DISTRIBUTION

MANAGEMENT

BOOK 01/CHAPTER 04
 Distribution Management

Determines optimal quantities of each product to

be made at each plant and to be distributed to
each warehouse, such that manufacturing.
 Logistics & Marketing
Management
• Concerned with the effective flow of products
and services in the economy
• Also responsible to the distribution of both
consumer and industrial goods
• Marketing is considered to be a vital part of an
economy
• Marketing activities should carried out in
accordance with the predefined goals of
business
 Logistic Managers
• Someone given the task of marketing logistics as well as
positioning logistics in the present competition environment.
• Is responsible for analyzing and coordinating the storage,
distribution and transportation of goods from the
manufacturing facilities, to the warehouses, and then to final
destinations.
• They develop business relationships with suppliers, customers
and transportation companies.
• They must work quickly to solve any problems that arise to
ensure that operations stay on schedule.
 Logistic Management
Is a supply chain management
component that is used to meet customer
demands through the planning, control
and implementation of the effective
movement and storage of related
information, goods and services from
origin to destination.
 Functions Of A Distribution
Channel
The main function of a distribution channel is to provide a link
between production and consumption.
• Information
• Gathering and distributing market research and intelligence -
important for marketing planning

• Promotion
• Developing and spreading communications about offers

• Contact
• Finding and communicating with prospective buyers

• Matching
• Adjusting the offer to fit a buyer's needs, including grading,
assembling and packaging
 Continue…..
• Negotiation
• Reaching agreement on price and other terms of the
offer
• Physical distribution
• Transporting and storing goods
• Financing
• Acquiring and using funds to cover the costs of the
distribution channel
• Risk taking
• Assuming some commercial risks by operating the
channel (e.G. Holding stock)
 Numbers Of Distribution Channel Levels

Each layer of marketing intermediaries

that performs some work in bringing the
product to its final buyer is a "channel
level".
• Direct Marketing
• Manufacturer sells directly to
customers
Manufacturer Customer
 Continue…
• Indirect Marketing
• One or more intermediary between manufacturer to
final consumers
Manufactur
Retailer Consumer
er

Manufactur Wholesal Retailer Consumer

er er

Manufactur Wholesal Consumer

Jobber Retailer
er er
Different Distribution
Channel
 VMS – Vertical Market System
• Formally or informally coordinated distribution channel
• Independent members work together to achieve greater
efficiency and economies of scale
• Eliminate channel conflict
• Three Common Types Of VMS Are:
1. Administered: Coordination between production and
distribution firms is achieved by the size and influence of the
dominant firm, without a formal agreement or ownership.
2. Contractual: Independent production and distribution firms
formally agree to integrate their resources. Franchising is an
example of this type.
3. Corporate: Production firm owns a retail chain (forward
integration) or a retail chain owns a production firm (backward
integration).
 HMS– Horizontal Market
System
• Type of ownership and control
• It is a strategy used by a business or
corporation that seeks to sell a type of product
in numerous markets.
• Horizontal integration in marketing is much
more common than vertical integration
• It occurs when one company merge with
another same type of company
• Example: A car manufacturer merging with
another car manufacturer
 Channel Management
• Goals
• Define the specific goals you have for each channel segment.
Consider your goals for the channel as a whole as well as
individual accounts.

• Policies
• Construct well-defined polices for administering the accounts
within this channel.

• Products
• Identify which products in your offering are most suited for each
segment and create appropriate messaging.

• Sales/Marketing Programs
• Design support programs for your channel that meet THEIR needs,
not what your idea of their needs are. To do this, you should start
by asking your customers within this segment, ―how can we best
support you in the selling and marketing of our products.