Distribution Channel or Marketing

Channel

Set of firms and individuals that take

title, or assist in transferring title, to the
particular good or service as it moves
from the producer to the consumer.
Number of Channel Levels

 Zero-level Channel
 Direct Marketing

 One-level Channel
 Consumer Markets – Retailer
 Organisational Markets – Sales Agent or Broker

 Two-level Channels
 Consumer Markets - Wholesaler / Retailer
 Organisational Markets – Industrial Distributor /
Dealers
 Multiple-levels
 Complex
Channel Flows

 Physical Flow
 Title Flow
 Payment Flow
 Information Flow
 Promotion Flow
 
Managing Channel Relationships

Channel
Channel Power
Power

Channel
Channel Control
Control
Social
Social
Dimensions
Dimensions
of Channel
Channel Leadership
Leadership
of Channels
Channels

Channel
Channel Conflict
Conflict

Channel
Channel Partnering
Partnering
Channel Power
 

A channel member’s capacity to

control or influence the behavior of
other channel members
Channel Control
 
A situation that occurs when one
marketing channel member
intentionally affects another
member’s behavior
Channel Leader
 
A member of a marketing channel
that exercises authority/power over
the activities of other members,
also referred to as the Channel
Captain
 Channel Conflict
  A clash of goals and methods between
distribution channel members
 Horizontal Conflict
Occurs among channel members on the same
level
 Vertical Conflict
Occurs among channel members at different
levels
 Channel Partnering
  The joint effort of all channel members to
create a supply chain that serves
customers and creates a competitive
advantage.
Channel Organisation
 Conventional Marketing Systems
 Highlyfragmented networks in which
loosely aligned manufacturers,
wholesalers and retailers have bargained
with each other at arms’ length, negotiated
aggressively over teams of sale, and
otherwise behaved autonomously.

 Each entity seeks to maximise its own

profits, even at the expense of maximising
the profits for the system as a whole.
Channel Organisation

 Vertical Marketing Systems

Professionally managed and centrally

programmed networks, pre-engineered to
achieve operating economies and
maximum market impact
Channel Design Decisions

 Customer Characteristics
 Product Characteristics
 Middlemen Characteristics
 Competitive Characteristics
 Company Characteristics
 Environmental Characteristics
Number of Intermediaries

 Intensive Distribution
 Exclusive Distribution
 Selective Distribution
Terms & Responsibilities of Intermediaries

 Price Policy
 Conditions of Sale
 Territorial Rights
 Mutual Services & Responsibilities
Motivating the Channel Members

 Co-operation
 Partnership
 Distribution Programming
Physical Distribution or Logistics

The planning, implementation, and control of the

flow of materials and final goods from points of
origin to points of use to meet the needs of
customers at a profit.

Objective of Physical Distribution

Getting the right goods to the right places at the

right time for the least cost.
Physical Distribution Decisions

 Order Processing
 Warehousing
 Inventory
 Transportation
Wholesaling

All activities involved in selling goods

and services to those buying for resale
or business use.
Retailing

All business activities involved with

the sale of goods and services to
the final consumer for personal,
family or household use.
Wholesaler & Retailer Marketing Decisions

 Target Market Decisions

 Product Assortment, Services &
Atmospherics Decision
 Price Decision
 Promotion Decision
 Place Decision
Wholesaler Types

 Merchant Wholesaler
 An institution that buys goods from
manufacturers, takes title to goods, stores
them, and resells and ships them.
 Agents and Brokers
 Wholesaling intermediaries who facilitate
the sale of a product by representing
channel member.
Types of Wholesalers

Merchant
Merchant Brokers/
Brokers/ Agents
Agents
Wholesaler
Wholesaler
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Wholesalers Functions

 Selling and  Warehousing

promoting  Transportation
 Buying and  Financing
assortment  Risk bearing
building  Market
information
 Bulk breaking
Different Ways to Classify Retail
Outlets

 Amount of Service
 Product Line Sold
 Relative Price Emphasis
 Nature of Business Premises
 Control of Outlets
 Type of Store Cluster
Wheel of Retailing

The lifecycle of retailers, moving

from an entry position with low
prices to gain market share to
eventually moving upscale with
higher-quality products aimed at
more affluent consumers.
 The Wheel of Retailing
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