Distribution Management

By
Dr. M.N.Varma

Major Role of Intermediary

Time
Utility

Place
Utility

Possessi
on
Utility

Definition of Distribution
Mgt.
The management of all activities which
facilitates movement and co-ordination
of supply and demand in the creation
of time and place utility in goods.
The art and science of determining
requirements,
acquiring
them,
distributing
them
and
finally
maintaining them in an operationally
ready condition for their entire lives.

Marketing Channels...
These are the distribution networks through
which producers product flow to the market.
It may be also defined as the external
contractual organization which management
operates to achieve its distribution objectives.
Distribution channel is a set of independent
organizations involved in the process of
making a product or service available for use
or consumption by the customer or industrial
user.

Are Intermediaries
Necessary?
Companies like Amazon, flipkart...
Bata has its own outlets in
distribution...
Eureka Forbes...
Medical equipments....
So question remains here Are Intermediaries
Necessary?

A Combination Works Better

as...
Depends on
Nature of the company and its products
Nature and dispersal of the company
customers
Business goals of the company
The companys capabilities and
strengths
Nature of competition and how it
operates.

Need for Channel

Channel members provides valuable
feedback to manufacturer regarding
competition, response etc.
Helps in making product visible
Instrumental in setting the final price
Direct marketing is costly and hence
this is effective
Companies sell in bulk but customer
needs as per their requirement.

Discrepancies in Distribution
Channel...
Spatial
Helps reduce the distance between the producer
and consumer

Temporal
Helps speed up in meeting the requirement of the
consumer

Break Bulk
Reduces large quantities into acceptable lot sizes
for the consumer

Discrepancies in Distribution
Channel
Assortment
Provides variety to the consumer to
choose from

Financial Support
Helps fund the activities of reaching the
product to the consumer.

Evolution of Distribution
Strategy...
Corporate Strategy
Marketing Strategy
Distribution Strategy

Defining Distribution
Strategy...
Defining the customer service levels
Defining the distribution objectives
Outlining the steps/activities required to
achieve the distribution channel objectives
Deciding the structure of the network
A clearly defined policy and procedures
Stating Key Performance Indicators (KPI)
Understanding the Critical Success
Factors(CSFs)

Distribution Channels are...

They are there as producers cannot
reach all their customers
They multiply reach and provide
efficiency
The facilitate smooth flow and create
time, place and possession utilities.
They have the core competence and
the reach
They provide contact, experience,
specialization and scales of operation

Distribution Channel can be

classified...

Sales Channel
Delivery Channel
Service Channel
Company owned distribution centres
(Dcs) or Carrying and Forwarding
Agents (C&FAs)
Wholesalers
Retailers

Different Channel
Members
Stockiest/Distributor
No competitors product and own sales force
Merchant wholesalers
Brokers and agents

Wholesaler
Moving Wholesaler
Buys in bulk and sells them in market

Sitting Wholesaler
Retailers comes to them to purchase in bulk

Semi Wholesaler
One who caters to retailers and consumer both.

Retailer

Different Channel Members

Retailer
They sells goods and services directly to
customers
Characteristics of Retailer
Can offer free home delivery and credit facility
Provides consumer feedback to company
Operates on low volume and high margins
Stock and assortment from various suppliers
Attention to product display and merchandise
to attract customer

Kinds of Distribution
Network...

Distribution Channels For Industrial

Products...
Producer

Industrial
Distributo
r

Customer

Agents

Distribution Channels For Consumer

Products...
Producer
Distributo
r
Wholesal
ers
Retailers
Consume
rs

Distribution Channels For Consumer

Durables...
Produce
r
Distributor
Dealer/Stockist

Retailers
Custom
ers

Service
Backup
Own or
Franchise

Distribution Channels For

Pharmaceutical Products...
Producer

Dealer/Sto
ckist

Distributor

Wholesaler
Doctors
Retail
Chemist
Customer

Distribution Channels For Products

from Process Industries...
Producer

Guarantor
Distributors
Dealers/Stoc
kist
Customers

Distribution Channels For Chemicals

and Fertilizers...
Producer

Distributors
Dealers/Stocki
st

Farmers
(fertilizers)

B2B
Customers
(Chemicals)

Distribution Channels For

Automation and Engineering...
Producer

Producer

Producer
Agent
Authorized
Service
Centres

Dealers

Customer

Customers

Original
Equipment

Customers

Spares and
Service

Distribution Channels For Service...

Producer

Franchisee/
Agents

Customers

Retail Outlets and Channel

of Distribution

Retail Outlets
Classification
Discount House
Heavy advertisements/Large scale retailing

Specialty stores
A very narrow and deep product variety

Super-markets
Self service and more competitive products

Hypermarkets
Targeted at middle and upper income group

Departmental Stores
They are Multi-brand selling and p carry width and
depth of product variety

Function performed for a

company

Market coverage function

Inventory holding function
Order processing function
Market information function
Customer support function

Function performed for the

Customers

Product availability function

Bulk breaking function
Credit and finance function
After sales service function
Customer service function

Parameters for Dealer

Selection

Growth and Profit record

Financial strength
Reputation in Market
Size and quality of sales force
Experience
Other Business
Coverage done in present line he is carrying
Personal Involvement in Business
Location of office / Godown
cooperation

Dealers Liability in the

company

When it becomes financially weak

It does not take interest in your business
It does not do proper market coverage
Creating Poor reputation
Never give credit in the market
Always start dealing in competitors product
Companys schemes and promotions are
never extended
Indulges in price undercutting

Channel of Distribution

Key Consideration for selecting a

distribution channel
Competition
Size of Competition, their Mkt share etc

Company
Its sales profit goals, resources, expertise,
experience etc.

Consumers
What,why, When,Where and how do they buy

Product
Nature of product (technical, perishable,weight
value etc.)

Distribution channel options

are
Exclusive distribution
Prestige, image, channel control and
loyalty, High profit margins

Selective distribution
Moderate Mkt. coverage, solid image
and loyalty, Good sales and profit

Intensive distribution
Widespread Mkt. coverage, channel
acceptance, volume sales and profits

Intensity of Channel
Coverage
Non store retailing
Direct selling
Telemarketing
Automatic vending
Direct marketing

Direct selling
Door to door selling
Party plan selling

Multilevel Marketing
Tele mktg, catalogue retailing, televised shopping,
direct mail