Marketing Channels.1ppt

8/7/2019 Marketing Channels.1ppt

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Marketing ChannelsMarketing Channels


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Marketing ChannelMarketing Channel

Submitted toSubmitted to -- : Prof. JASMEET: Prof. JASMEET

Submitted bySubmitted by --: Sunil Kumar: Sunil Kumar


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Definition of ChannelsDefinition of Channels

Any organization or individuals who participate in theAny organization or individuals who participate in theflow of goods and services as they move fromflow of goods and services as they move fromproducer to an ultimate user ( consumer or industrialproducer to an ultimate user ( consumer or industrial););

Marketing channels refer to an organized network ofMarketing channels refer to an organized network ofinterconnected organizations and agencies involvedinterconnected organizations and agencies involvedin the process of making a product or servicein the process of making a product or serviceavailable to consumersavailable to consumers..

Cont.Cont.

Producers Intermediaries CustomerProducers Intermediaries Customer


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TIMETIME

PLACEPLACE

POSSESSIONPOSSESSION

Channels of DistributionChannels of Distribution

create time, place, possession andcreate time, place, possession andinformation utilities.information utilities.

InformationInformation

37

24

572

9 1 1

Creating utilities for customers.


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Facilitation : bringing buyer and seller to close the deal ( transfer of title and

ownership )

Information : information about product / services to customers;

Promotion : products / services ( changeover from earlier product and brand

building of new one );

Negotiation : with customer on behalf of producers regarding price, delivery

terms etc.;

Providing pre-sale and post-sale services : as producers can not reach to the

customers;

Warehousing and transportation : stocking, sorting, break bulk, pkg. & dispatch

to members down the channel;

Market feedback and intelligence : product performance, trend, change in habits /

fashion / behavior of customer i.e. Demography.

Functions of Channels


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Channel Functions: PromotionChannel Functions: PromotionProducer CollaboratorsProducer Collaborators CustomerCustomer

Promotion:Promotion:

-- Cooperative advertisingCooperative advertising-- In Store Sales promotionIn Store Sales promotion

SalesPromotion

Advertising

Agencies

(Facilitate exchange)

Personal Selling:Merchant sales reps

sell only, no title transfer


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Channel Functions: PricingChannel Functions: PricingProducer IntermediariesProducer Intermediaries CustomerCustomer

Pricing supportPricing support::

-- terms of sale (credit, cash, etc.)terms of sale (credit, cash, etc.)

-- convenience of paymentconvenience of payment

-- financial riskfinancial risk

Pricing: How much?

Financial Institutions:Transfer of Ownership

Provide Credit Services


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What Levis is DoingWhat Levis is Doing

Levis jeans were the same model and price for many years

although they were bought many different types of people.

Diversifying their target markets by selling jeans in high

end stores such as Central , to middle class stores such as

Westside , to large discount stores such as Mega-Mart.


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Types of Marketing ChannelTypes of Marketing Channel

Wholesaler:Wholesaler: They buy goods fromThey buy goods frommanufacturer and resell the same the retailermanufacturer and resell the same the retailer

Retailer:Retailer: Retailer buys goods from wholesalerRetailer buys goods from wholesalerand sale the same to the customerand sale the same to the customer

Commission Houses:Commission Houses: They have physicalThey have physical

control of the goods they handle . these housescontrol of the goods they handle . these housesare in a position to enjoy broader control on price,are in a position to enjoy broader control on price,method, sales etc than brokermethod, sales etc than broker

ContCont


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Resident

Buyer

This is a type ofagent or individualperson, who isspecialised in

buying specialisedgoods and resalethe same oncommission.

brokers

They do not have

direct and physicalcontrol of goods inwhich they deal.

They representeither buyer orseller

jobbers

They are specialtypes of wholesalerundertaking theiractivities inspecialized trades

and location likestock market


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FactorsFactors to ConsiderWhento ConsiderWhen

Selecting Specific IntermediariesSelecting Specific Intermediaries

The producer will want to useThe producer will want to useintermediaries whointermediaries who::

Reach their target marketReach their target marketHave a good reputationHave a good reputationHandle distribution functions efficientlyHandle distribution functions efficientlyOrder large quantitiesOrder large quantities

Pay invoices quicklyPay invoices quicklyDisplay and promote merchandise wellDisplay and promote merchandise wellHave a good location and professionalHave a good location and professionalsalespeoplesalespeople


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IntensiveIntensive

distributiondistribution

SelectiveSelective


ExclusiveExclusive


Channel Design:Channel Design:

#1 Target Market Coverage#1 Target Market Coverage


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Reasons for ChoiceReasons for Choice ofof strategystrategy

Every manufacturer / producer may adopt different channels of

distribution according to his convenience and may change

them over a period and in different situations. It is an long-

term decision and various factors need to be considered while

determining the channel

product nature;

customer class / segment;

middleman channel cost, suitability, availability, legalcompliance, cost of maintenance;

market considerations nature, size, spread, size and

frequency of orders;

competitors channel.


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Decisions in channel ManagementDecisions in channel Management

Mktg. channelMktg. channel --independent businessindependent business orgnorgn.,.,

--middlemanmiddleman

--ensure smooth flowensure smooth flow--act as an interface between mfg.act as an interface between mfg.

& customer& customer

Product/Goods

Flow

Service

Flow

Buyers(institutional/individual)


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NeedNeed Of Channel ManagementOf Channel Management

Every manufacturer needs to reach to customers in theEvery manufacturer needs to reach to customers in the

market by either ways. Options to reach the Customermarket by either ways. Options to reach the Customer

are as under :are as under :--

Mfg. / Producer Wholesaler

Customer

[ Indirect Marketing Concept ]

Retailer


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Types of channelTypes of channel

Direct to customerDirect to customer

Through a Marketing channelThrough a Marketing channel

Two channels


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Direct Vs.Direct Vs. Indirect ChannelsIndirect Channels

Direct channelDirect channel-- a marketing channela marketing channelthat does not use intermediaries tothat does not use intermediaries to

distribute the product.distribute the product.

Why sell directly?Why sell directly?

Indirect channel a marketingchannel where intermediaries are

used to help distribute the product.Why sell indirectly?


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Examples of direct and indirectExamples of direct and indirect

channelschannels


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Distribution Channel DesignsDistribution Channel Designs

Organizations through which a product passes toOrganizations through which a product passes toreach the end user.reach the end user.

Zero-level:

(Direct)

Intermediaries:

(Traditional)

ManufacturerManufacturer

ConsumerConsumer

ManufacturerManufacturer

ConsumerConsumer

WholesalerWholesaler

RetailerRetailerIntermediaries

ProducerProducer

RetailerRetailer

ConsumerConsumer


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Direct to customer

Channel Structure

Zero level ChannelDirect contact with customer: Luxurious

: Exclusive products

Small Producers: Weak Financial Capability: Perishable Goods(Food, Farm)


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Direct Marketing ChannelsDirect Marketing Channels

ProducerProducer BuyerBuyer

Personal SellingPersonal Selling

TelemarketingTelemarketing

Toll free phone #Toll free phone #

Catalog orderCatalog order

Fax orderFax order

Mail orderMail order

E CommerceE Commerce


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Direct Marketing can eliminate theDirect Marketing can eliminate the

middleman but not the functionsmiddleman but not the functions

Infomediaries & Vertical Exchange


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Channel Structure

Two level Channel

M>W>R>C-all FMCG

M>Brokers/Commission Agents>R>C-Farm productFood grain


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Advantages of Marketing ChannelAdvantages of Marketing Channel

It bridge the gap between the producer andIt bridge the gap between the producer andconsumerconsumer

It helps in large scale distribution of products.It helps in large scale distribution of products.

It creates time , possession and place utilities.It creates time , possession and place utilities.

It performs marketing functions like storage ofIt performs marketing functions like storage ofgoods, risk bearing, sales promotion etc.goods, risk bearing, sales promotion etc.

effective coverage of the target market.effective coverage of the target market.

helping the firm to carry on manufacturinghelping the firm to carry on manufacturinguninterrupted, confident that the channels willuninterrupted, confident that the channels willtake care of sales.take care of sales.


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DisadvantageDisadvantage

Sources of Channel ConflictSources of Channel Conflict Disagreements on responsibilitiesDisagreements on responsibilities

Communication difficulties reduce coordinationCommunication difficulties reduce coordination

Increased use of multiple distribution channels byIncreased use of multiple distribution channels bymanufacturers creating conflicts with distributorsmanufacturers creating conflicts with distributorsand retailersand retailers

Intermediaries diversifying into and offeringIntermediaries diversifying into and offeringcompeting productscompeting products

Producers try to circumvent intermediaries andProducers try to circumvent intermediaries anddeal directly with retailersdeal directly with retailers


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Marketing Channels.1ppt

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