DISTRIBUTION MANAGEMENT

1. DISTRIBUTION MANAGEMENT

2. Marketing Channels

3. Need for Marketing Channels • Marketing channels have marketing intermediaries such as retailers, wholesalers, agents , brokers, travelling agents etc • For understanding the need for marketing channels, we have to understand the functions of marketing • FUNCTIONS OF MARKETING CHANNELS • Helps in physical distribution: Transporting and storing goods • Promotes Communication: Promotes company’s products • Provides Information • Plays key role in title transformation • Supports relationship management

4. Decisions Involved In Setting Up A Channel • The following factors need to be taken into consideration on setting up a channel: • Understanding the customer profile • Purchase habit differ from individual to individual • Individual who face shortage of time, make purchase through the net and those who have abundant time would like to go through shopping experience • Some people like to have variety of goods while others want unique or specialized products • Hence marketers should understand who are his customer and how they purchase and how often they purchase etc.

5. Decisions involved in setting up a channel 2. Determining the objectives of channel development • Reach: Company will adopt intensive distribution channel in this case • Profitability: Companies will restructure the channel to reduce the cost and thereby maximize the profit • Differentiation: In this situation, the companies will go for new format of channels Eg. Internet selling 3. Identify type of channel members: This involves selecting the appropriate channel members such as merchants, agents, resellers etc • Merchants buy the product, take title and resell the merchandize • Agents are employed to find the customers but not to take title of the products • Facilitators are appointed to aid the distribution but do not negotiate or take the title of the product

6. Decisions involved in setting up a channel 4.Determining the intensity of distribution: • Intensity of distribution means how many middlemen will be used at the wholesale and retail level in a particular territory • If channels are more, it will increase the cost and if channels are less, company may not be able to reach the target customers • Therefore company should adopt optimum number of intermediaries • On the basis of number of intermediaries, company can adopt one of the following strategies:

7. Decisions involved in setting up a channel • Intensive Distribution • A strategy in which company stocks goods in more number of outlets • The intention is to make the goods available near the customer

8. Decisions involved in setting up a channel b. Selective Distribution • A strategy in which company stocks goods in limited number of retail outlets • E.g.. Television sets

9. Decisions involved in setting up a channel c.Exclusive Distribution • A limited number of dealers will be given exclusive right to distribute its products in their territories

10. Decisions involved in setting up a channel 5. Assigning the responsibilities to channel members • Company should define the territory of channel members, at which price the products should be sold, what service should be performed etc 6.Selecting the criteria to evaluate channel members • Channel can be evaluated on the basis of a method called SCPCA • Sales (S): The ability of the channel member to generate the sales for company • Cost (C): The cost incurred for developing the channel • Profitability (P): Various alternatives and its profitability • Control ( C): How much control each channel member desires • Adaptability (A): The channel alternatives should be flexible enough to meet the changing requirements

11. CHANNEL MANAGEMENT STRATEGIES • Managing and motivating channel member • Now channel members are treated as partners • The members are integrated with the company to reduce cost, increase the efficiency and helps customer service • Companies are adopting Partner Relationship Management (PRM) software to add value to their supply chain

12. INTRODUCTION TO LOGISTICS MANAGEMENT

13. INTRODUCTION TO LOGISTICS MANAGEMENT • “The tasks involved in planning, implementing, and controlling the physical flow of materials, final goods and related information from points of origin to points of consumption to meet customer requirements at a profit”. (Philip Kotler) • From the above definition, it is clear that logistics management involves moving of the products and materials from suppliers to the factor ( inbound logistics) and moving the product from the factory to resellers and to customers (outbound logistics) • The above stream of study involving the suppliers and reverse distribution (returning products to factory) in the logistics management is considered as SCM

14. INTRODUCTION TO LOGISTICS MANAGEMENT • SCM is the process of flow of goods, information and fund from supplier’s supplier to consumer (supplier’s supplier-supplier-factory-intermediaries-consumers) effectively and efficiently • Ref example Page No: 219 • MAJOR LOGISTICS FUNCTIONS • Warehousing: • Warehousing is used not only for storing goods but also as a hub where goods come to the facility and cross docked • Many companies now use specialized players in warehousing and hence warehousing itself grew like separate industry • Eg. Barista and Safe Express

16. Major Logistics Functions b. Inventory Management • Transportation > air transportation > Water > Surface > Pipelines > Internet carriers

17. Introduction to Retailing • Characteristics • Direct interaction with customers • Purchase in small quantity • Tool of marketing communication FUNCTIONS • Sorting • Breaking bulk • Holding stock • Channels of communication • Transportation

18. Types of retailing • Store retailing • Specialty stores • Department stores • Supermarkets • Convenience stores • Discount stores • Off-price retailers • Super stores • Non store retailing

19. Wholesaling • FUNCTIONS • Selling • Bulk breaking • Warehousing • Transportation • Credit and risk taking • Information TYPES OF WHOLESALERS • Merchant wholesalers • Brokers and agents