Distribution Management

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Marketing Channels:
Interdependent Organisations Orchestrated Networks Making Offerings for use

Primarily used to satisfy and also to stimulate

Brief Value Chain Model

Subsystem Suppliers

Co-ordination Facilitators

Supplier: Designer Manufacturer

Delivery Partner

Customer

Form Product/ Design Unique Offerings Time Place Utilities

Create value

Deliver Value Satisfaction

Feedback Experience

Felt Need
Customer Expected Service Perceived Service Service Delivery Service Specifications Management of Service Expectations

Past

Channel as a Sub System

International/ National PEST Distribution Structure Competitive Channels

Commercial Sector Manufacturer Retailer Core: Consumer

Marketing Flows
Commercial Subsystem
Physical Possessions Ownership Physical Possessions Ownership Physical Possessions Ownership

Wholesaler

Negotiations Financing Risking Ordering Payment

Negotiations Financing Risking Ordering Payment

Retailer

Promotions

Promotions

Promotions Negotiations Financing Risking Ordering Payment

Consumer

Producer

Marketing Flows
Functions have to be performed These can be interchanged or changed among channel members, depending upon the specialisation & division of labour Interdependence of the participants is the core

Channel Roles
Improve Efficiency: Reducing Transactions Sorting: Accumulation, Allocation, Breakbulk Assorting

Routinisation: to reduce bargaining and speeding up Facilitator Search

Channel Participants
Participants participate in the performance of the flows Assistance has to improve the performance for the end user Intermediaries include those who may not be obvious End user can also be opted in as a participants Channels in a state of constant flux New members can always move in

Reverse Channels
Need of controlling waste Efforts to use the materials optimally Leads to the stress on return of the materials Applicable both for the used materials and also the protective materials This creates opportunity for fulfilling this function

Factors Affecting Structures

Costs Culture Geography PEST Legalities History

Fluidity in the Channels

Channels always evolving Fluidity a function of Changing demands of customers Availability of Technology Entry of the new participants Shifting power within the channels

Retailing/ Wholesaling
Retailing: Activities to deliver the offerings to the ultimate customer Wholesaling: Activities involving resellers, institutions and commercial users The difference lies in motives

Important issues in Retailing

1. Margin & Inventory T.O. 2. Variety & Assortments 3. Customer Service

Retail-Factors for Positioning

Gross Margins on Inventories on employees on space utilised

Demand Side Factors Waiting Delivery time Variety Service

Important Issues in Retailing

Convenience in the days of time Compression Increased Power volumes help in dealing with the suppliers Possibility of own labels Power from high variety and low prices

Why Changing Retail Formats

Emergence of Specialised Outlets Mass Merchandiser Impact of importance of importance of convenience Information Technology Home Shopping

What does the Future Hold ?

Impact of disintermediation - Pressures of costs Be customer friendly, Look for taking over more functions to remain relevant

Polarity in Retailing
Traditional operations Stagnation in volumes Pressure on Margins High Growth Mass Marketers Volume, Price and Technology Specialised Possibility of better margins

Wholesaling

Market Coverage Contact Inventory holding Order Processing Market Information Customer Support

Wholesales Adds Value

Product Availability Assortment Bulk break Credit Service Advice & Support

Wholesaling
Aid to direct selling Channel from Manufacturer Assistance in planning & displays Guidance in Relationship Mgmt Frequent order fulfillment Credit Inventory carrying Manuf can focus on core competence Shifting physical distribution & service responsibilities Consultancy & advisory functions To the ultimate customer Packaging to offer systems solutions (VAR) Multiple brand coverage

Wholesales Adds Value

Supplier Response
Technological intervention Efforts towards disintermediation Multiple Channels Owned stores Innovative Channels

Information Systems
Redefines Market Boundaries Alters the use and basis of competition Redefines business scope Shifting from separation to unification
Information which is non scarce, non appropriable & has increasing returns to use results in breaking down boundaries & lead to issues of access, sharing and creating opportunities for use.

Channel Flow Changes

Flow Possession Ownership flow Financing Inventories Risking QR Payment transfers Changes due to Info Systems J.I.T Reductions due to increased

Lower due to lower Greater postponement due to technology Electronic mode of fund

Changes in Performances
Manufacturer can take over marketing & intelligence functions Strengthening internal linkages within marketing/ sales force and other areas like finance & engineering

Improved productivity & cost control

Information flows faster to the manufacturer thus P.O.S gets involved earlier and production later to collapse the time of fulfillment and the cash within the system

Channel Design
What kind of services
What kind of Functions Who is in the best position

Customer Intimacy

To deliver superior customer value

Operational Excellence

Critical Issues in Channel Design

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