Channel of distribution:

It is an organized network or a system of agencies

&institutions which in combination ,perform all the
activities required to link producers with users to
accomplish the marketing task.

MAR KET ING CH ANNELS: are the sets of

interdependent organization involved in the process
of making a product or service available for
the use or consumption.
Basic intermediaries:

Intermediaries

merchants agents facilitators

Managing intermediaries:

• PUSH STRATEGY: • PULL STRATEGY

• Focus is on carry, • Consumer persuasion
promote and sell • High brand loyalty
• Low brand loyalty • High involvement
• Impulse item product
 Factors governing the choice of
channels of distribution:

product Market Unit Environment

factors factors factors factors
Cont….

• Product factors: • Market factors

• Nature of product • Market structure
• Perceived risk/product A. concentrated
value B.Dispersed
• Technical nature Purchase
• Product volume deliberations
Cust .wants high level
service
Cont….

• Unit factors
• Co’ financial position
• Extent of market
control
• co 'reputation
Types of channels:

Conventional/ non.-conventional/
Non integrated integrated

direct

vertical horizontal

indirect
Direct channels:

• Zero level/direct marketing:

manufacturer consumer
One lev el/in dire ct ch annel

manufacturer retailer consumer

Two level:

manufacturer wholesaler retailer

consumer
 consumer
manufacturer wholesaler
3-level:

manufacturer wholesaler jobber retailer

consumer
INTEGRATED CHANNELS:

• Those that work with full coordination

rather than in loose manner

• Integrated mkt channels can be vertical

and horizontal in nature
VERTICAL MARKETING SYSTEM:

• ALL the channel members act as part of

a Unified system in one of them owing
the other so have the power to make
them all corporate
CORPORATE VMS:
• Successive stages from production to distribution
are under single ownership.
• E.g .
• amartex
• Bata have their own manufacturing as well as
retail outlets.
• Woodlands
• Raymond's owns their own retail stores while
producing textiles and woolens.
• Giant food stores operates an ice making facility,
soft drink boiling operations, ice-cream plant
that supplies them everything.
Administrative VMS:

• Seeks control over successive stages from

production to distribution through size and
power of one of the channel members.
• E.g. HLL,P&G,nestle,maruti are brand and
market leaders
 Co ntr ac tual VM S:

• Independent firms at different levels of

production & distribution integrating their
programs on contract basis.
• For e.g.
• Manufacturer sponsored retailer franchise
• Manufacturer sponsored wholesaler
franchise
Ho rizo nta l m ar keti ng sy ste m:
sy mbi otic m ar keti ng

• 2 or more unrelated co’s

• Put together their resources or programs to
exploit an emerging market opportunity
• E.G.
• Supermarkets have arrangements with local
banks to offer in store banking
• Tie-up b/w TVS whirlpool,onida to market
• washing machines
Ch annel d esig n d ecis ion s:
1.Analyzing customer desired service
outputs.
2.Establishing channel alternatives
3.Identifying major channel alternatives
4.Evaluating major channel alternatives
Analyzing the customers desired
service output: getting know
what your customer want
• Lot size
• Spatial convenience
• Waiting and delivery time
• Product variety
• Service back up
Esta bl ish ing o bj ectiv es an d
co nstr ai nts :
Obj.are stated in the terms of services.
Channel objective vary with Product
characteristics.
For e.g.
perishable product timely and fast delivery

Bulky product Minimize the shipping distance

and amount of handling.

High unit value service ,training, installation

Identifying major alternatives:
Channel alternatives for a cellular car phone
maker:
1.Co’ could sell car phones to automobile
manufacturers to be installed as original
equipment.
2.Could sell it car phones to auto dealers.
3.Could sell it to retail automotive
equipment dealer.
4.Trough mail order catalogs
Channel alternatives described by:

1.types of business intermediary

2.No,of intermediaries
3.Terms &responsibility
Channel management decision:

1.Selecting the channel members

2.Training channel members
3.Motivating the channel members