L – 4 Distribution Channel selection

• A channel of distribution comprises of a set of institutions which perform all of the activities utilized to move a product and its title from production to consumption

Selection

• Selection consideration 

• Market segment - must know the specific segment and target customer

• Changes during plc - different channels are exploited at various stages of plc

• Producer-distributor fit - their policies, strategies and image

• Qualification assessment - experience and track record must be established

• Distributor training and support

Selection

• Indirect influence strategies - information is merely exchanged with channel member personnel

• Direct unmediated strategies - consequences of a poor response from the market are stressed

• Reward and punishment strategies - given to channel members and their firms

Selection…

• Direct un weighted strategy or request - producer’s wishes are communicated . No consequences are applied or mentioned

• Direct mediated strategies - specific action is requested and consequences of rejection are stressed

• e.g.1 control of retail pricing • e.g.2 minimum order size • e.g.3 salesperson training • e.g.4 physical layout of store • e.g. 5 territorial and customer restrictions

Channel Selection

• Selection of channel :

The selection of distribution is affected by many of factors, which play significant role while choosing the channel for distribution. It may include the buying pattern of consumer, type of the product (the product is perishable, or auto mobile), weight and bulk and it also depends on the company's resources.

The main affecting factors are following..

Type of product - bread, milk (perishable), or FMCG goods. Nature and extent of market- requirement of market Existing channel for comparable product- company may chose It's existing channel of distribution for relative product. Buying habit of customers- buying in small quantity or larger quantity middle man consideration- company's strategies

Logistical Strategy has three Objectives

• Cost Reduction Strategy

• Capital Reduction strategy

• Service improvisation strategy

Levels of Planning

• Strategic Planning

• Tactical Planning

• Operational Planning

Decision Area / Level of Decision

Decision Area

STRATEGIC TACTICAL OPERATIONAL

Facility Location

Number, size, location, plants, Terminal

Inventories Stock locations and control policies

Safety stock levels Replenishment quantities

Transportation Mode Selection Seasonal equipment leasing

Routing,dispatching

Customer service

Setting Standards Priority rules for customer orders

Expediting deliveries

Warehousing Handling equipments selection, Layout design

Seasonal space choices and private ut;lization

Order picking and restocking

Purchasing Development of supplier buyer relationship

Contacting, vendor selection, forward buying

Order releasing and expediting supplies

Customer Service Goals

Inventory Strategy- Inventory Levels- Deployment of inventories scheduling- Control methods

Transport- Modes of Transport- Carriers routing- Shipment size / consolidation

Location Strategy- Number size and location of facility- Assignment of stocking points to sourcing points- Assignment of demand to stocking or sourcing point- Private / Public warehousing

Triangle of Logistical Decision Making

Major Planning Area

• Customer Service Goals

• Facility location strategy

• Inventories Decisions

• Transportation Strategy

Major Planning Area

• Logistical Planning is a design problem. The network is to be constructed as configuration of warehouse,retail outlets, factories, deployed inventories, transportation service and information processing system that will achieve an optimum balance between the revenue resulting from the level of customer service established by the network design and the cost associated with the creation and operational of the network

When to Plan

• A General guidelines for network appraisal and audit can be offered in the five key areas:– Demand– Customer Service– Product Characteristics– Logistical costs– Pricing policy

Measuring Strategy Performance

• Cash Flow

• Savings

• Return on Investment

Mission of Logistics

• Mission of Logistics is to Plan and coordinate all those activities necessary to achieve a desired level of delivered services and quality the least possible;e cost

The components are…

• Target customers and market• Principal products and services• Geographic domain• Core technologies• Survival, growth and profitability• Company philosophy• Company self – concept• Desired public image

Customer Service

• Customer Service is a measure how well the logistics system is performing in providing place utility for a product

• Customer Satisfaction is the over all assessment of the Marketing Mix.

Customer Service viewed…

• Activity or function managed to order processing or customer complaint.

• Actual performance in a particular parameter

• Part of an overall corporate philosophy rather than simply an activity.

Elements of Customer Service…

• Pre- Transaction:– A written statement of customer service

policies– Customer receives policy statement– Organisation structure– System flexibility– Managerial Service

Elements of Customer Service…

• Transaction:– Stock out level– Order information– Element of order cycle– Expedite shipments– Transshipment– System accuracy– Order convenience– Product substitution

Elements of Customer Service…

• Post Transaction:– Installation, warranty, alteration, repairs, parts– Product training– Customer claims, complaints, returns– Temporary replacement of products