sales and distribution management: channel management
TRANSCRIPT
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Rahul Pratap Singh Kaurav
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Distribution refers to bringing the product to the market and giving it to the final consumer.
According to Mossmam & Norton “distribution is the operation which creates time, place & form utility through the movement of goods and persons from one place to another”.
MEANING AND DEFINITION
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Are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.
DISTRIBUTION CHANNELS DEFINED
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Right product in
Right quantity in
Right condition at the
Right time and
Right place for the
Right customer at
Right cost
7 RS
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DISTRIBUTION CHANNELS
Are intermediaries or middlemenExist because producers cannot reach all their consumers
Multiply reach and provide efficiency to the marketing process
Facilitate smooth flow
Have the core competence and reach to the customer
Provide contact, experience, specialisation in operations
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THE MARKETING MIX
Product
Place
Price
Promotion
Distribution channels help in the ‘place’aspect of the marketing mix
Distribution provides place, time and possession utility to the consumer
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EXAMPLE
Consumer wants to buy a tube of toothpaste k
Made available at a retail outlet close to her residence – place
Made available at 8 pm on a Tuesday evening when you wants it – time
She can pay for the toothpaste and take it away – possession
The company distribution function has made all this possible.
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Provides distribution efficiency to the manufacturers.
Provides vital inputs to the sales people.
Looks after the physical distribution functions.
Acts as manufacturer’s godown or depot.
Helps in merchandising.
Helps in maintaining price mechanism.
Promotion additional marketing inputs.
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Helps in keeping distribution cost to the optimum.
Helps in sales forecasting.
Helps in credit and collection of sales documents.
Provides help in marketing research.
Provides risk over [extending supporting hands].
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LISTING/TYPES OF CHANNEL MEMBERS
Sole selling agents
C&FAs and CSAs
Distributors, dealers, stockist, agents and brokers
Franchisees
Wholesalers
Jobber
Retailers
Sole selling agentsManufacturer prefers to keep himself out of picture.
Agents have extensive territory coverage.
Only one agent (given territory).
Marketed by: P&G, India
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C&FAS / C&SAS C&FA: carrying and forwarding agent and C&SA:
carrying and selling agent – both are on contract with a company
Both are transporters who work between the company and its distributors
Goods belong to the company
C&F Agent:
3PL Service Provider in North India, Jaipur, Rajasthan, New Delhi, Himachal Pradesh, Punjab, Uttrakhand, J&K
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DISTRIBUTORS, DEALERS, STOCKISTS, AGENTS
Distributors invest in the products – buy products from the company
Are on commission, margins or mark-up
May or may not get credit – but extend credit
Distributors cover the markets as per a beat plan
Distributors could be exclusive for a company
Agents bring buyer and seller together
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WHOLESALERS
Operate out of the main markets
Deal with a number of company products of their choice
Are not on contract with any company
Sell to other wholesalers, retailers and institutions
Operate on high volumes and low margins
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The only Difference between jobber and retailer is that retailer use to sell to the final customer/consumer, whereas, jobber use to sell to the merchandiser rather than the final user.
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RETAILERS
The final contact with consumers
Operate out of their shops and sell a large assortment and variety of goods
Located closest to consumers
Buy from company, distributors or wholesalers
Highest margins in the network
Provide personalised services to their customers
Jai Anand Plaza, Gwalior
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INDUSTRIAL PRODUCTSProducer Producer
Industrial Distributor
Industrial Customer
Industrial Distributor
Industrial Customer
Agent/middleman
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CONSUMER PRODUCTS
Producer ProducerProducer
Customer /
consumer
Retailer
DistributorDistributor
Retailer
Customer/
Consumer
Wholesaler
Customer/
Consumer
Retailer
Retailers
may also
direct from
company
sales force
Producer
Customer /
consumer
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Channel Intensity:
How many channel
members and how
close?
Tier - I Tier - II Tier - IIITier: Number
of levels in
the channel
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PATTERNS OF DISTRIBUTIONDetermines the intensity of the distribution
Intensity decides the service level provided
Types of distribution intensity:
Intensive Convenience goods FMCG
Selective Shopping goods Home appliances
Exclusive Specialty goods Automobiles
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A primary distributor is a firm that buys products directly from a manufacturer, with the intention of reselling them to others, thus acting as a market maker of manufacturer.
The manufacturer may regulate the behaviour and numbers of its primary distributors and impose conditions of entry.
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Sometimes it is found that distributor should have specific skills and abilities to distribute the goods, i.e., Petroleum Products, Hazardous (mostly chemicals) Products, etc.
More suitable example is of Suit Cases of Mont Blanc, are available at five star hotels in big cities only.
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Distribution
Objectives
STRATEGY
Channel
Design
Network
Strategy
STRUCTURE
Intermediate Management
Warehouses and Transport
Materials Management
PROCESS
IT Policies and
Procedures
Facilities and
Equipment
Channel
Management
IMPLEMENTATION
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POLICY & PROCEDURE
Define policy and implementation guidelines through Operating Manuals
Policy guidelines includeCode of conduct for channel members
System for redressal of complaints
Any additional subsidies, etc.
Handling institutional business
Service policy for engineering products
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KEY PERFORMANCE INDICATORSFor measurement of effectiveness. Some of these could be:Consistent achievement of targets by product groups, periods and territories
Achievement of market shares
Achievement of profitability
Zero complaints from customers
No stock returns
Ability to handle emergencies and sudden spurts in demand
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KEY PERFORMANCE INDICATORSFor measurement of effectiveness. Some of these could be:Balanced sales achievement during a period – no period end skews
Market coverage with ready stocks
Excellent management of accounts receivables
Minimize losses on account of stock-outs
Minimize damages to products
CSFs…