TYPE OF DISTRIBUTION NETWORK

AND SELETION OF DISTRIBUTION

NETWORK

BY
MD WAZIR KHAN
ROLL N.10 MBA 57
EN GD 2468
MBA 4 SEMESTER
What is a Marketing Channel?

 Marketing channel
(a.k.a. distribution
channel) - network of
organizations that
create time, place, and
possession utilities for
consumers
Dr. Rosenbloom
 Channel Structure
Three Dimensions

Dr. Rosenbloom
 Channel Structure
Length of marketing channel
1 level 2 level 3 level 4 level
Manufacturer Manufacturer Manufacturer Manufacturer

Agent

Wholesaler Wholesaler

Retailer Retailer Retailer

Consumer ConsumerDr. Rosenbloom

Consumer Consumer
 Channel Structure
Intensity at various levels

Exclusive
Distribution

Selective
Distribution

Intensive
Distribution
Dr. Rosenbloom
 Channel Structure
Intensity at various levels
Exclusive Distribution

 Practiced when a manufacturer restricts product

distribution to a single retailer in a particular market
or just a relatively few retailers
 Products that are expensive, infrequently purchased,
are sought after by consumers (i.e. specialty goods),
or which require considerable after-sale servicing are
the most likely candidates for exclusive distribution
Dr. Rosenbloom
 Channel Structure
Intensity at various levels
Selective Distribution

 Selectively distributed bands are available in

multiple retail outlets in a particular market
 Shopping products, or those that consumers
seek out, are sold through selective distribution

Dr. Rosenbloom
 Channel Structure
Intensity at various levels
Intensive Distribution

 Used when convenience products are sold

through virtually every available retail outlet in
a particular market, e.g. soft drinks, candy,
gum, cigarettes

Dr. Rosenbloom
 Channel Structure
Types of intermediaries

Merchant Functional
Middlemen Middlemen

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 Channel Structure
Types of intermediaries

Do not take title to products;

they simply facilitate the
exchange process by performing
buying and/or selling functions.

Functional
Middlemen
Dr. Rosenbloom
 Channel Structure
Types of intermediaries

Take title to products and

resell them.

Merchant
Middlemen
Dr. Rosenbloom
 Channel Structure

 Determinants of channel
structure include:
 Distribution tasks
 Economics of distribution tasks
 Management's desire for
distribution control

Dr. Rosenbloom
 Channel Structure
 Distribution tasks
 Familial Relationship-
style
• Concentration
• Equalization
• Dispersion
 Selection process-style
• Accumulating
• Selecting
• Sorting
Dr. Rosenbloom
 Channel Structure
 Distribution tasks
 Resolve discrepancies between
consumers and producers
• Quantity - buffer mass produced goods
• Assortment - allow producers to focus
while providing customers selection
• Time - hold goods until ready
• Place - connect producers and
consumers

Dr. Rosenbloom
 Channel Structure

 Economics of
distribution tasks
 Specialization or
division of labor

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 Channel Structure
 Economics of distribution tasks
 Transaction efficiency
Mfg. A Mfg. B Mfg. C

Without
intermediaries

1 2 3 4 5 6 7 8

Dr. Rosenbloom
 Channel Structure
 Economics of distribution tasks
 Transaction efficiency
Mfg. A Mfg. B Mfg. C

With
intermediaries Intermediary

1 2 3 4 5 6 7 8

Dr. Rosenbloom
 Channel Structure

 Management’s desire for

control
 The shorter the channel
structure the higher the control
 Needed when a manufacturer
must protect product image, etc.

Dr. Rosenbloom
Innovation in marketing system
 Horizontal marketing system
Two or more companies at one channel level join
together to increase coverage e.g. banks in
grocery stores
Hybrid marketing system
A single firms sets up two or more marketing
channel to increase coverage e.g. retailer,
catalogue and sales force

Dr. Rosenbloom
 Vertical Marketing Systems

 Administered VMS  Corporate Systems

 Contractual Systems

 Conventional channel with one channel member

(a manufacturer, wholesaler, or retailer)
informally acting as the channel leader.

Dr. Rosenbloom
 Vertical Marketing Systems

 Administered VMS  Corporate Systems

 Contractual Systems

 Combines all levels of the marketing channel

under one company’s ownership

Dr. Rosenbloom
 Vertical Marketing Systems

 Administered VMS  Corporate Systems

 Contractual Systems

 Are integrated via contractual agreement

 Franchising is the major form of contractual
VMS. Others include voluntary chains and
cooperatives
Dr. Rosenbloom
THANK YOU