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CHANNELS OF DISTRIBUTION . RENUKA MEHRA LECTURER INB.B.B.A.III GCCBA-42. INTORDUCTION .
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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.”
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
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 Manufacturer Manufacturer Manufacturer Agents Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers C A B D
Types of Marketing Intermediaries • 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