Rahul Pratap Singh Kaurav

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Distribution refers to bringing the product to the market and giving it to the final consumer.

According to Mossmam & Norton “distribution is the operation which creates time, place & form utility through the movement of goods and persons from one place to another”.

MEANING AND DEFINITION

Are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

DISTRIBUTION CHANNELS DEFINED

Right product in

Right quantity in

Right condition at the

Right time and

Right place for the

Right customer at

Right cost

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DISTRIBUTION CHANNELS

Are intermediaries or middlemenExist because producers cannot reach all their consumers

Multiply reach and provide efficiency to the marketing process

Facilitate smooth flow

Have the core competence and reach to the customer

Provide contact, experience, specialisation in operations

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THE MARKETING MIX

Product

Place

Price

Promotion

Distribution channels help in the ‘place’aspect of the marketing mix

Distribution provides place, time and possession utility to the consumer

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EXAMPLE

Consumer wants to buy a tube of toothpaste k

Made available at a retail outlet close to her residence – place

Made available at 8 pm on a Tuesday evening when you wants it – time

She can pay for the toothpaste and take it away – possession

The company distribution function has made all this possible.

Provides distribution efficiency to the manufacturers.

Provides vital inputs to the sales people.

Looks after the physical distribution functions.

Acts as manufacturer’s godown or depot.

Helps in merchandising.

Helps in maintaining price mechanism.

Promotion additional marketing inputs.

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Helps in keeping distribution cost to the optimum.

Helps in sales forecasting.

Helps in credit and collection of sales documents.

Provides help in marketing research.

Provides risk over [extending supporting hands].

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LISTING/TYPES OF CHANNEL MEMBERS

Sole selling agents

C&FAs and CSAs

Distributors, dealers, stockist, agents and brokers

Franchisees

Wholesalers

Jobber

Retailers

Sole selling agentsManufacturer prefers to keep himself out of picture.

Agents have extensive territory coverage.

Only one agent (given territory).

Marketed by: P&G, India

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C&FAS / C&SAS C&FA: carrying and forwarding agent and C&SA:

carrying and selling agent – both are on contract with a company

Both are transporters who work between the company and its distributors

Goods belong to the company

C&F Agent:

3PL Service Provider in North India, Jaipur, Rajasthan, New Delhi, Himachal Pradesh, Punjab, Uttrakhand, J&K

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DISTRIBUTORS, DEALERS, STOCKISTS, AGENTS

Distributors invest in the products – buy products from the company

Are on commission, margins or mark-up

May or may not get credit – but extend credit

Distributors cover the markets as per a beat plan

Distributors could be exclusive for a company

Agents bring buyer and seller together

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WHOLESALERS

Operate out of the main markets

Deal with a number of company products of their choice

Are not on contract with any company

Sell to other wholesalers, retailers and institutions

Operate on high volumes and low margins

The only Difference between jobber and retailer is that retailer use to sell to the final customer/consumer, whereas, jobber use to sell to the merchandiser rather than the final user.

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RETAILERS

The final contact with consumers

Operate out of their shops and sell a large assortment and variety of goods

Located closest to consumers

Buy from company, distributors or wholesalers

Highest margins in the network

Provide personalised services to their customers

Jai Anand Plaza, Gwalior

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INDUSTRIAL PRODUCTSProducer Producer

Industrial Distributor

Industrial Customer

Industrial Distributor

Industrial Customer

Agent/middleman

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CONSUMER PRODUCTS

Producer ProducerProducer

Customer /

consumer

Retailer

DistributorDistributor

Retailer

Customer/

Consumer

Wholesaler

Customer/

Consumer

Retailer

Retailers

may also

direct from

company

sales force

Producer

Customer /

consumer

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Channel Intensity:

How many channel

members and how

close?

Tier - I Tier - II Tier - IIITier: Number

of levels in

the channel

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PATTERNS OF DISTRIBUTIONDetermines the intensity of the distribution

Intensity decides the service level provided

Types of distribution intensity:

Intensive Convenience goods FMCG

Selective Shopping goods Home appliances

Exclusive Specialty goods Automobiles

A primary distributor is a firm that buys products directly from a manufacturer, with the intention of reselling them to others, thus acting as a market maker of manufacturer.

The manufacturer may regulate the behaviour and numbers of its primary distributors and impose conditions of entry.

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Sometimes it is found that distributor should have specific skills and abilities to distribute the goods, i.e., Petroleum Products, Hazardous (mostly chemicals) Products, etc.

More suitable example is of Suit Cases of Mont Blanc, are available at five star hotels in big cities only.

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Distribution

Objectives

STRATEGY

Channel

Design

Network

Strategy

STRUCTURE

Intermediate Management

Warehouses and Transport

Materials Management

PROCESS

IT Policies and

Procedures

Facilities and

Equipment

Channel

Management

IMPLEMENTATION

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POLICY & PROCEDURE

Define policy and implementation guidelines through Operating Manuals

Policy guidelines includeCode of conduct for channel members

System for redressal of complaints

Any additional subsidies, etc.

Handling institutional business

Service policy for engineering products

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KEY PERFORMANCE INDICATORSFor measurement of effectiveness. Some of these could be:Consistent achievement of targets by product groups, periods and territories

Achievement of market shares

Achievement of profitability

Zero complaints from customers

No stock returns

Ability to handle emergencies and sudden spurts in demand

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KEY PERFORMANCE INDICATORSFor measurement of effectiveness. Some of these could be:Balanced sales achievement during a period – no period end skews

Market coverage with ready stocks

Excellent management of accounts receivables

Minimize losses on account of stock-outs

Minimize damages to products

CSFs…