Presented BY:

Rushabh Doshi (8)Marketing, 4th sem. (A)

Distribution Channel A distribution channel is a set of

interdependent organizations that help make a product available for use or consumption by the consumer or business user to do this.

A distribution channel is critical to large and small businesses because they use these distribution channels to meet their marketing and business objectives by providing and delivering products and/or services that generate profit and increase their customer base.

The Importance of Distribution Channel Intermediaries Are:

Wholesalers, Agents Brokers Retailers

Channel decisions directly affect other marketing decisions

The firm’s sales force and communications decisions depend on persuasion, training, motivation, and support needed by its channel partners

Success of a new product of a firm may depend on capabilities of its channel members

Distribution channel is the competitive advantage for companies like Dell and FedEx

Channels provide time, place, and ownership utility

Functions of Distribution Channel Physical distribution function Increase the efficiency of the flow of goods Reducing transactions of goods

Breaking bulk. Wholesalers and retailers customers Purchasing large Quantity Selling one to

customer

Assortments Variety of products in one location customers

can buy many different items from one seller at one time

Types of Distribution Channels Consumer Channels

Simplest & shortest channel Producer Customer

Business-to-Business Channels Producer Organisation Customer

Organisation Producer Org. Agent Customer Org

Channels for Services Producer Customer Producer Org. Agent Customer Org

Horizontal Marketing Systems Two or more companies at one level join

together to follow a new marketing opportunity

E.g.. Mc Donald’s Restaurants in Wal-Mart Stores

Multichannel Distribution Systems A single firm sets up two or more marketing

channels to reach one or more customer segments

Hybrid Marketing Channel

Categories of Distribution System Stationary Facilities

Storage or transportation of goods Transportation Network

Rail Water Pipeline Air Highway

Location Place which can most utilize stationary and

transportation facilities

Geographical Factor

Facility Location Warehouse Godown Depot Plant

Factors Affecting Facility Location Physical Factors Topological Factors Climatic Factors

Factors Affecting Location Decision Internal Factors

Technology Used Capacity of Location Financial Position Work Force

External Factors Economic Conditions Social Conditions Political Conditions

Location Decision Affects the Organization's: Efficiency Effectiveness Productivity Profitability

Reasons for Facility Location Study

New facility to be established

Setting up facility at new site due to poor old site location

Need for additional location for business expansion

Abiding to the Industrial Policy of country

Outweighed advantages of the location

New social, economic or political factors affecting location

Poor location Selection Consequences

Higher costs Higher investment Difficult marketing Difficult transportation Frustrated employees Dissatisfied customers Interruptions in production Abnormal wastages & delays No advantage of geographical

specialization

Difficulties in Site Change Economic, Political & Social Reasons

Cost , profit, labour, power & transportation availability

Pursuance of policy of decentralization

Security considerations

Natural calamities

Pollution issues