Marketing channel middlemen

Distribution Management

1. Distribution Management
7
th
Semester
B.B.A.
By
Mr. Navin Raj Saroj
M.B.A. (Marketing)

2. MERCHANT MIDDLEMEN
A trader who buys from producers and sells to retailers or
consumers.

(Business / Commerce) an independent trader engaged in the
distribution of goods from producer to consumer

A person who buys goods from the producer and resells them to
the retailer or consumer.

A person who acts as an intermediary.

3. HOW INTERMEDIARIES ADD VALUE
Intermediaries offer the firm more than it can achieve
on its own through their contacts, experience,
specialization, and scale of operations
From an economic view, intermediaries transform the
assortment of products into assortments wanted by
consumers
•Intermediaries can carry out a range of tasks,
including payment
•Processing, transport, transport planning and
management, storage and
•Handling, and increasingly, light manufacturing and
assembly

4. INTERMEDIARIES ESTABLISHMENT - TYPES
Types of intermediaries refers to channel members
available to carry out channel work. Examples
include:
•Company sales force
•Manufacturer’s agency
•Industrial distributors

5. Number of intermediaries
Companies have to decide on the number of intermediaries to use. Three
strategies available;
a)EXCLUSIVE DISTRIBUTION
•limited number of intermediaries. It is used when the producer
wants to maintain control over the service level and service
outputs offered by the reseller.
•It involves exclusive dealing arrangement, which the resellers
agree not to carry competing brands. By granting exclusive
distribution, the producer hopes to obtain more dedicated and
knowledgeable selling.
»It requires greater partnership between seller and reseller.
»Appropriate for specialty products which are expensive,
infrequently bought and require service or info to fit them to
buyers needs, such as Rolex watch, Mercedes and Roll Royce
car.


INTERMEDIARIES ESTABLISHMENT - STAGES

6. b)SELECTIVE DISTRIBUTION
•Only some available outlets in area are chosen to distribute a
product.
•The company does not have to dissipate its efforts over too many
outlets, it enables the producer to gain adequate market
coverage with more control and less cost than intensive
distribution.
•It is appropriate for shopping products, which consumers are
willing to spend more time visiting several retail outlets to
compare prices, designs, styles, and other features of these
product. Nike is a good example of selective distribution.

INTERMEDIARIES ESTABLISHMENT - STAGES

7. c)INTENSIVE DISTRIBUTION
•Intensive distribution is the use of all available outlets to
distribute a product. It is suitable for convenience products, such
as soft drinks, bread, candy, newspapers, etc. because they have
high replacement rate and require almost no service.
•Multiple channels (i.e. convenience stores, service stations,
supermarkets discount store) are used to sell these products.
Availability of these products is more important than the nature
of the outlet.
•For convenience of consumers, store must be located nearby and
minimum time will be necessary to search for the product at
the store.

INTERMEDIARIES ESTABLISHMENT - STAGES

8. INTERMEDIARIES
Retailer
Merchant
Wholesaler
Stockist / Agents
And Brokers
A channel intermediary that sells mainly to customers.
An institution that buys goods from manufacturers,
takes title to goods, stores them, and resells and ships
them.
Wholesaling intermediaries who facilitate the sale of a
product by representing channel member.
Distributor
/ Dealer
Distributors are similar to wholesalers, but with one key
difference.

9. INTERMEDIARIES - RETAILERS
RETAILERS - A retailer takes title to, or purchases,
products from other market intermediaries.

Retailers can be independently owned and operated, like
small “mom and pop” stores, or they can be part of a
large chain, like BIG MART .

The retailer will sell the products it has purchased
directly to the end user for a profit.

10. RETAILERS ROLE
Retailers buys goods from wholesaler and sells them
directly to consumers. Thus he acts as a direct link
between the wholesaler and consumers.
1.Wide choice to Consumers
2.Availability of goods in small quantities and at
convenient locations
3.Home Delivery
4.Assurance of regular supply
5.Credit Facility
6.Close Interactions with Customers

11. RETAILERS TYPES
1)Store retailers

2)Non-store retailers

3)Other retailers

4)Retail organisations

12. STORE RETAILERS - TYPES
a)Speciality stores
–Few lines but deep assortment
–E.g. Mobile shops, Camera shops

b) Department stores
–Many product lines
–E.g. Westside, Shoppers Stop

c) Super Markets
–Many product lines – large stores and chains
–E.g. Big Bazaar, Walmart, Bhatbhateni

13. d) Convenience Stores
–Well located – convenient
–Few FMCG type lines
–E.g. Kirana shops, Petrol pump stores

e) Super stores
–Large stores for particular product lines
–E.g. City Center, Kathmandu Mall

f) Discount Stores
–Limited / broad product lines
–Low prices, limited service
–E.g. Dollar Stores

STORE RETAILERS – TYPES Cont….

14. g) Warehouse stores
–Large stores with large size packs
–E.g Vegetable Market, China Market

h) Showrooms
–Franchise outlets
–Company brand promotion
–E.g. Titan, Tanishq, Samsung, Sony

Service / Facilities / Assistance
a)Self service
b)Limited Assistance / facilities
c)Full assistance / facilities / service
STORE RETAILERS – TYPES Cont…

15. NON STORE RETAILERS - TYPES
a)Mail order catalogues
b)Direct mail
c)Telemarketing
d)TV marketing
e)Internet retailing
f)E-shopping

OTHER RETAILERS - TYPES
a)Direct selling – Door to door
–Multi-level marketing
b) Through Machines
–Automated Vending Machines
–ATMs

16. MARKETING DECISIONS FOR RETAILERS
1)Target market
–Which consumers? Who are the buyers?
2) Product Assortment
–Which product lines / products to take on?
3) Pricing
–Margins, ROI
4) Services / facilities
–What level of services / facilities to provide?
5) Store formats / layouts
–Convenience, premium, discount
6) Promotion
–How to reach consumers?
–Print media, in-store promotions, POPs
–Campaigns, schemes, discount coupons / sales

17. WHOLESELLING INTERMEDIARIES
WHOLESALERS -
Wholesalers are independently owned firms that take title to
the merchandise they handle. The wholesalers own the
products they sell. Wholesalers purchase product in bulk and
store it until they can resell it.
Wholesalers generally sell the products they have purchased
to other intermediaries, usually retailers, for a profit.

Wholesaling is concerned with the activities of those persons
or establishments that sell to retailers and other merchants
and / or industrial, institutional and commercial users but do
not sell in large amounts to consumers.

18. WHOLESALERS ROLE
Wholesaler acts as a middlemen in the channel of
distribution as he buys goods in large quantity from the
manufacturer and sells these to retailers in small quantities.
1.Buying and Assembling
2.Selling and dispersing
3.Transportation
4.Storage
5.Packing and grading
6.Advertising and Sales Promotion
7.Financing
8.Risk taking

19. WHOLESALERS ADVANTAGES
•Bring efficiencies to selling process
•Assist small organisations in selling
•Specialist role on selling so that manufacturers
can focus on production
•Bring economies of scale
•Give / make assortment of products
•Important link between manufacturers and
retailers

20. WHOLESALERS - FUNCTIONS
a) Selling – Push products / services
b) Promotion – Pass on schemes
c) Bulk breaking – eg. steel, wires
d) Assortment building – wide range – FMCG
e) Warehousing – Intermediate storage
f) Transportation – Quicker delivery
g) Financing – Credit to retailers
h) Risk bearing – Damage, loss, theft, spoilage,
obsolescence
i)Market Information – Competition activities, price
trends
j) Management Services – Technical services, layouts

21. 1)Merchants

2)Brokers / Agents

3)Manufacturers offices / branches

4)Miscellaneous wholesalers

WHOLESALERS - TYPES

22. DISTRIBUTORS / DEALER
DISTRIBUTORS - Distributors are similar to wholesalers, but with
one key difference.

Wholesalers will carry a variety of competing products, for
instance Pepsi and Coke products, whereas distributors only
carry complementary product lines, either Pepsi or Coke
products.

Distributors usually maintain close relationships with their
suppliers and customers.

Distributors will take title to products and store them until
they are sold.

23. DEALER
Role similar to a distributor but
 May not have a clearly defined territory and may
sell both in the market and from his shop
May deal with competitive products also
Extends credit selectively
Dealers in industrial products may have better
defined roles i.e. dealer for an edible oil company,
garment brands
DISTRIBUTORS / DEALER

24. AGENT - MIDDLEMEN
AGENT - is an independent individual or company
whose main function is to act as the primary selling arm
of the producer and represent the producer to users.
Agents take possession of products but do not actually
own them.
Agents usually make profits from commissions or fees
paid for the services they provide to the producer and
users.