CHANNELS OF DISTRIBUTION RENUKA MEHRA LECTURER INB.B.B.A.III GCCBA-42

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 distribution Manufacturers and processors 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

Contd.  Negotiation  Physical distribution  Financing  Risk taking

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

Types of Channel of Distribution Direct Selling Indirect Selling Channels

Direct Selling  Personal Selling  Direct Mailing  Telemarketing

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 Agents Wholesalers Retailers Consumers AB C D

Types of Marketing Intermediaries 1) 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

2) Agent Intermediary  Commission agents  Brokers  Factors  Auctioneers  Facilitators

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

Middlemen Consideration  Functions performed by middlemen  Financial ability  Terms and conditions

Environment consideration  Economic  Legal  Fiscal Policies

Channel selection process Identity target consumers Determining consumer behavior Ascertain channel alternatives Evaluation of channel alternatives Locate potential customer Select channel members

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