distribution strategy

Group Member:-Group Member:-Ritwik SharmaRitwik Sharma

Himanshu PandeyHimanshu PandeyRajShekhar GantiRajShekhar Ganti

Jithish NambiarJithish Nambiar

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“Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption”

Philip Kotler

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A plan created by the management of

a manufacturing business that specifies how the firm

intends

to transfer its products to intermediaries, retailers and

end consumers.

Larger companies involved in making products will usually

also put together a detailed production distribution strategy

to guide its entry into its intended market.

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4

Manufacturers/products

Agents/brokers

Wholesalers/distributors

RetailersRetailers

Consumers and organizational end users

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Exclusive Distribution◦ Limiting the distribution to only one intermediary

in the territory

Intensive distribution◦ Distribute from as many outlets as possible to

provide location convenience

Selective distribution◦ Appoint several but not all retailers

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It is a situation where suppliers and distributors enter into

an exclusive agreement that only allows the named

distributor to sell a specific product

Means that the producer selects only very few

intermediaries.

Exclusive distribution is often characterised by exclusive

dealing where the reseller carries only that producer's

products to the exclusion of all others

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Maximize control over service level/output

Enhance product’s image & allow higher

markups

Promotes dealers loyalty, better forecasting,

better inventory and merchandising control

Restricts resellers from carrying competing

brands

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Betting on one dealer in each market

Only suitable for high price, high margin, and low volume products

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The producer's products are stocked in the majority of outlets

It is a strategy under which a company sells its product through as many outlets as possible so that the customers encounter the product virtually everywhere they go

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Advantages:

◦ Increased sales, wider customer recognition,

and impulse buying

Disadvantages:

◦ Characteristically low price and low-margin

products that require a fast turnover

◦ Difficult to control large number of retailers

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Newspapers, soft drinks

Most of the fast moving consumer goods

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Selective Distribution is a type of

distribution that lies between intensive

and exclusive distribution.

This basically involves using more than

one, but lesser than all the intermediaries

who carry the company’s products

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Advantages:

◦Better market coverage than exclusive

distribution

◦More control and less cost than intensive

distribution

◦Concentrate effort on few productive outlets

◦Selected firms capable of carrying full product

line and provide the required service14

Disadvantages:

◦May not cover the market adequately

◦Difficult to select dealers (retailers) that

can match your requirement and goals

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Using two or more different channels to

distribute goods and services

Why?◦ Permits optimal access to each market segment

◦ Increase market coverage, lower channel cost and

provide more customized selling

What to look out for?◦ More channels usually means more conflict and

control problems

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Each channel handles a product or

segment that is different or non-

competing e.g.

Toyota Lexus

MPH online portals

Magazine distributions

The same product is sold through two different

and competing channels e.g.

◦ Non-prescriptive drugs

◦ Electronic goods

Why? To increase sales

What to look out for?

◦ Over extending yourself

◦ Dealers’ resentment

◦ Control problems

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Modify when the following changes occur:

Consumer markets and buying habits

Customer needs

Competitor’s perspectives

Relative importance of outlet types

Manufacturer’s financial strength

Sales volume level of existing products, and

The marketing mix

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One of the importance of any website or business

is to bring the products or services to the right

people and to reach the target audience.

There are a number of different distribution

channels available on the Internet which could be

utilised efficiently to the benefits of any company

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McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved

Selecting Channels of DistributionSelecting Channels of Distribution

In either the presence or the absence of a traditional channel, a primary constraint is that of the availability of various types of middlemen

Selecting a channel of distribution can hinge on one of these factors Distribution coverage required Degree of control desired Total distribution cost Channel flexibility

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved

Selecting Channels of DistributionSelecting Channels of Distribution

Distribution coverage – Channel selection may depend upon the nature of market coverage desired Intensive distribution – Using as many

wholesalers and retailers as possible Selective distribution – Using only the best

available per geographic area Exclusive distribution – Selected

intermediaries are given exclusive rights within a particular territory

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved

Selecting Channels of DistributionSelecting Channels of Distribution

Degree of control desired – Achieved by the seller is

proportionate to the directness of channel

Total distribution cost – Channel should be viewed as a total

system composed of interdependent subsystems

Objective should be to optimize total system performance

Generally assumed that the total system should be designed

to minimize costs, other things being equal

Channel flexibility – Ability of the manufacturer to adapt to

changing conditions

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved

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