distribution strategy
DESCRIPTION
TRANSCRIPT
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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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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