Flows in channels

Distribution Networks and flows

1. Flows in channels Submitted By : Nitish Sadotra

2. What does “flow” means in distribution channel? One traditional framework that has been used to express the channel mechanism is the concept of flow . These flows, reflect the linkages that tie channel members and other agencies together in the distribution of goods and services . When a marketing channel has been developed, a series of flows emerges.

3. From the perspective of the channel manager or the management, there are five important flows; Product flow Negotiation flow Ownership flow Information flow Promotion flow

4. Product flow The  product flow  refers to the actual movement of the physical product from the manufacturer through all of the parties who take physical possession of the product until it reaches the ultimate consumer . This is one directional flow. For e.g. Clothes, FMCG goods. Manufacturer Transportation company Wholesalers Retailers Consumers

5. Negotiation flow The  negotiation flow represents the buying and selling functions associated with the transfer of title (right of ownership) to products. This flow does not includes transportation firm because it does not participate in negotiation function. This flow is two directional as negotiations involve a mutual exchange between buyers and sellers at all levels of the channel. Manufacturer Wholesalers Retailers Consumers

6. Ownership flow The  ownership flow  shows the movement of title to the product as it passes through the channel.  Here also transportation can not be taken as it can’t posses the title. For e.g.. Transaction of a car. Manufacturer Wholesalers Retailers Consumers

7. information flow Information flow shows the flow of information from manufacturer to consumer in two directions. All parties participate in exchange of information either up or down flow. This flow might not always have transportation firm as a party. For e.g. Information about time of shipping or the rates from manufacturer to transportation Manufacturer Transportation company Wholesalers Retailers Consumers

8. Promotion flow T he   promotion flow  refers to the flow of persuasive communication in the form of advertising, personal selling, sales promotion, and publicity. Here advertising agency is in the flow as it is providing and maintaining the promotional flow. The two directional arrow shows the combined work performance for the promotional activities. Manufacturer Advertising agency Wholesalers Retailers Consumers

9. Channel flows in general

10. Physical Possession : Product moves from producer to consumer. Ownership : When does title change. Risking : Who is responsible for damage. Negotiation : Two-way communication.

11. Ordering : One-way communication. Payment : When does money change hands. Financing : Where does the money come from? Promotion : One-way persuasive communication.

12. Only physical possession deals with the tangible products. All other flows are essentially intangible or we can say are the information with the help of information technology and software. Tangibility vs. Intangibility