Physical Distribution and Channel Management  

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This is the Final delivery vehicle of marketing• It deals with the Place P of the marketing mix• Physical distribution means–movement of goods (transportation), storage and inventorymanagement– Logistics is the other name of physical distribution• Channel management means– a set of intermediary to be managed• Mfg of goods cannot contribute alone–without distribution, towards growth of GDP• Intermediaries has taken charge for distribution at aprofit and lower cost– instead of manufacturers

What is Distribution - Process

• The process that brings a product–from the place of production to the end user.• As a part of marketing it has to satisfycustomer.• To establish a product many factors play animportant role such as– Quality of the product– Reputation of the manufacturer– The brand image– Packaging and presentation

– Effective channel of distribution is also one of them

Need for distribution channels: Set of Inter.

• Opening case:–Colgate produced toothpaste which moved• through C&FA to distributors, wholesalers and further toretailer and finally to consumers–The above process also included• Transportation• Storage and personnel handling it• Labor and– Loading and unloading• Others who ensured movement

Functions of Channel Members

• Research:– The gathering of information necessary for planning andfacilitating exchange, who will be the right supplier, how do weget right quality product• Promotion:– The development and dissemination of persuasivecommunication about the offer. It includes Personal Selling andpoint of purchase.• Contact– The searching out and communicating with prospective buyers.They can reach the prospects and recommend to buy the productor service.• Matching– The shaping and filling of the offer to the buyer’s requirements.This includes such activities as manufacturing, assembling andpackaging, assortment, range of products, supply and demand.

Distribution management – Utilities served

• Utility being provided to the customers throughdistribution management includes:• Place–Buying product from the nearest store–E.g. Colgate from a retailer• Time and–E.g. Buying Colgate at 8 P.m.• Possession–Through exchange process wherein customer paysand become the owner of the product

Right channel of Distribution• This simply depends on the–nature of product and• (Textile machine – Direct, Soap – Indirect)–service to be given to the end user.• (Technical – Mostly direct and consumer durable - Indirect)• Each manufacturer shapes his specific channelobjectives from major situational constraints–such as customer, products, intermediaries,competitors, company policies and the environment.–(Major factors affecting choice of COD)• There is no hard and fast rule of designing achannel for a product and service.

Others………….

Optimization Solutions - Distribution and Logistics Examples

This free workbook contains six example models from distribution and logistics.  Click the model names todisplay

each worksheet model in your browser.

You can use the worksheet that most closely models your situation as a starting point.  Solving your real problem

may require "scaling up" the model to include more variables and constraints -- but rest assured that you can

solve your full-size problem with the power of our Excel Solver upgrades, even if it requires hundreds of

thousands of variables!

To download and save the workbook if you are using Excel 2007 or later: Right-click Distribution Examples.xlsx and select Save Target As... from the context menu.

To download and save the workbook if you are using Excel 2003 or earlier: Right-click Distribution Examples.xls and select Save Target As... from the context menu. 

You can then actually solve these small example models in Excel, using the standard Excel Solver, Premium

Solver or Premium Solver Platform.

Or, if you would prefer to view the examples in your browser, rather than in Excel, click the links below.

Transport1  - Transportation Model:  Determine how many products to ship from each factory to each

warehouse, to minimize shipping cost while meeting warehouse demands and not exceeding factory supplies

Transport2  - Multi-Level Transportation Model:  Determine how many products to ship from each factory

to each warehouse and each customer, to minimize total shipping cost while meeting demands and not

exceeding warehouse capacities and factory supplies

Transport3  - Multi-Level, Multi-Commodity Transportation Model:  Determine how many products of

several different types to ship from each factory to each warehouse and each customer, to minimize total

shipping cost while meeting demands and not exceeding capacities and supplies

Knapsack  - Partial Loading (Knapsack Problem) - Decide which sizes or types of products to load into a

vehicle, given its size limits, to best meet demand or to minimize wasted space

Facility  - Facility Location:  Determine which (if any) plants to close to minimize total costs, which include

fixed operating costs and shipping costs from plants to warehouses

Prodtran  - Production / Transportation Model:  Determine how many products to produce in each factory

and ship to warehouses and customers, to minimize overall costs while meeting demands and not exceeding

warehouse capacities and factory supplies

On each example worksheet, read the description at the bottom, then select Solver on the Data tab in Excel 2007,

or Tools Solver... from the menu in Excel 2003.  When you see the Solver Parameters dialog box, click the Solve

button to find the optimal solution