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Channel Management Slide

The document discusses marketing channels and distribution systems. It defines key terms like value network, distribution channel, and marketing channel. It describes different types of channel systems like vertical, horizontal, and multi-channel systems. It also outlines the functions performed by channels like physical distribution, risk assumption, financing, and information sharing. Channel levels from zero to three are also defined.

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Muhammad Haris
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95 views

Channel Management Slide

The document discusses marketing channels and distribution systems. It defines key terms like value network, distribution channel, and marketing channel. It describes different types of channel systems like vertical, horizontal, and multi-channel systems. It also outlines the functions performed by channels like physical distribution, risk assumption, financing, and information sharing. Channel levels from zero to three are also defined.

Uploaded by

Muhammad Haris
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Review Channel

Management
VALUE NETWORK

 “A system of partnerships and alliances that a firm


creates to source, augment and deliver its offerings”

2
DISTRIBUTION

 Marketing channel management


+
 Logistics Management

3
DEFINITIONS

 “ A set of people and firms involved in the transfer


of title to a product as it moves from producer to
ultimate consumer or business user.” Stanton.
 “set of inter dependant organizations involved in
the process of making a product or service
available for consumption or use.”

4
DISTRIBUTION IN THE NEW
SCENARIO

 “we are now re inventing our distribution system in


order to strengthen our competitive advantage”
 Uni.liver Pakistan
 K & N Foods
 Sitara Chemical
 Daubers Industries India

5
PROMINENT CHANNEL
SYSTEMS

 Organizations use a variety of channel partners


depending on the nature of the business and
the customer service they desire to achieve.
 These partners can be grouped into three
channel systems.
1. Vertical marketing systems
2. Horizontal marketing systems
3. Multi channel marketing systems

6
CHANNEL SYSTEMS

 Vertical Marketing Systems : comprises the


manufacturer, wholesaler, retailer acting as a unified
system. The principal channel member has substantial
control over the other members.
 Corporate VMS :combines stages of production and
distribution under single ownership. ( Dawn Bread)

7
CORPORATE VMS

 Milak Food Limited Fresh Milk.


 Bata shoes are retailed thru Bata stores.

 Administered VMS: Manufacturers of dominant


brands are able to demand and influence high levels
of co operation from channels. (Kodak, P&G, Gillette.

8
HORIZONTAL MARKETING
SYSTEMS

 Two or more unrelated companies put together


resources to exploit an emerging market opportunity.(
UDL and Many medicine Companies, IBL and P&G.)

9
CONTRACTUAL VMS

 Independent firms at different levels of manufacturing


and distribution integrate on a contractual basis.
(Value adding Partnerships.)
 Whole seller sponsored
 Retailer cooperatives
 Franchise organizations

10
Channel management

Marketing focuses on the channel or Value


Network which operates on the “customer
side”
Intermediaries that constitute a marketing
channel are also called “trade channel” or
Distribution channel”

11
Value network chain

Consultant, advisor
Raw material supplier
inbound logistics provider
Manufacture, assemble
Sell, Distribute, resell, communicate
Outbound logistics provider
Monitor consumption, feedback, service
Satisfaction measurement
12
Distribution system

Is a key external resource


Ranks in importance with internal resources
such as manufacturing, engineering, research,
sales persons. Etc.
Represents an important corporate commitment
to the numerous independent distributors.
Represents commitment to Policies and
Practices.

13
Channel structures

Mfgr. Customer

Mfgr. Dealer Consumer

Mfgr C&F Stockist Retailer Customer


Mfgr. Depot Stockist Retailer Customer

Mfgr. Distributor Stockist Retailer Cust.


14
Multiple channel systems

Self-service stores and supermarkets


Project (Haneef Rajpoot)
Pakistan Unilever Network-consultants
Out-of-home opportunity-vending H/M.
Health and beauty services therapy

15
Work Performed by
Channels
Producers establish marketing channels for a
variety of reasons:
◦ Producers lack financial resources necessary for direct
marketing
◦ Direct marketing is not feasible for many offerings
◦ Using channels frees money for investment in main
business
◦ Intermediaries are more efficient

16
Functions…..

Take on risks connected with channel work


Storage and movement of physical goods
Provide payment of buyers’ bills.
Oversee actual transfer of ownership

17
Distribution channel
activities
Distribution channel activities arise due to
discrepancies between typical
manufacturing activity and consumption
activity.
Discrepancies vary at different situations.
The general discrepancies that exist are:

18
Distribution activities

Spatial discrepancy: Exists because of the


physical distance between point of
manufacture and point of consumption.
limited manufacturing locations and
widespread consumption locations.

19
Distribution activities

Temporal discrepancies: The point of time


in manufacturing is distinct from the point
of time in consumption. (Pharmaceutical,
Textile)
To bridge or reduce the temporal
discrepancy products have to be stocked at
appropriate places and in adequate
quantities
20
Distribution activities

Breaking bulk: appropriate selling units.

Provide an assortment: The OSS concept

21
Distribution activities

Bridging the information discrepancy.


Tourism and travel; Savings and Investment;
New technology products

22
Work Performed by
Channels
Channel members perform a number of key
functions:
Forward flow functions:
 Develop / disseminate communication
 Store and move the physical products
 Oversee transfer of ownership

Backward flow functions:


 Place orders with manufacturers
 Facilitate payment of bills

23
Work Performed by
Channels
Other key functions performed by channel
members include those that flow both ways:
Forward and backward flow functions:
 Gather information
 Negotiate price and transfer of ownership
 Finance inventories
 Assume risk

24
Channel levels

Zero level: manufacturer & consumer


One level : mfgr. retailer,consumer
Two level: mfgr. wholeseller,retailer,consumer
Three level: mfgr. soledistributor,wholeseller,
retailer, consumer

25

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