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Distribution Mix

Distribution Mix. Right Product Right Time Right Quantity Right Place. Definitions. Process of moving goods / services from the point of production to the point of consumption is termed as DISTRIBUTION

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Distribution Mix

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  1. Distribution Mix Right Product Right Time Right Quantity Right Place

  2. Definitions • Process of moving goods / services from the point of production to the point of consumption is termed as DISTRIBUTION • The hands that a product / service pass through before reaching the final consumer is termed as DISTRIBUTION CHANNEL • The agencies involved in the process are termed as CHANNEL PARTNERS

  3. Types of Channels • Direct • Manufacturer directly sells to the consumer • Salespeople / Outlet is of the manufacturer • No third-party interference • Win-win for both manufacturer & consumer • Exclusive for the product / brand • Building reach is a challenge • High Investment • Eg. Eureka Forbes / Tupperware / Bata

  4. Types of Channels • Indirect • Manufacturer gives to third-party traders • Traders build their own infrastructure to sell • Each trader involved in the process gets a certain pre-defined margin • Helps build up reach • Lowers manufacturers cost • May / may not promote your product exclusively • Eg. Maruti Suzuki / Videocon / Lux

  5. Essence of Channel Management • Push vs Pull • Consumer Involvement • Brand Loyalty • Trader Offers vs Consumer Demands • Trader Sells vs Consumer Buys • Every channel strategy is a combination

  6. Commonly Used Channels

  7. 0-Level MANUFACTURER • Also known as direct marketing channel • Door-to-door, company outlets, catalogue, TV & internet • Best deals • Exclusive channel • Bata / Tupperware CONSUMER

  8. 1-Level MANUFACTURER • One intermediary in the form of RETAILER • Used for products where value is high & volume is low • Mostly exclusive • Automobiles RETAILER CONSUMER

  9. 2-Level MANUFACTURER • Two intermediaries in the form of RETAILER & WHOLESALER • Each has a defined role • Not exclusive • Durables WHOLESALER RETAILER CONSUMER

  10. 3-Level MANUFACTURER • Three intermediaries • High volume, low value products • High frequency of purchase • Best Reach • FMCG DISTRIBUTOR WHOLESALER RETAILER CONSUMER

  11. Designing the Channel

  12. Customers Demand • Quantity of Purchase • Value of Purchase • Delivery Time • Degree of Convenience Sought • Product Variety • Service Backup

  13. Evaluating Alternatives • Types of Intermediaries • Distributors • Wholesalers • Retailers • Agents • Direct Sellers • Unconventional (Self-Help Groups / e-Choupal)

  14. Evaluating Alternatives • Number of Intermediaries • Exclusive Distribution • Limited intermediaries • Exclusive dealing arrangements • High control & High Margins • Used for Luxury Products • Gucci

  15. Evaluating Alternatives • Number of Intermediaries • Selective Distribution • More than one but not all • Balance between coverage & control • Assumes a certain loyalty & pull for brands • Tanishq

  16. Evaluating Alternatives • Number of Intermediaries • Intensive Distribution • Product in as many outlets as possible • Availability a strong driver of purchase • High frequency of purchase • High competition resulting in price wars • Can dilute brand image in certain cases • Mentos

  17. Selecting Channel Partners • Face of the Company • Properly Trained & Motivated • Financial Strength • Infrastructure

  18. Multichannel Marketing • Firm uses multiple channels • Increase market coverage (Project Shakti) • Lower channel cost (Online Sales) • Brand Image • Channel Conflict • Exclusive roles / customer sets for each

  19. E-Commerce: The Emerging Channel • Electronic platform in place of physical • Geographical reach • Added convenience (Energy & Time) • Ease of Information / Comparison • Pure Click Co. vs Click n Brick Co.

  20. Group Assignment • Take a product category • Go in the market and study the distribution channel in terms of • Structure • Role • Coverage • Margins • Deadline: Next Class

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