Oxford University Press 2012. All rights reserved.
Sales and Distribution
Management 2e Tapan K. Panda Sunil Sahadev Oxford University Press 2012. All rights reserved. Chapter 15 Distribution Channel Management - An Introduction Oxford University Press 2012. All rights reserved. Learning Objectives Understand the reason why distribution channels exist
Know the types of functions that distribution channels perform
Explain the process of channel management
Appreciate the need for channel strategy in an organization Oxford University Press 2012. All rights reserved. Role of distribution channels To adjust the discrepancy of assortment through the process of sorting, accumulation, allocation, and assorting To minimize the distribution costs through routinising and standardizing transactions to make exchange more efficient and effective To facilitate the searching process of both buyers and sellers by structuring the information essential to both the parties To provide a place for both parties to meet each other and reducing uncertainty Oxford University Press 2012. All rights reserved. How do distribution channels contribute Intermediaries can improve the efficiency of the exchange process Channel intermediaries adjust the discrepancy of assortment through the performance of the sorting process Marketing intermediaries hang together in channel arrangements to provide for the routinisation of transactions Channels facilitate the searching process Time, place and possession utilities
Oxford University Press 2012. All rights reserved. Activities that a typical Distribution Channel performs Spatial discrepancy
Temporal discrepancy
Need to break the bulk
Need to provide assortment Oxford University Press 2012. All rights reserved. The cost and control aspects of intermediation Direct distribution Indirect distribution Control Cost efficiency Oxford University Press 2012. All rights reserved. Distribution Channel Strategy Setting distribution objectives in terms of the customer requirements Finalizing the set of activities that are required to be performed to achieve the channel objectives Organizing the activities so that the responsibility of performing the activities is shared among the entities who are meant to perform these activities Developing policy guidelines for the smooth functioning of the channel on a day to day basis Oxford University Press 2012. All rights reserved. Distribution Channel Strategy Distribution channel management encompasses all activities dealing with the distribution function of the firm The distribution strategy provides guidelines for decision making The distribution management function can be viewed as happening in two phases: the ex ante phase and the ex poste phase Oxford University Press 2012. All rights reserved. Distribution Channel Strategy The ex ante phase involves all the activities that are associated with the design and establishment of the distribution channel. These activities actually take place before the distribution channel actually starts functioning. The exposte phase involves managing the day to day activities of the channel wherein the behavior of the individual channel members are coordinated Oxford University Press 2012. All rights reserved. The Framework for Channel Management Distribution Channel Strategy Channel Objective Activity Finalization Organizing the activities Developing Policy Guidelines Design of the channel structure
Establishing the channel Motivating channel members Resolving conflicts among channel members Ex ante Phase Ex poste Phase Distribution Channel Strategy Channel Objective Activity Finalization Organizing the activities Developing Policy Guidelines Design of the channel structure
Establishing the channel Oxford University Press 2012. All rights reserved. Pharmaceutical Distribution in India Distribution channel structure
Post-liberalization scenario
Stockists
Retail
Distribution Margins in India Oxford University Press 2012. All rights reserved. Pharmaceutical Distribution in India Manufacturer C&F/Depot/Super stockist Stockist Wholesaler Retail/Chemist Patient Institution Hospital Oxford University Press 2012. All rights reserved. Rural Distribution Channels Public distribution system which operates ration shops
ITC and Hindustan Unilever trying innovative methods at expanding network and achieving penetration of the rural hinterland
Oxford University Press 2012. All rights reserved. Rural Distribution Channels Major Issues