Q.1What are the primary logistics activities?

• 1.Helps the marketing department to set

customer service levels.
• 2. Facilitates taking location decisions.
• 3. Helps in warehousing and materials
handling
 What is Make-to-stock
manufacturing strategy?
• Make-to-stock manufacturing strategy
involves holding products in inventory for
immediate delivery, so as to minimize
customer delivery times.
 Which factors influences the
channel design?
• Intensity of market coverage sought from the
channels and extent of convenience to be
provided to the customer.
 According to you, what are the duties
of an ideal distribution manager?

• 1. Actively directing, guiding, and motivating teams

to handle goods distribution and storage activities
properly.
• 2. Training personnel to make sure that distribution
work is handled accordingly
• 3. Monitoring stock levels, delivery times, and
transport costs
• 4. Allocating and managing staff resources,
• 5. Liaising and negotiating with customers
• 6. Developing business opportunities
• 7. Overseeing warehouse operations
• 8. Developing and implementing logistics processes
• 9. Managing inventory of goods
 What are the skills you possess as a
distribution manager that differentiates you
from other contenders? Convince us.

• Very often candidate fall to this question and

are not able to impress the interviewer leading to rejections.
Instead look at the question as an opportunity to step forward
and get cracking. If have ample experience then focus on
highlighting the same
• - eg- I possess substantial experience of working in distribution
and storage that gives me an upper edge with the functioning
and implementation. Also I am an excellent communicator, that
makes it easy to liaise with people within the company, and
externally. Together with excellent knowledge of developing
and implementing logistics systems, and skills to handle
shipping activities increase my chances to be a potential
candidate. Also I have expertise in developing cost reduction
initiatives, while maintaining productivity, and quality control.
What is the one thing that you find extremely
difficult in the profile of a distribution
manager?

• To be honest with you, I do not find

the job roles that difficult. Indeed
there are times when we have to
deal with such tough situations and
challenges that can make things a bit
tricky. But since I thrive in a
challenging environment, it doesn’t
matter a lot instead it motivates to
further upgrade and enhance my
skills set avoid such situations.
 Better answer can be….
• To make the distribution as per needs and
requirements of customers.
 What Is The Channel In
Business?
A distribution channel is a chain of
businesses or intermediaries through
which a good or service passes until it
reaches the end consumer. It can
include wholesalers, retailers,
distributors and even the internet
itself.
 What Is A Channel
Design?
• Channel design refers to those
decisions involving the development
of new marketing channels where
none had existed before or to the
modification of existing channels.
 What Are The Channels Of
Distribution?
• A distribution channel is the chain of
businesses or intermediaries through
which a good or service passes until
it reaches the end consumer. A
distribution channel can include
wholesalers, retailers, distributors
and even the internet.
 What Are The Channels Of
Sales?
• A way of bringing products or services to
market so that they can be purchased by
consumers. A sales channel can be direct if it
involves a business selling directly to its
customers, or it can be indirect if an
intermediary such as a retailer or dealer is
involved in selling the product to customers.
 What Is A Channel Partner In Marketing?

• A channel partner is a company that partners

with a manufacturer or producer to market
and sell the manufacturer's products, services,
or technologies. This is usually done through a
co-branding relationship.
 What is a Distribution Channel?

A distribution channel (also called a marketing channel) is the

path or route decided by the company to deliver its good or
service to the customers. The route can be as short as a direct
interaction between the company and the customer or can
include several interconnected intermediaries like wholesalers,
distributors, retailers, etc.

Hence, a distribution channel can also be referred to as a set of

interdependent intermediaries that help make a product available
to the end customer.
 Functions of Distribution Channels

• In order to understand the importance of distribution channels, businesses

need to understand that it doesn’t just bridge the gap between the
producer of a product and its user.

• Distribution channels provide time, place, and ownership utility. They make
the product available when, where, and in which quantities the customer
wants. But other than these transactional functions, marketing channels
are also responsible to carry out the following functions:
• Logistics and Physical Distribution: Marketing channels are responsible for
assembly, storage, sorting, and transportation of goods from manufacturers
to customers.
• Facilitation: Channels of distribution even provide pre-sale and post-
purchase services like financing, maintenance, information dissemination
and channel coordination.
• Creating Efficiencies: This is done in two ways: bulk breaking and creating
assortments. Wholesalers and retailers purchase large quantities of
goods from manufacturers but break the bulk by selling few at a time to
many other channels or customers. They also offer different types of
products at a single place which is a huge benefit to customers as they
don’t have to visit different retailers for different products.
• Sharing Risks: Since most of the channels buy the products beforehand,
they also share the risk with the manufacturers and do everything
possible to sell it.
• Marketing: Distribution channels are also called marketing channels
because they are among the core touch points where many marketing
strategies are executed. They are in direct contact with the end
customers and help the manufacturers in propagating the brand message
and product benefits and other benefits to the customers.
 Types of Distribution Channels

• Channels of distribution can be divided into

the direct channel and the indirect channels.
Indirect channels can further be divided into
one-level, two-level, and three-level channels
based on the number of intermediaries
between manufacturers and customers.
Direct Channel or Zero-level Channel (Manufacturer to Customer)

• Direct selling is one of the oldest forms of selling

products. It doesn’t involve the inclusion of an
intermediary and the manufacturer gets in direct
contact with the customer at the point of sale.
Some examples of direct channels are peddling,
brand retail stores, taking orders on the company’s
website, etc. Direct channels are usually used by
manufacturers selling perishable goods, expensive
goods, and whose target audience is geographically
concentrated. For example, bakers, jewellers, etc.
 Indirect Channels (Selling Through
Intermediaries)
• When a manufacturer involves a
middleman/intermediary to sell its product to
the end customer, it is said to be using an
indirect channel. Indirect channels can be
classified into three types:
• One-level Channel (Manufacturer to Retailer to Customer):
Retailers buy the product from the manufacturer and then sell
it to the customers. One level channel of distribution works
best for manufacturers dealing in shopping goods like clothes,
shoes, furniture, toys, etc.
• Two-Level Channel (Manufacturer to Wholesaler to Retailer to
Customer): Wholesalers buy the bulk from the manufacturers,
breaks it down into small packages and sells them to retailers
who eventually sell it to the end customers. Goods which are
durable, standardised and somewhat inexpensive and whose
target audience isn’t limited to a confined area use two-level
channel of distribution.
• Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to
Customer): Three level channel of distribution involves an agent besides the
wholesaler and retailer who assists in selling goods. These agents come
handy when goods need to move quickly into the market soon after the
order is placed. They are given the duty to handle the product distribution
of a specified area or district in return of a certain percentage commission.
The agents can be categorized into super stockiest and carrying and
forwarding agents. Both these agents keep the stock on behalf of the
company. Super stockiest buy the stock from manufacturers and sell them
to wholesalers and retailers of their area. Whereas, carrying and forwarding
agents work on a commission basis and provide their warehouses and
shipment expertise for order processing and last mile deliveries.
Manufacturers opt for three-level marketing channel when the user base is
spread all over the country and the demand of the product is very high.
 Dual Distribution

• When a manufacturer uses more than one

marketing channel simultaneously to reach the end
user, he is said to be using the dual distribution
strategy. They may open their own showrooms to
sell the product directly while at the same time use
internet marketplaces and other retailers to attract
more customers.

• A perfect example of goods sold through dual

distribution is smartphones.
 Distribution Channels for Services
• Unlike tangible goods, services can’t be stored.
But this doesn’t mean that all the services are
always delivered using the direct channels.

• With the advent of the internet, online

marketplaces, the aggregator business model,
and the on-demand business model, even
services now use intermediaries to reach to the
final customers.
 The Internet as a Distribution Channel
The internet has revolutionised the way
manufacturers deliver goods. Other than the
traditional direct and indirect channels, manufacturers
now use marketplaces like Amazon (Amazon also
provide warehouse services for manufacturers’
products) and other intermediaries like aggregators
(Uber, Instacart) to deliver the goods and services. The
internet has also resulted in the removal of
unnecessary middlemen for products like software
which are distributed directly over the internet.
Factors Determining the Choice of Distribution Cha­nnels

• Selection of the perfect marketing channel is tough. It

is among those few strategic decisions which either
make or break a company.

• Even though direct selling eliminates the intermediary

expenses and gives more control in the hands of the
manufacturer, it adds up to the internal workload and
raises the fulfilment costs. Hence these four factors
should be considered before deciding whether to opt
for the direct or indirect distribution channel.
 Market Characteristics

• This includes the number of customers, their geographical

location, buying habits, tastes and capacity and frequency of
purchase, etc.

• Direct channels suit businesses whose target audience lives in a

geographically confined area, who require direct contact with
the manufacturer and are not that frequent in repeating
purchases.

• In cases of customers being geographically dispersed or residing

in a different country, manufacturers are suggested to use
indirect channels.
• The buying patterns of the customers also affect the choice of
distribution channels. If customers expect to buy all their necessaries
in one place, selling through retailers who use product assortment is
preferred. If delivery time is not an issue, if the demand isn’t that high,
the size of orders is large or if there’s a concern of piracy among the
customers, direct channels are suited.

• If the customer belongs to the consumer market, longer channels may

be used whereas shorter channels are used if he belongs to the
industrial market.

• Understanding consumer behavior is essential for deciding the most

effective marketing channel for the business.
Short Channel Long Channel
• The offering is targeted to • The offering is targeted to
business users. consumers and non-business
• The customers are users.
geographically concentrated. • The customers are
• Customers require extensive geographically dispersed.
technical knowledge. • Customers don’t require
• Regular servicing is required extensive technical knowledge.
for the offering to operate. • Regular servicing is not
• The order quantity is large. required for the offering to
operate.
• The order quantity is small.
 How channel members add value

 Right PLACE
 Right TIME

• Place UTILITY
– Location – having the product where customers can buy it

• Time UTILITY
– Having the product available when the customer wants/needs it

28
Channel members add value to a product
by performing certain channel activities
expertly
– Marketing
– Packaging
– Financing
– Storage
– Delivery
– Merchandising
– Personal selling

29
Adding Value through Distribution
• Intermediaries provide value to producers
because they often have expertise in certain
areas that producers do not have.

• Intermediaries are experts in displaying,

merchandising, and providing convenient
shopping locations and hours for customers.

30
 Today’s system of exchange

Promotion
Contact

Negotiation

Transporting and storing

Producers

Users
Financing

Packaging
Money
Goods

31
 Tasks of a Logistics Manager
• plans the flow of materials in a manufacturing
organization (beginning with raw materials
and ending with delivery of finished products
to channel intermediaries or end customers)
and coordinates the work of departments
involved in the process, such as procurement,
transportation, manufacturing, finance, legal,
and marketing.

32
 CHANNEL MANAGEMENT DECISIONS

• Channel strategy is not formulated in

a vacuum
– Channel strategy and product strategy

– Channel strategy and price strategy

– Channel strategy and promotion strategy

33
Describe channel management decisions
Decisions about a product’s physical movement and transfer of ownership from
producer to consumer.

• FIRST - Setting channel objectives

– Determine what the company is trying to achieve
– Meet the needs and wants of their target market
– Give their product a competitive edge

• SECOND - Channel members:

– Selection
– Management
– Motivation
– Evaluation
34
 1. Selecting Channel Members
Determine the types of members the belong in
the channel, as well as the channel length
(total number of channel members)
– Usually based on the nature of the product
– Factors to consider:
• Create product value that others cannot or are not
willing to provide
• Channel the product to its desired market
• Have a pricing and promotion strategy compatible with
the product’s needs
• Offer customer service compatible with the products
needs
• Be willing and able to work cooperatively with other
members within the product’s channel
35
1. Selecting Channel Members (cont.)
Involves determining the characteristics that
distinguish the better ones by evaluating channel
members
• Do they: Provide value? Perform a function?
Expect an economic return ?
• Years in business
• Lines carried
• Profit record
• Policies, strategies, & image
• Experience & track record

36
1. Selecting Channel Members (cont.)
• Market segment - must know the specific segment
and target customer

• Selecting intermediates that are retail stores that

want exclusive or selective distribution involves
evaluating
• Store’s customers

• Store locations

• Growth potential

37
 2. Managing Channel Members

• Determining channel responsibilities

• Members must work together appropriately
and perform the tasks they are best suited for

• The company must sell not only through the

intermediaries but also to/with them

38
 2. Managing Channel Members (cont.)

• Partner relationship management (PRM) and

supply chain management (SCM) software are
used to
• Forge long-term partnerships with channel
members
• Recruit, train, organize, manage, motivate, and
evaluate channel members

39
 3. Motivating Channel Members

• Develop a cooperative/collaborative and balanced relationship

with the partner
• Understand the partner’s customers – their needs, wants, and
demands
• Understand the partner’s business – operationally and
financially and what’s really important to them
• Look at the partner’s needs in terms of customer support,
technical support, and training
• Establish clear and agreed upon expectations and goals
• Develop recognition programs focusing on the partner’s
contributions
• Build internal support systems and dedicate resources to the
partner

40
 4. Evaluating Channel Members

Produces must evaluate intermediaries performance

against such standards as:
• Sales quota attainment

• Average inventory levels

• Customer delivery time

• Treatment of damaged and lost goods

• Cooperation in promotional and training programs.

41
 4. Evaluating Channel Members (cont.)

Risks & Dangers of Distribution Decisions

• Transaction costs both apparent & hidden

• Risks include loss in transit, destruction,

negligence, non-payment and so on.

• So, careful choice & evaluation of each & every

channel partner is a necessity.
42
 Distribution Decisions - Major
Considerations…

– Multiple channels

– Control vs. costs

– Intensity of distribution desired

– Involvement in e-commerce

43
 Intensity of Channel Structure
• Channel intensity: the number of intermediaries at each
level of the marketing channel.

Intensive Selective Exclusive

All Possible Relatively Few Just One

Intermediaries Intermediaries Intermediary

44
 Intensive Distribution
• = the use of all suitable outlets to sell a product.

• The objective is complete market coverage and the ultimate

goal is to sell to as many customers as possible, wherever they
choose to shop.

• Ex. Motor oil is sold in quick-lube shops, farm stores, auto

parts retailers, supermarkets, drugstores, hardware stores,
warehouse clubs, and other mass merchandisers.

45
 Selective Distribution
• = a limited number of outlets in a given geographical area are
used to sell the product.

• Very important to select channel members that maintain the

image of the product & are good credit risks, aggressive
marketers & good inventory planners.

• Ex. Armani & Lucky Brand sell their clothing only through top
department stores that appeal to the affluent customers who
buy its merchandise. It does not sell in a chain megastore or a
variety store.
46
 Exclusive Distribution
• = protected territories for distribution of a product in a
given geographic area; business maintains tight control
over a product

• Ex. Franchisor legally requires a franchisee to sell only

the franchisor’s products

47
 Integrated Distribution
Manufacturer acts as wholesaler and retailer for its
own products.

• EX. Sherwin-Williams Paint, Merle Norman

• Ex. The Gap or Ann Taylor sells its clothing in

company-owned retail stores.

48
 Dual distribution
• A manufacturer may sell its products through
multiple outlets at the same time:

– Toll-free phone system

– Company website
– Multiple retailers

49
 Identify actions that customer service can
take to facilitate order processing

• EX. In retail selling, bag the merchandise with

care. Products such as glassware may require
individual wrapping before bagging.Work quickly
to bag your customer’s merchandise and
complete the payment process.
• EX. In business-to-business sales, complete the
paperwork quickly and leave a business card.

50
 Call Customer Online
Center Order

Warehouse

Actions to
Facilitate
Order Inventory
Processing Check

No, Customer Items Yes, Item Packed

Notified of for Shipment
Backorder in
Stock?
Accounts
Receivable
Processes
Payment

Item Shipped 51
 Describe the role of customer service in
following up on orders
• Following up with your customers after the
sale is an important part of providing good
customer service.
• Should customer have questions or
problems it is your duty to make sure they
have a positive experience with your
company.

52
 Use of Technology in Distribution
• Some businesses have the capacity to
distribute most or all of their products through
the internet
– e-commerce: Products are sold to customers and
industrial buyers through the Internet.
– e-marketplace
• Satellite tracking = a dispatcher has current
knowledge of a delivery truck’s location and
destination
53
 Use of Technology in Distribution (cont.)

• Tracking of package
– Bar coding on package
– Package scanned at transition points in
distribution chain
– Customer uses internet to follow package along
distribution chain; e-mail may be used
– Global distribution: in some countries the postal
service is not reliable; package tracking facilitates
global trade

54
 Use of Technology in Distribution (cont.)

• Problems

– Cost of technology

– Changing technology = updating equipment

– Need for compatible systems within and between

businesses & countries

55