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19 Channel Distribution Decisions Shilpa

This document discusses channel distribution decisions, which is one of the four elements of marketing mix along with product, price, and promotion. It explains that most businesses use third-party intermediaries to distribute their products through distribution channels. The document then defines distribution channels and outlines their key functions. It distinguishes between two types of channel decisions: channel design decisions related to analyzing customer needs and evaluating alternatives, and channel management decisions regarding selecting and motivating intermediaries. Finally, it provides details on evaluating alternatives based on economic, control, and adaptive criteria.

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Vineet Kumar
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38 views

19 Channel Distribution Decisions Shilpa

This document discusses channel distribution decisions, which is one of the four elements of marketing mix along with product, price, and promotion. It explains that most businesses use third-party intermediaries to distribute their products through distribution channels. The document then defines distribution channels and outlines their key functions. It distinguishes between two types of channel decisions: channel design decisions related to analyzing customer needs and evaluating alternatives, and channel management decisions regarding selecting and motivating intermediaries. Finally, it provides details on evaluating alternatives based on economic, control, and adaptive criteria.

Uploaded by

Vineet Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Marketing Management

Channel Distribution Decisions

By: Shilpa Wadhawan


Roll No. 038
PRODUCT

PRICE ELEMENTS PLACE

PROMOTION
 Physical Distribution (or place) is one of
the four elements of marketing mix.
 The other three parts of the marketing mix
are product, pricing, and promotion.
 Most businesses use third parties or
intermediaries to bring their products to
market. They try to forge a "distribution
channel“.
The Distribution Channel
 Chain of intermediaries, each passing the
product down the chain to the next organization,
before it finally reaches the consumer or end-
user.... This process is known as the 'distribution
chain' or the 'channel.‘
 Path or 'pipeline' through which goods and
services flow in one direction (from vendor to the
consumer), and the payments generated by
them flow in the opposite direction (from
consumer to the vendor).
 All the organizations through which a product
must pass between its point of production and
consumption.
Functions of a Distribution Channel
 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
 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)
Two types of decisions

 Channel design decisions:


 Designing a channel systems calls for analyzing
customers needs, establishing channel objectives,
identifying the major channel alternatives and
evaluating them.
 Channel management decisions:
 Intermediary must be selected, trained, motivated
and evaluated.
Channel
design
decisions

ANALYSING IDENTIFYING
ESTABLISHING
THE THE MAJOR EVALUATING THE
CHANNEL
CUSTOMER CHANNEL ALTERNATIVES
OBJECTIVES
NEEDS ALTERNATIVES

TERMS AND
TYPES OF NUMBER OF
RESPONSIBILITIES
INTERMEDIARIES INTERMEDIARIES
OF CHANNEL
Channel Design Decisions
 Analyzing service output levels
 lot size:- the lot size is the number of units that the
marketing channel permits a typical customers to
buy on a buying occasion.
 Waiting time:- waiting time is the average time that
customer of That channel wait for receipt of the
goods.
 special convenience:- special convenience
expresses the degree to which the marketing
channel makes it easy for customers to purchase the
product.
 product variety:- product variety represents the
assortment breath provided by the marketing
channel.
 service backup:- service backup represents the
add-on service (credit,delievery, installation, repairs)
provided by the channel.
 Establishing objectives and constraint.
 Channel objective should be in terms of
targeted service output levels.
 Channel objective vary with product
characteristics. Perishable products – direct
marketing.
 Total channel cost should be minimised.
 Channel design must adapt to larger
environment.
 Channel design must be influenced by
competitors channel.
 Identifying major channel alternatives.
 Types of intermediaries
 The number of intermediaries
 The terms and responsibilities of
each channel member
 Evaluating the major alternatives
 Economic criteria
 Control criteria
 Adaptive criteria
Economic Criteria

Each alternative will produce a different level


of sales and cost.
 Determine whether a company sales force
or sales agency will produce more sales.
 To estimate the cost of selling different
volumes through each channels.
 Comparing sales and costs.
THANK YOU

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