Distribution Channels

Abhay Pathak
Industry Interface Head
What Do you mean by ?

Distribution means to spread the product/Service throughout the market place such
that a large number of people can buy/use it.

Is the process of making a product or service available for the consumer or business
user who needs it.

2
This can be done by ---------- Types.
Type of Distribution ?

• Direct
A distribution system is said to be direct when the product
or service leaves the producer & goes directly to
the customer – no intermediaries.

OR

• Indirect
Through intermediaries - is a chain of business or intermediaries through which a good
or service passes until it reaches the end customer.

This can be done through various Channels

Distribution Channels Defined as

• Are the set of Interdependent organisation involved in

the process of making a product or service available for
use or consumption

Need
Need of a Distribution Channels

Are the Intermediaries or Middlemen

• Exist because Producers Can’t reach all their consumer.
• Multiple reach & provide marketing process
• Facilitate smooth flow
• Have the core competency & reach to the consumer
• Provide contacts, Experience, Specialisation in operations

What is marketing mix ?

 The Marketing Mix are 4 “P”
DC Helps in which aspect ?

• Product

• Place
• Distribution Channel helps in “ Place” Aspect of
• marketing mix
Price
• Distribution provides Place , Time , & Possession utility to
• Promotion
the consumer

What are the7 R Expectations ?

7 R expectations

• Product in

Right
• Quantity in
• Condition at the
• Time &
• Place for the
• Customer @
• Cost

Importance
Importance of a Distribution Channels

• Provide distribution efficiency to the manufacturer.

• Provide vital input to the sales people.
• Look after the physical distribution functions.
• Act as manufacturer go down or depot.
• Helps in merchandising.
• Helps in prise mechanism.
• Promotion additional marketing inputs.
• Helps in sales forecasting.
• Helps in credit & collection of the sales documents.

Which r the channels ?

 Consumer products
Producer Producer Producer Producer
Multi Level
Two Level CFA(Carry Forward
Distributor’s / Agent)
One Level
Zero Level Wholesalers
Distributor’s /
Retailer Wholesalers
Retailer
Customer / Customer / Retailer
Consumer Consumer Customer / Customer /
Consumer Consumer

Patterns
Patterns of Distributions

• Determines the Intensity of the Distributions.

• Intensity decides the Service level provided
• Types of Distribution Intensity :-

• Intensive  Convenience goods  FMCG

• Selective  Shopping goods  Home Appliances

• Exclusive  Specialty goods  Automobiles

Channels in FMCG
Channels of Distribution FMCG

• TT - Retail, WS, Urban, Rural (CFA, Distributors, SS)

• MT - Retail, WS, Hyper ( CFA , Distributors )
• Institutional - Horoeka, Selective, Exclusive ( Distributors ,CFA)
• Ecommerce - B2B, B2C, C2B,C2C ( As per TOT )
• Promotional ???

Lets Understand Each…….TT

Traditional Trade ( TT )-Urban/Rural
Manufacturer

Small
Urban • MG Rural • • DB’s /SS’s
MG Co’s
• CFA’s • CFA’s • Retailer’s /
• DB’s • SS’s Sub db’s
• WS • Sub db’s • Retailer’s
• Retailer’s • Retailer’s • Consumer
• Consumer / • Consumer / Customer
Customer /Customer

MT
Modern Trade ( MT )/Organised Retail
Manufacturer

Daily/ Cash &

Hyper • MG Carry • MG
• CFA’s • CFA’s
• DB’s • Chain’s MG
• Chain’s MG • Outlets
• Outlets • Consumer
• Consumer / /Customer
Customer

D ’Mart, Metro ,
Spencer , Big Walmart
Bazar etc. etc.
Institutional
Institutional
Manufacturer

• MG • Dealer
• CFA’s • Consumer
• DB’s /
• Consumer / Customer
Customer

Horoeka ,
IT’s etc.

Channel Member
Types of Channel members

• Sole selling agents

• Cfa.’s
• Distributor , Dealer , Stockist , Agent
& Broker.
• Franchisees.
• Jobber.
• Retailer

Lets Understand each

1.Sole selling agents

Sole Selling agents menace

• Manufacturer keep himself out of picture.
• Agents have extensive territory coverage.
• Only One agent ( Given territory )

• Marketed by P & G
2.C&F Agents or C&S Agents

C&F – Caring & Forwarding Agents / C&S – Caring & selling Agents – Both
are on contract with a company.
• Both are transporter & work between the Company & Its distributors.
• Goods belongs to company.
3.Distributors ,Stockists ,Dealers , Agents

Distributor invests in the products-Buy from the company

• Are on the commission , margin or mark-up.
• May or may not get credit – but extend credit.
• He covers the market as per given territory.
• He could be exclusive for the company.
• Agents bring buyer & seller together.
4.Franchising

Types
 Types of Franchise Agreements

Individual Franchise Area Franchise Master Franchise

Agreement Agreement Agreement

Topic-Channel Members
5.Jobber

one who buys from a wholesaler and sells to a retailer. A jobber, who actually
purchases goods himself and then resells them, is distinguished from a broker
or agent, who sells goods on another's behalf.
6. Retailer

Retailers are the important link between

manufacturers and customers. They are the final
point of sales and are invaluable to the entire
distribution channel. They, in fact, provide
services to both the wholesalers and the
consumers.
M