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Channel Management
This document discusses distribution channels. It defines distribution as managing the movement of goods from producers to consumers. Common distribution channels involve manufacturers, wholesalers, distributors, retailers and customers. Goods and payments flow between these parties. Intermediaries like agents, wholesalers and distributors take ownership of goods and sell to other parties for a profit. The document outlines three main types of distribution channels: intensive, selective and exclusive.
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Channel Management
- 1. PLACING -I ` P C R O O N D S U U C M E E R R
- 2. IIM RAIPUR Placing (I) - Channel Management MANOJ H RAHUL KHEDKAR RISHIRAJ SINGH ASHIYA SHAHUL HAMEED VAMSY KRISHNA INDIAN INSTITUTE OF MANAGEMENT RAIPUR
- 3. AGENDA CONCEPT CHANNELS TYPES ROLES FUNCTIONS SELECTION 12/12/2012 Indian Institute of Management Raipur 3
- 4. DISTRIBUTION CONCEPT What is Distribution? CHANNELS It is defined as the management of TYPES all activities which facilitate , movement and co-ordination of ROLES supply and demand in creation of time, place utility in goods FUNCTIONS SELECTION 12/12/2012 Indian Institute of Management Raipur 4
- 5. DISTRIBUTION CONCEPT What is Distribution? CHANNELS It is the Art and Science of TYPES determining requirements, , acquiring them, distributing them ROLES and finally maintaining them in an FUNCTIONS operationally ready condition for their entire life SELECTION 12/12/2012 Indian Institute of Management Raipur 5
- 6. TYPES OF DISTRIBUTION CONCEPT CHANNELS Distribution TYPES , ROLES Channel Physical FUNCTIONS management Distribution SELECTION 12/12/2012 Indian Institute of Management Raipur 6
- 7. CHANNELS CONCEPT What are Channels? CHANNELS • The path through which TYPES , goods and services ROLES travel from the vendor FUNCTIONS to the consumer or payments for those SELECTION products travel from the 12/12/2012 consumer to the vendor Indian Institute of Management Raipur 7
- 8. CHANNELS CONCEPT MANUFACTURER CUSTOMER CHANNELS MANUFACTURER TYPES RETAILER CUSTOMER , ROLES MANUFACTURER WHOLESALER RETAILER CUSTOMER FUNCTIONS MANUFACT WHOLE AGENTS RETAILER CUSTOMER URER SELECTION SALER 12/12/2012 Indian Institute of Management Raipur 8
- 9. MANUFACTURER CUSTOMER MANUFACTURER RETAILER CUSTOMER 12/12/2012 Indian Institute of Management Raipur 9
- 10. MANUFACTURER WHOLESALER RETAILER CUSTOMER 12/12/2012 Indian Institute of Management Raipur 10
- 11. CHANNEL FLOW CONCEPT Goods/ Services C FORWARD CHANNELS C U O S TYPES Payment for Goods/ , M BACKWARD T Returns ROLES P O A M FUNCTIONS N BOTH E Information MANUFACT Y WAYS R URER SELECTION S
- 12. INTERMEDIARIES CHANNELS INTERMEDIARIES AGENTS WHOLESALERS DISTRIBUTORS RETAILERS 12/12/2012 Indian Institute of Management Raipur 12
- 13. INTERMEDIARIES CHANNELS • Links producers to other INTERMEDIARIES intermediaries or the ultimate buyer. AGENTS • Promote, sell, and make- available a good or service through WHOLESALERS contractual arrangements or purchase and resale of the item. DISTRIBUTORS • Each intermediary receives the item at one pricing point and RETAILERS moves it to the next higher pricing point until the item reaches 12/12/2012 the final buyer Raipur Indian Institute of Management 13
- 14. AGENTS CHANNELS INTERMEDIARIES AGENTS • An independent individual or company WHOLESALERS • Primary selling arm of the producer and represent the producer to users. DISTRIBUTORS • Agents take possession of products but do not actually own them. • Make profits from commissions or fees RETAILERS paid for the services they provide to the producer and users. 12/12/2012 Indian Institute of Management Raipur 14
- 15. WHOLESALERS CHANNELS INTERMEDIARIES AGENTS WHOLESALERS • Independently owned firms that take title to the merchandise they handle. • In other words, the wholesalers own the products they sell. DISTRIBUTORS • Wholesalers purchase product in bulk and store it until they can resell it. • Wholesalers generally sell the products they RETAILERS have purchased to other intermediaries, usually retailers, for a profit. 12/12/2012 Indian Institute of Management Raipur 15
- 16. DISTRIBUTORS CHANNELS INTERMEDIARIES AGENTS WHOLESALERS • Distributors only carry complementary product lines, either Pepsi or Coke products. DISTRIBUTORS • Distributors usually maintain close relationships with their suppliers and RETAILERS customers. Distributors will take title to products and store them until they are sold 12/12/2012 Indian Institute of Management Raipur 16
- 17. RETAILERS CHANNELS INTERMEDIARIES AGENTS WHOLESALERS • A retailer takes title to, or purchases, products from other market intermediaries. DISTRIBUTORS • Retailers can be independently owned and operated, like small “mom and pop” stores, or they can be part of a large chain, like Walmart. • The retailer will sell the products it has purchased RETAILERS directly to the end user for a profit 12/12/2012 Indian Institute of Management Raipur 17
- 18. TYPES CONCEPT CHANNELS INTENSIVE TYPES ROLES SELECTIVE FUNCTIONS EXCLUSIVE SELECTION 12/12/2012 Indian Institute of Management Raipur 18
- 19. INTENSIVE CONCEPT INTENSIVE SELECTIVE EXCLUSIVE CHANNELS TYPES ROLES FUNCTIONS SELECTION 12/12/2012 Indian Institute of Management Raipur 19
- 20. SELECTIVE CONCEPT INTENSIVE SELECTIVE EXCLUSIVE CHANNELS TYPES ROLES FUNCTIONS SELECTION 12/12/2012 Indian Institute of Management Raipur 20
- 21. EXCLUSIVE CONCEPT INTENSIVE SELECTIVE EXCLUSIVE CHANNELS TYPES ROLES FUNCTIONS SELECTION 12/12/2012 Indian Institute of Management Raipur 21
- 22. ROLES CONCEPT PROMOTION NEGOTIATIO CHANNELS N INFORMATIO N TYPES ORDERING ROLES PHYSICAL POSSESSION TRANSFER FUNCTIONS OF TITLE FINANCING SELECTION RISK TAKING 12/12/2012 Indian Institute of Management Raipur 22
- 23. PROMOTION ROLES PROMOTION • Marketing intermediaries NEGOTIATIO attract customers and N INFORMATIO persuade them to buy goods N and services. ORDERING PHYSICAL • These intermediaries POSSESSION undertake sales promotion TRANSFER OF TITLE activities through media and FINANCING personal contacts RISK TAKING 12/12/2012 Indian Institute of Management Raipur 23
- 24. PROMOTION ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER OF TITLE FINANCING RISK TAKING 12/12/2012 Indian Institute of Management Raipur 24
- 25. NEGOTIATION ROLES PROMOTION • Intermediaries or middlemen NEGOTIATIO negotiate prices and other N INFORMATIO terms and condi-tions N between buyer and seller. ORDERING PHYSICAL • No sale can take place POSSESSION without an agreement on TRANSFER OF TITLE prices and other terms and FINANCING conditions RISK TAKING 12/12/2012 Indian Institute of Management Raipur 25
- 26. NEGOTIATION ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER OF TITLE FINANCING RISK TAKING 12/12/2012 Indian Institute of Management Raipur 26
- 27. INFORMATION ROLES PROMOTION • Middlemen collect NEGOTIATIO information about demand, N INFORMATIO competition, etc., from N consumers and pass on to ORDERING manufacturers. PHYSICAL POSSESSION • They also provide information TRANSFER OF TITLE to consumers about new FINANCING products, changes in design, RISK TAKING style, prices, etc., of existing products 12/12/2012 Indian Institute of Management Raipur 27
- 28. INFORMATION ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER OF TITLE FINANCING RISK TAKING 12/12/2012 Indian Institute of Management Raipur 28
- 29. ORDERING ROLES PROMOTION • WHOLESALERS NEGOTIATIO N INFORMATIO N ORDERING • RETAIL OUTLETS PHYSICAL POSSESSION TRANSFER OF TITLE • Intermediaries collect small FINANCING orders from consumers RISK TAKING and on that basis place large 12/12/2012 orders with manufacturers Indian Institute of Management Raipur 29
- 30. PHYSICAL POSSESSION ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER OF TITLE • Middlemen take possession of goods from producers and FINANCING pass on possession to RISK TAKING consumers 12/12/2012 Indian Institute of Management Raipur 30
- 31. TRANSFER OF TITLE ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER OF TITLE • Middlemen transfer FINANCING ownership of goods from producers to consumers RISK TAKING 12/12/2012 Indian Institute of Management Raipur 31
- 32. FINANCING ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION TRANSFER • Intermediaries provide financial, OF TITLE assistances at different stages of FINANCING the market-ing channel. They buy goods in cash from producers and RISK TAKING sell them to consumers on credit 12/12/2012 Indian Institute of Management Raipur 32
- 33. RISK TAKING ROLES PROMOTION NEGOTIATIO N INFORMATIO N ORDERING PHYSICAL POSSESSION • Intermediaries assume most of TRANSFER OF TITLE the risks involved in the FINANCING distribution of goods. They relieve producers from these RISK TAKING risks and enable them to 12/12/2012 concentrate on pro-duction Indian Institute of Management Raipur 33
- 34. FUNCTIONS CONCEPT INFORMATION FLOW CHANNELS STIMULATE TYPES PURCHASING ROLES STORAGE AND MOVEMENT FUNCTIONS SELECTION PRICE FIXING 12/12/2012 Indian Institute of Management Raipur 34
- 35. INFORMATION FLOW FUNCTIONS INFORMATION FLOW STIMULATE PURCHASING STORAGE AND MOVEMENT Information flows from Retailers <- >distributors Distributors <-> Wholesalers PRICE FIXING Wholesalers <-> company
- 36. STIMULATE PURCHASING FUNCTIONS INFORMATION FLOW STIMULATE PURCHASING STORAGE AND MOVEMENT For its promotion VIP encourages retailers to advertise in the city on its behalf, and shares PRICE FIXING some cost of it
- 37. STORAGE AND MOVEMENT FUNCTIONS INFORMATION FLOW STIMULATE PURCHASING STORAGE AND MOVEMENT GAS CYLINDERS ARE STORED IN THE WAREHOUSES AND THEN MOVED THROUGH RETAILERS T PRICE FIXING 12/12/2012 Indian Institute of Management Raipur 37
- 38. PRICE FIXING FUNCTIONS INFORMATION FLOW STIMULATE PURCHASING STORAGE AND MOVEMENT PRICE FIXING 12/12/2012 Indian Institute of Management Raipur 38
- 39. Factors Influencing theSelection of Channel Members CONCEPT Cost CHANNELS Control TYPES Image Selection of Channel ROLES Members Performance FUNCTIONS Experience Reputation SELECTION 12/12/2012 Indian Institute of Management Raipur 39
- 40. SELECTION CONCEPT CHANNELS MARKET FACTORS TYPES PRODUCT ROLES FACTORS FUNCTIONS PRODUCER FACTORS SELECTION 12/12/2012 Indian Institute of Management Raipur 40
- 41. MARKET FACTORS MARKET PRODUCT PRODUCER FACTORS FACTORS FACTORS CONCEPT CHANNELS TYPES ROLE • Customer Profiles FUNCTIONS • Consumer or Industrial Consumer • Size of Market SELECTION • Geographic Location 12/12/2012 Indian Institute of Management Raipur 41
- 42. PRODUCT FACTORS MARKET PRODUCT PRODUCER FACTORS FACTORS FACTORS CONCEPT CHANNELS TYPES ROLE • Product Complexity FUNCTIONS • Product Price • Product Life Cycle SELECTION • Product Delicacy 12/12/2012 Indian Institute of Management Raipur 42
- 43. PRODUCER FACTORS MARKET PRODUCT PRODUCER FACTORS FACTORS FACTORS CONCEPT CHANNELS TYPES ROLE • Producer Resources FUNCTIONS • Number of Product Lines SELECTION • Desire for Channel Control 12/12/2012 Indian Institute of Management Raipur 43
- 44. PROJECT SHAKTHI ECHOUPAL
- 45. THANK YOU 12/12/2012 Indian Institute of Management Raipur 45
Editor's Notes
- #19 INTENSIVEDistribution through every reasonable outlet availableStrategy is to make sure that the product is available easily in as many outlets as possibleExample: FMCGSELECTIVEPreferred for consumer, pharma products and automobile sparesMultiple, but not all outlets in the marketFew Select outlets will be permitted to keep the productOutlets are selected in line with the brand image the company wants to projectEXCLUSIVEHighly selective choice of outlets – might even be one outlet in an entire marketExample: Car DealersCould include outlets set up by the companies itselfExample: Titan, Bata, Planet Fashion