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Sales and Distribution Channel

Distribution involves organizing channels to move goods from manufacturers to customers, potentially using intermediaries. A channel of distribution includes internal company units and external agents/dealers that market a product through various levels like wholesale and retail. When selecting intermediaries for channels, important criteria include the intermediary's continuity in business, trading area to cover customer demand, reputation, complementary products handled, sales capabilities consistent with the product, objectives supporting product sales, stock performance, financial strength, and facilities to support the product. Regular analysis of market channels helps evaluate their effectiveness for growth, appropriate coverage of markets, optimal sales resources, and efficient costs.

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155 views

Sales and Distribution Channel

Distribution involves organizing channels to move goods from manufacturers to customers, potentially using intermediaries. A channel of distribution includes internal company units and external agents/dealers that market a product through various levels like wholesale and retail. When selecting intermediaries for channels, important criteria include the intermediary's continuity in business, trading area to cover customer demand, reputation, complementary products handled, sales capabilities consistent with the product, objectives supporting product sales, stock performance, financial strength, and facilities to support the product. Regular analysis of market channels helps evaluate their effectiveness for growth, appropriate coverage of markets, optimal sales resources, and efficient costs.

Uploaded by

sanjuviewsonic
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Distribution and Market Segmentation

Distribution is organised into Channels that take the goods from the manufacturer to the customer and may
involve many different types of intermediaries.

A Channel of Distribution is: The Structure of intra-company organisation units and extra-company
agents and dealers, wholesale and retail, through which a commodity, product or service is marketed.

FUNCTIONS OF A CHANNEL
1. Transfer of title to the goods involved.

2. Physical movement from the point of production to the point of consumption.

3. Storage functions.

4. Communication of information concerning the availability, characteristics and price of the


goods.

5. The financing of goods in transit, inventory and on purchase.

The importance of these functions varies depending on the nature of the goods themselves.

Retailers break bulk and supply direct to the end-user.

Wholesalers supply it larger quantities to retailers whilst buying in very larger quantity from
manufacturers.

Agents act on behalf of a company in another market often in another country.

With bulky goods, chemicals, oil-based goods the chain of distribution is concerned with
physical movement and storage.

With consumer goods the chain of distribution is concerned with the provision of information
and with product service.

With industrial goods the chain of distribution is concerned with personal selling and the
modification of goods to meet customer needs.

There are three basic alternatives when deciding upon a distribution policy.

1. Direct Sale

2. Sale through an intermediary.

3. A dual policy combining direct sales with the use of an intermediary.


The decision presents a dilemma of choice between COST and CONTROL.

The more costs you pass onto the channel the less you can control it. The selection of the
specific intermediaries to use in any particular channel is thus very important.

Selection Criteria for intermediaries


Continuity

When marketing though someone else's organisation there is always a chance that they will go
out of business or drop your product at a very inconvenient time. It is wise to avoid the less
permanent types of business organisation.

Trading Area

When selecting particular outlets, the channel manager will try to match outlets with trading
areas so that all centres of demand will be covered.

Trading Standing

A merchant's reputation amongst customers and competition is an important factor to consider


in selecting an outlet. Certain outlets will lend their prestige to your product or vice versa.

Other Products Handled

Besides choosing an outlet whose products will aid the sales of his product, you will want to
choose an outlet handling products of equal quality.

Sales Personnel and Methods

You must ensure that an outlet's sales personnel and methods are consistent with your
products needs.

Outlet Objectives.

The outlets chosen must have objectives that aid the sale of your product. Some outlets may
want a product simply to prevent competition getting it.

Stock Carrying Performance.

If you want an outlet to carry stock it is wise to check their history in this area.

Financial Position
Any outlet chosen should have the necessary financial strength to carry out a proper marketing
programme.

Facilities

An outlet must have proper facilities to meet the service needs of the product being sold.

Market Channel Analysis


How effective are our sales channels?

Do we have the right market channels for growth?

Do we have the right number of feet-on-the-street?

Do we have duplication of marketing costs?

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