channel sales.2

8/7/2019 channel sales.2

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channel sales

Definition:

Aggregate of all sales generated in a particular period by all means of distribution (own sales force, dealers,retailers, direct marketing, etc.) employed

by a firm to move its products to themarket.



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Distribution channels:

Distribution channels are the methods thatcompanies use to enter the consumer market with their product. While manymethods exist, they have changed over

the years because of the Internet andglobal sales.



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Def inition

1. A distribution channel is the method a company uses to get its products into themarketplace for consumer use. The traditional

channel goes f rom supplier, manuf acturer,distributor, wholesaler and retailer. Two typesof distribution channels exist: indirect anddirect.



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Indirect Channel

The indirect channel is used by companies whodo not sell their goods directly to consumers.

Suppliers and manuf acturers typically use indirectchannels because they exist early in the supplychain.

Depending on the industry and product, directdistribution channels have become moreprevalent because of the Internet.



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Direct Channel

A direct distribution channel is where a company sells its products direct to

consumers. While direct channels were notpopular many years ago, the Internet hasgreatly increased the use of directchannels. Additionally, companies needing

to cut costs may use direct channels toavoid middlemen markups on their products.



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Indirect Channel Methods

Distributors, wholesalers and retailers arethe primary indirect channels a companymay use when selling its products in the

marketplace. Companies choose theindirect channel best suited for their product to obtain the best market share;it also allows them to focus on producing

their goods.



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Direct Channel Methods

Selling agents and Internet sales aretwo types of direct distribution channels.

Selling agents work for the company andmarket their products directly toconsumers through mail order, storef rontsor other means. The Internet is an easydistribution channel because of the global availability to consumers.



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W hat are Channels of Distribution?

a supply chain as consisting of all parties andtheir supplied activities that help a marketer create and deliver products to the final customer. For marketers, the distribution

decision is primarily concerned with the supplychain¶s f ront-end or channels of distribution thatare designed to move the product (goods or services) f rom the hands of the company to thehands of the customer. All activities andorganizations helping with the exchange are part

of the marketer¶s channels of distribution.



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Middleman:

A distributor is the middle man themanuf acturer and retailer. After a productis manuf actured, it may be warehoused or

shipped to the next echelon in the supplychain, typically either a distributor, retailer or consumer



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Activities involv ed:

Activities involved in the channel are wide andvaried though the basic activities revolve aroundthese general tasks:

Ordering

Handling and shipping Storage Display Promotion Selling Information feedback



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Channel Lev els:

consumer mkt¶ g:

0-level

1-level

2-level

3-level



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0-lev el:

Manufacturer

consumer



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2-lev el:

Manufacturer

Wholesaler

Retailer

Consumer



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3-lev el

manufacturer

wholesaler

Jobber

retailer

Consumer



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The distribution channel

Frequently there may be a chain of intermediaries, each passing the product downthe chain to the next organization, before it

finally reaches the consumer or end-user. Thisprocess is known as the 'distribution chain' or the'channel.' Each of the elements in these chainswill have their own specific needs, which theproducer must take into account, along with

those of the all-important end-user.



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Type of Channel Members

Channel activities may be carried out bythe marketer or the marketer may seek

specialist organizations to assist withcertain functions.



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We can classify specialist organizationsinto two broad categories:

Resellers

Specialty service firms.



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R esellers

These organizations, also known within someindustries as intermediaries, distributors or dealers, generally purchase or take ownership of products f rom the marketing company with theintention of selling to others. If a marketer utilizes multiple resellers within its distributionchannel strategy the collection of resellers istermed a Reseller Network.



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Sub division of reseller

Retailers

Wholesalers

Industrial Distributors



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These organizations can be classified into several sub-categories including:

Retailers ± Organizations that sell products

directly to final consumers. Wholesalers ± Organizations that purchase

products f rom suppliers, such as manuf acturersor other wholesalers, and in turn sell these toother resellers, such as retailers or other

wholesalers.



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Industrial Distributors ± Firms thatwork mainly in the business-to-businessmarket selling products obtained f rom

industrial suppliers.



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Specialty Service Firms:

These are organizations that provideadditional services to help with the

exchange of products but generally do nottake ownership of the product



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Agents and Brokers ± Organizations thatmainly work to bring suppliers and buyerstogether in exchange for a fee.

Distribution Service Firms ± Offer servicesaiding in the movement of products suchas assistance with transportation, storage,and order processing.



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Others ± This category includes firms thatprovide additional services to aid in thedistribution process such as insurance

companies and firms offering transportation routing assistance.



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AMUL: Grow th Strategy

Every day Amul collects 447,000 liters of milk f rom 2.12 million f armers (manyilliterate), converts the milk into branded,

packaged products, and delivers goodsworth Rs 6 crore (Rs 60 million) to over 500,000 retail outlets across the country.



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Its supply chain is easily one of the mostcomplicated in the world.



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Organization structureIt all started in December 1946 with a group of f armers keen to f ree themselves

f rom intermediaries, gain access tomarkets and thereby ensure maximumreturns for their efforts.



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Managing this supply chain efficiently iscritical as GCMMF's competitive position isdriven by low consumer prices supported

by a low cost system.



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The distribution network Amul products are available in over 500,000 retail outlets across India through

its network of over 3,500 distributors.There are 47 depots with dry and coldwarehouses to buffer inventory of theentire range of products.



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Wholesale dealers carry inventory that isjust adequate to take care of the transittime f rom the branch warehouse to their

premises. This just-in-time inventorystrategy improves dealers' return oninvestment (ROI). All GCMMF branchesengage in route scheduling and havededicated vehicle operations.

channel sales.2

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