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“Place” as a Marketing Mix

• Product
• Place
• Price
• Promotion
• Distribution channels help in the ‘place’
aspect of the marketing mix
• Distribution provides place, time and
possession utility to the consumer

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Example
• Consumer wants to buy a tube of toothpaste
– Made available at a retail outlet close to her residence –
place
– Made available at 8 pm on a Tuesday evening when she
wants it – time
– She can pay for the toothpaste and take it away –
possession

• The company distribution function has made all this possible.

• The situation would be similar if a customer wants to buy a
refrigerator or medicines or even an electric motor

Distribution management

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Meaning and definition

Distribution refers to bringing the product to the market
and giving it to the final consumer

According to Mossmam & Norton

“distribution is the operation which creates time, place &
form utility through the movement of goods and persons
from one place to another”.

Distribution Channels Defined

A sets of interdependent organizations involved in the
process of making a product or service available for use or
consumption

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Role of Channels/Intermediaries

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Need for Marketing Channels

Marketing channels serve many functions, including creating utility and
facilitating exchange efficiencies.

Some of these functions may be performed by a single channel member,

most functions are accomplished through both independent and joint
efforts of channel membrs.

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1) Information Provider:

2) Price Stability:
3) Promotion:
4) Financing:
5) Title:
Most middlemen take the title to the goods, services and trade
in their own name. This helps in diffusing the risks between the
manufacturer and middlemen.
6) Help in Production Function:
7) Matching Demand and Supply:
8) Pricing:
9) Standardizing Transactions:
10) Matching Buyers and Sellers:

Decisions Involved in Setting up the Channel

We have to consider the following factors for the selection of
channel of distribution:

(I) Product:
-Perishable goods need speedy movement and shorter route of
distribution.
-For durable and standardized goods, longer and diversified
channel may be necessary.
-for custom made product, direct distribution to consumer or
industrial user may be desirable.
-For technical product requiring specialized selling and serving
talent, we have the shortest channel.
-Products of high unit value are sold directly by travelling sales
force and not through middlemen.

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(ii) Market:

(a) For consumer market, retailer is essential whereas in business

market we can eliminate retailing.

(b) For large market size, we have many channels, whereas, for small
market size direct selling may be profitable.

(c) For highly concentrated market, direct selling is preferred whereas

for widely scattered and diffused markets, we have many channels of
distribution.

(iii) Middlemen:

(a) Middlemen who can provide wanted marketing services will be

given first preference.

(b) The middlemen who can offer maximum co-operation in

promotional services are also preferred.

(c) The channel generating the largest sales volume at lower unit cost is
given top priority.

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(iv) Company:
(a)The company’s size determines the size of the market

(b)A large company may have shorter channel.

(b) The broader the product- line, the shorter will be the channel.

(c) A financially weak company has to depend on middlemen.

(d) New companies rely heavily on middlemen due to lack of

experience.

(e) A company desiring to exercise greater control over channel will

prefer a shorter channel as it will facilitate better co-ordination,
communication and control.

v) Marketing Environment:
During recession or depression, shorter and cheaper channel is
preferred.
During prosperity, we have a wider choice of channel
alternatives.
Hence, this leads to expanded role of intermediaries in the
distribution of perishable goods.

(vi) Competitors:
Marketers closely watch the channels used by rivals.
Sometimes, marketers deliberately avoid channels used by
competitors.

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(vii) Customer Characteristics:

This refers to geographical distribution, frequency of purchase,
average quantity of purchase and numbers of prospective customers.

(viii) Channel Compensation:

This involves cost-benefit analysis.

Major elements of distribution cost apart from channel

compensation are transportation, warehousing, storage insurance,
material handling distribution personnel’s compensation and interest
on inventory carried at different selling points.

Distribution Cost Analysis is a fast growing and perhaps the

most rewarding area in marketing cost analysis and control.

Channel Management Strategies

1 - Drill down to find the key problem areas

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2 - Create clear and achievable benchmarks for improvement.

3 - Spend hands-on time with their staff.

Take the time to get to know the management team at the partner
level. Find out how they see their company, and what problems & challenges
they perceive within their own organization. If they're worth doing business
with, they should have some awareness of these issues and be able to discuss
them.

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4 - Play to their strengths.

Look for the best areas within their organization as well, and think about how
those could be leveraged for greater effect. Adapt strategies to match the real-
world skill set their employees possess.

5 - Get help from other partners.

If you or a trusted delegate aren't in a position to spend too much time
with the underperforming partner directly, look to some of your best partners
for help.

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6 - Give constant feedback throughout the process.

Steps for designing Distribution Channel Strategy

1. Defining customer service levels
• Affordability
• Match competition
• Match Expectations
2. Distribution objectives and steps
• Influenced by the customer expectations
• Defines the extent of time, place and possession
utility
3. Set of activities
•Sales forecasts
•Dispatch plans
•Market coverage beat plans
•Journey plans for service engineers
•Collection of sales proceeds
•Carrying out promotional activities

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4. The distribution organization

5. Key performance indicators

•Consistent achievement of targets by product, periods and
territories
•Achievement of market shares
•Achievement of profitability
•Zero complaints from customers
•No stock returns
•Ability to handle emergencies and sudden spurts in demand

6. Critical success factors

Some of the CSFs could be:
•Clear, transparent and unambiguous policy and procedure
•Serious commitment of the channel partners
•Fairness in dealings
•Clearly defined customer service policy
•High level of integrity
•Equitable distribution at times of shortage
•Timely compensation of channel partners

Listing of Channel Members

• C&FAs and CSAs

• Distributors, dealers, stockiest, value-added re-sellers
• Agents and brokers
• Franchisees
• Electronic channels
• Wholesalers
• Retailers

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C&FAs / C&SAs
• C&FA: carrying and forwarding agent and
C&SA: carrying and selling agent – both are on contract
with a company
• Both are transporters who work between the company
and its distributors
• Collect products from the company, store in a central
location, break bulk and dispatch to distributors against
indents
• Goods belong to the company

• C&SA also sells the goods on behalf of the company but

remits proceeds after sale

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Distributors, Dealers, Stockiest, Agents

• Name denotes the extent of re-distribution done by
them
• Distributors invest in the products – buy products from
the company
• Are on commission, margins or mark-up
• May or may not get credit – but extend credit
• Distributors cover the markets as per a beat plan. All
others merely finance the business.
• Distributors could be exclusive for a company
• Agents bring buyer and seller together

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Wholesalers
• Operate out of the main markets
• Deal with a number of company products of their
choice
• Are not on contract with any company
• Sell to other wholesalers, retailers and institutions
• Negotiate about 15 days credit from company
distributors – also provide credit to their customers
• Operate on high volumes and low margins

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Retailers
• The final contact with consumers

• Operate out of their shops and sell a large assortment and

variety of goods

• Located closest to consumers

• Buy from company, distributors or wholesalers

• Highest margins in the network

• Provide personalized services to their customers

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Channel Level

Industrial Products Channel

Producer Producer

Agent/middleman

Industrial Distributor Industrial Distributor

Industrial Customer Industrial Customer

Customers may also direct from company sales force

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Consumer Products Channel

Producer Producer Producer

Distributor Distributor

Wholesaler

Retailer Retailer Retailer

Customer / Customer/ Customer/

consumer Consumer Consumer

Retailers may also direct from company sales force

Patterns of Distribution
• PoD determines the intensity of the distribution
• Intensity decides the service level provided

• Types of distribution intensity:

– Intensive
– Selective
– Exclusive

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Distribution Intensity
• Intensive: distribution through every reasonable
outlet available – FMCG

• Selective: multiple, but not all outlets in the

market – Pharma, frozen food

• Exclusive: may be only one outlet in a market - car

dealers
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To Introduction Logistic Management

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Logistics
The planning, execution, and control of the
movement / placement of goods and / or
people, and the related supporting activities,
all within a system designed to achieve
specific objectives.

Logistics Management

"Logistics management is that part of supply chain

management that plans, implements, and
controls the efficient, effective forward and
reverse flow and storage of goods, services and
related information between the point of origin
and the point of consumption in order to meet
customers' requirements”

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The Evolution of Logistics

• LOGISTICS AS A DISCIPLINE STARTED WITH THE
EUROPEAN ARMED FORCES.

• DURING TIMES OF WAR MAINTAINING ONES SUPPLY

LINES WHILE DISRUPTING THOSE OF THE ENEMY IS A
CRUCIAL ELEMENT OF MILITARY STRATEGY.

• SOLDIERS MOVED FROM THEIR BASE TO A FORWARD

POSITION AND ALONG WITH THEM
ARMS,AMMUNITION,FOOD,EQUIPMENT HAD TO BE
MOVED QUICKLY WITHOUT ANY ERRORS OR
OMISSIONS.

• WARS WERE WON OR LOST DEPENDING UPON

THE STRENGTH OF A COUNTRY’S LOGISTICS
CAPABILITY OR THE LACK OF IT.

• IN TODAY'S GLOBALIZED COMPETITION AND

BUSINESS WARFARE, COMPANIES EITHER SURVIVE
OR PERISH DEPENDING UPON THE STRENGTH OF
THEIR LOGISTICS CAPABILITIES.

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Examples of Logistics Solutions

• Dhabawallas of Mumbai
• Automobile Industry
• Textiles Industry
• Indian postal service
• Restaurants
• Hotel Laundry Services
• Ecommerce

MAIN FIELDS WITHIN LOGISTICS

Procurement Logistics

Production Logistics

Distribution Logistics

Disposal Logistics

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ACTIVITIES INVOLVED IN LOGISTICS

MANAGEMENT
 Order processing

 Inventory management

 Material planning

 Warehousing

 Transportation.

TYPES OF LOGISTICS
 Inbound Logistics

 Outbound Logistics

 Third Party Logistics

 Fourth Party Logistics

 Reverse Logistics

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7 R’s In Logistics
Right product in
Right quantity in
Right condition at the
Right time and
Right place for the
Right customer at
Right cost

WHAT IS THR ROLE OF A LOGISTICS

MANAGER ?

LOGISTICS MANAGERS ENSURE THAT

•THE RIGHT PRODUCT,
•IN THE RIGHT QUANTITY,
•IN THE RIGHT CONDITION IS DELIVERED TO
•THE RIGHT CUSTOMER
•AT THE RIGHT PLACE
•AT THE RIGHT TIME AND
•AT THE RIGHT COST.

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OBJECTIVES OF LOGISTICS

 Rapid response

 Minimum
variance

 Quality

IMPORTANCE OF LOGISTIC

 Maintaining
competitive advantage

Good consumer
relationship

Creating finished
goods

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SUPPLY CHAIN AND LOGISTICS

 Sourcing

 Procurement

 Storage of raw materials

 Production planning and

scheduling

 Forward and reverse logistics

LOGISTICS HAS GAINED IMPORTANCE

Raise in transportation cost.

Production efficiency is reaching a peak

Fundamental change in inventory philosophy

Product line proliferated

Computer technology

Reduction in economic regulation

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LOGISTIC COMPANIES IN INDIA

CHALLENGES FACED BY THE LOGISTICS

INDUSTRY OF INDIA
 Lack of quality infrastructure

 Railroad transportation

 lack of a border crossing

 Too many regulations

 The lack of trained staff

 Limited use of information

technologies
 Lack of certainty in the business

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Retailing
Retailing is a distribution process, in which all the
activities involved in selling the merchandise directly to the
final consumer (i.e. the one who intends to use the product)
are included.
It encompasses sale of goods and services from a
point of purchase to the end user, who is going to use that
product.

Classification/Formats of Retailing

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Store Retailing:
Department store is the best form of store retailing, to attract a
number of customers.
The other types of store retailing includes,

specialty store,
supermarket,
convenience store,
catalogue showroom,
drug store,
super store,
discount store,
extreme value store.

Different competitive and pricing strategy is adopted by different

store retailers.

Non-store Retailing:
It is evident from the name itself, that when the selling of
merchandise takes place outside the conventional shops or stores, it is
termed as non-store retailing. It is classified as under:
Direct marketing
Direct selling
Automatic vending
Buying service

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Corporate Retailing:
It includes retail organizations such as
corporate chain store,
franchises,
retailer and consumer cooperatives and
merchandising conglomerates.
There are a number of advantages that these organizations can
achieve jointly, such as economies of scale, better and qualified
employees, wider brand recognition, etc.

Service retailing
Service retailing often involves products and physical
exchanges. But unlike other forms of retail, the emphasis is
largely placed on something less tangible: the level of
service and the relationship with the customer.
Nature:

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Wholesaling
Wholesaling is the act of buying goods in bulk from a
manufacturer at a discounted price and selling to a retailer for a higher
price.
Due to the large quantities purchased from the manufacturer at
a discounted price, the wholesaler can also pass on this discount to
retailers. The retailer sells at a price that reflects the overall cost of
doing business.

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Agents and Brokers:

They perform various wholesale tasks, but do not take title of
products, unlike merchant wholesalers. Agents and brokers enable a
manufacturer to expand sales volume because of their special expertise
and experience in the field.

Manufacturer Wholesaling:
In this case a firm has its own sales offices and wholesale
activities are done at these offices. Sales office may be conveniently
located in a market place. This type of arrangement is preferred when
the manufacturer desires more control on marketing and/or customers
who may be few in number and each is a key account.

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Merchant Wholesaling:
Merchant wholesalers buy, take title and take possession of
products for further resale. Merchant wholesalers may perform full
range distribution tasks.
They provide credit, store and deliver products, after
merchandising and promotion assistance, have a personal sales force,
offer research and training support and provide all necessary
information to customers and provide installation and after-sales
services.
Exe: India Mart

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Multi Channel Marketing

Multichannel marketing is the blending of different
distribution and promotional channels for the purpose of
Marketing. Distribution channels range from a retail
storefront, a website, or a mail-order catalogue.

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Advantages of Multi Channel Marketing

1) An increased market potential
2) Marketing as per consumer preference
3) Increased revenue 5) Competitive advantage
4) Optimization of Marketing 6) Sustainability

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