds to finance inventories at different levels in the
marketing channel
• Assume risk connected with carrying out channel work
• Provide for the successive storage and movement of physical products
• Provide for buyers’ payment of their bills through banks and other
financial institutions
• Oversee actual transfer of ownership from one organisation or person to
another
 Channel Levels
• Zero-level channel / direct marketing
channel
– Door-to-door, mail order, telemarketing, TV
selling, Internet selling, manufacturer
owned stores
• One-level channel
• Two-level channel
• Three-level channel
Designing a Marketing Channel System
• Analysing customers’ desired service output levels
– Lot size; waiting time and delivery; purchase convenience; product
variety; service backup
• Establishing objectives
• Identifying major channel alternatives
– Types of intermediaries
– Number of intermediaries
• Exclusive distribution
• Selective distribution
• Intensive distribution
– Terms and responsibilities of channel members
• Evaluating the major alternatives
– Economic criteria
– Control and adaptive criteria
 Channel Management Decisions
• Selecting channel members
• Training channel members
• Motivating channel members
• Evaluating channel members
• Modifying channel arrangements
Channel Integration and Systems
• Vertical Marketing Systems (VMS)
– Corporate VMS
– Administered VMS
– Contractual VMS
• Horizontal Marketing Systems
• Multichannel Marketing Systems
 Market Logistics
“Market logistics involves planning the
infrastructure to meet demand, then
implementing and controlling the physical
flows of materials and final goods from
points of origin to points of use, to meet
customer requirements at a profit.”
 Market Logistics Decisions
• Order processing
• Warehousing
• Inventory
• Transportation
 Retailing
• Retailing includes all the activities
involved in selling goods or services
directly to final consumers for personal,
nonbusiness use.
 Retailers’ Marketing Decisions
• Target market
• Product assortment
• Procurement
• Services and store atmosphere
• Store activities and experiences
• Price decision
• Communication decision
• Location decision
 Wholesaling
•Wholesaling includes all the activities
involved in selling goods or services to
those who buy for resale or business use.

Wholesaling excludes manufactures and farmers

because they are engaged primarily in
production and it excludes retailers
Wholesalers Marketing Decisions
• Target market
• Product assortment and services
• Price decision
• Promotion decision
• Place decision