Channel of distribution:

It is an organized network or a system of

agencies &institutions which in
combination ,perform all the activities
required to link producers with users to
accomplish the marketing task.

MARKETING CHANNELS: are the sets of

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

Basic intermediaries:
Intermediaries

merchants

agents

facilitators

Managing intermediaries:
PUSH STRATEGY:
Focus is on carry,

promote and sell

Low brand loyalty
Impulse item

PULL STRATEGY
Consumer

persuasion
High brand loyalty
High involvement
product

Factors governing the choice of

channels of distribution:
product
factors

Market
factors

Unit
factors

Environment
factors

Cont.
Product factors:
Nature of product
Perceived

risk/product value
Technical nature
Product volume

Market factors
Market structure
A. concentrated
B.Dispersed
Purchase
deliberations
Cust .wants high
level service

Cont.
Unit factors
Co financial

position
Extent of market
control
co 'reputation

Types of channels:
Conventional/
Non integrated

non.-conventional/
integrated

direct

vertical
indirect

horizontal

Direct channels:
Zero level/direct marketing:
manufacturer

consumer

One level/indirect
channel
manufacturer

retailer

consumer

Two level:
manufacturer

wholesaler

retailer

consumer

manufacturer

wholesaler

consumer

3-level:
manufacturer

wholesaler

jobber

retailer

consumer

INTEGRATED CHANNELS:
Those that work with full coordination
rather than in loose manner

Integrated mkt channels can be

vertical and horizontal in nature

VERTICAL MARKETING SYSTEM:

ALL the channel members act as

part of a Unified system in one of

them owing the other so have the
power to make them all corporate

CORPORATE VMS:
Successive stages from production to

distribution are under single ownership.

E.g.
amartex
Bata have their own manufacturing as well
as retail outlets.
Woodlands
Raymond's owns their own retail stores
while producing textiles and woolens.
Giant food stores operates an ice making
facility, soft drink boiling operations, icecream plant that supplies them everything.

Administrative VMS:
Seeks control over successive stages

from production to distribution

through size and power of one of the
channel members.
E.g. HLL,P&G,nestle,maruti are brand
and market leaders

Contractual VMS:
Independent firms at different levels of
production & distribution integrating
their programs on contract basis.
For e.g.
Manufacturer sponsored retailer
franchise
Manufacturer sponsored wholesaler
franchise

Horizontal marketing
system:
symbiotic marketing
2 or more unrelated cos
Put together their resources or programs to

exploit an emerging market opportunity

E.G.
Supermarkets have arrangements with local
banks to offer in store banking
Tie-up b/w TVS whirlpool,onida to market
washing machines

Channel design decisions:

1.Analyzing customer desired service
outputs.
2.Establishing channel alternatives
3.Identifying major channel
alternatives
4.Evaluating major channel
alternatives

Analyzing the customers

desired service output: getting
know
Lot size

what
your customer want
Spatial convenience
Waiting and delivery time
Product variety
Service back up

Establishing objectives and

constraints:
Obj.are stated in the terms of services.
Channel objective vary with Product

characteristics.
For e.g.
perishable product timely and fast delivery

Bulky product

Minimize the shipping

distance and amount of handling.

High unit value

service ,training, installation

Identifying major alternatives:

Channel alternatives for a cellular car
phone maker:
1.Co could sell car phones to automobile
manufacturers to be installed as
original equipment.
2.Could sell it car phones to auto dealers.
3.Could sell it to retail automotive
equipment dealer.
4.Trough mail order catalogs

Channel alternatives described

by:
1.types of business intermediary
2.No,of intermediaries
3.Terms &responsibility

Channel management
decision:
1.Selecting the channel members
2.Training channel members
3.Motivating the channel members