GROUP B•Rajpar (GL)•Ahsan Jaffry•Aashiq Hussain•Meeral Khan•Parasad Kumar

TOPIC:Distribution Channel And Classification of industrial consumer goods

1. CHANNELS OF DISTRIBUTIONMeaning of channel of distribution

The channel of distribution is the route or the path taken by a product as it moves from producer to consumer.

This channel or route, which connects the producer with the consumer in the transfer of ownership of a product may be direct or indirect.

IMPORTANCE• Important element of marketing mix

• Influences sales volume and profits

• Determines where and when the product will be available to users

• Helps in reducing the effects of fluctuations in production

TYPES OF CHANNELS OF DISTRIBUTION Direct channel Indirect channel

TYPES OF CHANNELS OF DISTRIBUTION

1. Direct channel: No middlemen involved, In, direct channel the manufacturer or the

producer supplies goods directly to the consumers.

METHODS OF DIRECT SELLING

Door to door salespersons

Retail outlets

Catalogue Selling

Telemarketing

On Line Marketing or Internet marketing

TYPES OF CHANNELS OF DISTRIBUTION

2. Indirect channel: - Exclusive distribution channel, only one

retailer sells the goods. - Marketing of goods first to retailer who in

turn sell it to consumers is a favourite method with most of the manufacturer of consumer goods such as clothes, machines, automobiles etc.

Types of channal of distribution

1) Manufacturer-consumer (Direct selling):• Shortest and simplest channel• No middleman between the producer and consumer• Producers sell directly to customers through door-to-door

salesmen , direct mail , own retail stores, e.g.. BATA India Ltd.• Used generally for selling shoes , clothes , books, etc.• Very fast and economical• Expert services of middlemen are not available• Large investment is required

2) Manufacturer-retailer-consumer:• Manufacturer sells to one or more retailers who sell to

consumers• This channel is popular when retailers are big and buy in large

quantities ,e.g. departmental stores , super markets.• Generally used for distribution of consumer durables and

products of high value like automobiles, home appliances,etc.• Relieves manufacturer of the burden of selling and provides

control over distribution.

3) Manufacturer-wholesaler-retailer-consumer:• Traditional or normal channel• Suitable where producers have limited finance and narrow

product line• Channel used in case of consumer durables which are not subject

to frequent changes in fashion.

4) Manufacturer-agent-retailer-consumer:• Used when retailers are few or geographically concentrated• Commonly used to sell agricultural products, machinery and

equipment, etc.

5) Manufacturer-agent-wholesaler-retailer-consumer:• Longest channel• Producer hands over entire output to the agent who sales them to

wholesalers• In case of cloth this channel is widely used• Results in wider distribution of products

CLASSIFICATION OF GOODS Consumer goods Industrial goods

CONSUMER GOODS Consumer goods: Consumer goods are those which are

purchased by ultimate consumers from retail outlets for their own personal consumption.

2. CLASSIFICATION OF CONSUMER GOODS Convenience goods: Goods which are frequently

purchased by the consumers. The profit margin on convenience goods are low, i.e. Pepsi, Sugar, Soap, Cigarettes.

Shopping goods: Goods which have a relatively high unit

value and are bought less frequently by the consumers. The buyers visits many stores and compare the prices, style, quality of goods, i.e. Furniture, Jewellery, Shoes, Clothes.

SPECIALTY GOODS:

Goods which buyers have strong preference and make efforts to purchase. These are the high priced, i.e. Automobiles, Television etc..

2) INDUSTRIAL GOODS: - Industrial goods are those which are

used in the production of consumer or other type of goods for business use.

CLASSIFICATION OF INDUSTRIAL GOODS: Raw Material Semi finish good Parts Machinery and equipments

RAW MATERIAL

These are the basic products which enter into the production process with little or no alterations. They may be marked to user customers or OEMs (Original Equipment Manufactures). Such as iron ore, crude oil, vegetables.

INDUSTRIAL GOODS Semi finish good Parts Machinery and equipments