Optimizing Channels of Distribution for Business Success

Students can learn channels of distribution. Channels of distribution refer to the pathways through which goods and services travel from the producer to the final consumer. These channels can be complex networks involving various intermediaries, each playing a crucial role in ensuring that products reach their destination efficiently and effectively. Understanding the structure and function of these channels is vital for businesses to optimize their distribution strategies and enhance market reach.
Types of Distribution Channels
Direct Channels

Producer to Consumer: In this simplest form, producers sell their products directly to consumers without any intermediaries. This can be done through various means such as physical stores, e-commerce websites, and direct mail.
Indirect Channels

One-Level Channel: This involves one intermediary, typically a retailer, who purchases products from producers and sells them to consumers. Examples include department stores and online retailers.
Two-Level Channel: This involves two intermediaries—wholesalers and retailers. Wholesalers buy in bulk from producers, sell in smaller quantities to retailers, who then sell to consumers. This channel is common in industries where bulk buying and breaking down into smaller lots are needed.
Three-Level Channel: This includes an additional layer of intermediaries, such as agents or brokers, who facilitate the distribution process by connecting wholesalers and retailers, especially in international trade or specialized markets.
Importance of Distribution Channels
Market Coverage: Effective distribution channels help businesses reach a wider audience and penetrate new markets.
Cost Efficiency: Properly managed channels can reduce costs related to transportation, storage, and handling, enhancing overall profitability.
Customer Convenience: Channels ensure products are readily available to consumers, improving customer satisfaction and loyalty.
Competitive Advantage: Strategic distribution can provide a competitive edge by delivering products faster and more reliably than competitors.
Factors Influencing Choice of Distribution Channels
Product Nature: Perishable goods require faster, more direct channels, while durable goods can utilize longer, more complex channels.
Market Characteristics: The target market's size, geographic dispersion, and buying behavior influence channel decisions.
Company Objectives: Business goals such as market expansion, cost reduction, and customer service levels guide the selection of distribution channels.
Intermediary Capabilities: The ability of intermediaries to efficiently and effectively perform distribution functions is crucial in channel selection.
In conclusion, channels of distribution are critical components of a business's overall strategy, affecting how products are delivered to consumers and how well a company can compete in the marketplace. By understanding and optimizing these channels.

1. Marketing Management
IV Unit
Channels of Distribution
1

2. Achannelofdistribution
isasetofInterdependent
organisationsinvolvedinthe
processofmakingaproduct
orserviceavailableforuseor
consumptionbytheconsumer
orbusinessuser.
2

3. Types of Channels of Distribution
I. Direct Channel
Directly delivers products or services to the users
II. Indirect Channel
Products or services will be delivered through
intermediaries such as follows:
1.Distributor
2.Dealer
3.Wholesaler
4.Retailer
3

4. 4
1.Meaning of Distributor
Distributorpurchasesgoodsdirectlyfromthe
companyandsellthemtosomedealers.
adistributorsuppliesgoodsinthenameofthe
company;thatiswhytheyactasanagentofthe
company.
Distributorsoffertheirservicesina
comparativelylargerarea.

5. 5
2.Meaning of Dealer
ApersonwhobuysproductsfromDistributor
andresaletospecifiedwholesalerorretailer.
Dealsinspecifickindofproducts.
Asthedealertradesontheirownbehalf,their
workislikeofprincipal.
Theservingareaofdealersislimitedtoa
particularregion.

6. 6
3.Meaning of Wholesaler
Thetermwholesalerisdefinedasapersonor
entity,whopurchasegoodsinbulkandsellthem
inrelativelysmallerunitstoretailers.

7. 7
4. Meaning of Retailer
Apersonorbusinessthatsellsgoodsto
thepublicinrelativelysmallquantitiesfor
useorconsumptionratherthanforresale.

8. 8
Difference between Wholesaler & Retailer
Wholesaler Retailer
1. Wholesalers buy
products from the
manufactures and sell
goods to the retailers.
Retailers buy products from
the wholesalers and sell
goods to the consumers.
2. Wholesalers usually sell
on credit to the retailers.
Retailers usually sell for
cash.
3. They specialize in a
particular product.
They deal in different kinds
of goods.
4. They buy in bulk
quantities from the
manufacturers and sell in
small quantities to the
retailers.
They buy in small quantities
from the wholesalers and
sell in smaller quantities to
the ultimate consumers.

9. 9
Difference between Wholesaler & Retailer
Wholesaler Retailer
5. A wholesaler needs mainly a
godownto stock the goods he
handles.
A retailer needs a shop or a
showroom to sell.
6. A wholesaler need not provide
shopping comforts like luxurious,
interiors, provision of air-condition,
trolleys, etc.
A retailer usually provides
shopping comforts mainly to
attract customers.
7. As per the custom of their
trade, wholesalers allow the
retailers trade discount each time
the retailers buy.
The retailers normally do not allow
any discount to their customers.
Some of them may offer cash
discount to bulk buyers.
Sometimes, they may offer
seasonal discounts.

10. 10
•Channel length = number of levels in a distribution
channel.
ManufacturerManufacturerManufacturerManufacturer
Consumer Consumer Consumer Consumer
Retailer Retailer Retailer
Wholesaler Wholesaler
Distributor/ Dealer/Agent
0 level 1 level 2 level 3 level
Levels / Length/ Structure of
Channels for Consumer Products

11. 11
ManufacturerManufacturer Manufacturer
Industrial UserIndustrial UserIndustrial User
Industrial DistributorIndustrial Distributor
Sales Office
0 level 1 level 2 level
Levels / Length/ Structure of
Channels for Industrial products

12. 12
Tasks of a Logistics Manager
•plans the flow of materials in a
manufacturing organization (beginning
with raw materials and ending with
delivery of finished products to channel
intermediaries or end customers) and
coordinates the work of departments
involved in the process, such as
procurement, transportation,
manufacturing, finance, legal, and
marketing.

13. 13

14. Promotional Mix
Promotionalmixconsistsof“Thespecific
blendofadvertising,salespromotion,
publicrelations,personalselling,and
directmarketingtoolsthatacompany
usestopursueitsadvertisingand
marketingobjectives”
14

15. Components of Promotional Mix
I.Advertising
II.SalesPromotion
III.PublicRelations
IV.PersonalSelling
V.DirectMarketing
VI.Publicity
15

16. Components of Promotional Mix
I.Advertising
Itisanypaidformofnon-personal
presentationandpromotionofideas,
goods,orservicesbyanidentified
sponsor.Itincludes:
PrintMedia:Newspapers,Magazines,etc.
ElectronicMedia:TV,Radio,Internet,
Theater,etc.
16

17. Components of Promotional Mix
2.SalesPromotion:
Shorttermstrategytopromotesaleslike
samples,coupons,Rebates(refund),Price
Packs,Gifts(Calenders,coffeemugs,
penswithmessages.),prizes(contests,
games), patronageaward (loyal
customer),freetrials(ex:four-wheeleror
two–wheeler),productwarranties,point–
of–purchase(pop)&demonstration.
17

18. Components of Promotional Mix
3.PublicRelations:
Publicrelationsincludebuildinggood
relationswiththepublicbyobtaining
favourablepublicity,buildingagood
corporateimage.
InvestorRelations
GovernmentRelations
CommunityRelations
MediaRelations
18

19. Components of Promotional Mix
CustomerRelations
SocialMedia
CrisisCommunications
19

20. Components of Promotional Mix
4.PersonalSelling:
Personalsellingincludesdirectpersonal
presentationbycompanysalesforceforsales
andbuildingcustomerrelationships.
ProspectingandQualifying
Pre-Approach
Approach
PresentationandDemonstration
HandlingObjections
Closingthesale
FollowUp
20

21. Components of Promotional Mix
5.DirectMarketing:
Itinvolvesdirectcommunicationwithselected
targetcustomersonaonetoonebasistoobtain
animmediateresponseandcultivatelasting
customerrelationships,usingtelephone,direct
mail,fax,theinternet,etc.
21

22. Components of Promotional Mix
6.Publicity:
Itincludesnon-personalpromotionofdemand
forproductsbyobtainingpublicitythroughnews
inmedialikeTV,radio,newspapers,and
magazines.
22

23. Components of Promotional Mix
7.OnlineMarketing
Onlinemarketingisasetoftoolsand
methodologiesusedforpromotingproductsand
servicesthroughtheinternet.Onlinemarketing
includesawiderrangeofmarketingelements
thantraditionalbusinessmarketingduetothe
extrachannelsandmarketingmechanisms
availableontheinternet.
Onlinemarketingisalsoknownasinternet
marketing,webmarketing,digitalmarketingand
searchenginemarketing(SEM).
23

24. Components of Promotional Mix
Examples:
Amazon,Flipkart,eBay,snapdeel,etc.
24

25. Marketing Communication process
F/b
25
SOURC
E
Mrktg
Mgt
ENCODI
NG
Converti
ng
Message
CHANNEL
Through
which
message
Can be
delivered
RESULT
Action
DECODIN
G
Recever
converts
msge

26. Factors influencing Promotion Mix
1.TypeofProduct
2.NatureofMarket
3.Stageofproductinitslifecycle
4.Budgetavailability
5.CompanyPolicy
26

27. Thanking You
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