MARKETING CHANNELS

Group No. 3• Arun Kumar V. K

• Deepa Rose Jacob

• Molamma Abraham

• Jerry Jose

• Kichu V John

• Rithvik R Nair

• Rohit Nair

Physical distribution has become more

dynamic.

It aims to maximize customer

satisfaction.

Physical distribution and channel

decisions are critical in marketing

management.

Introduction

A ‘Marketing Channel’ can be defined as…

“an array of exchange relationships that

create

customer value in the acquisition,

consumption, and disposition of products

and services.“

Producers Intermediaries Customers

"All the organizations through which a

product must pass between its point of

production and consumption"

“It is an organized network of

interconnected organizations and

agencies involved in the process of

making a product or service

available to customers.”

CHANNEL OPTIONS

Option-1 Direct marketing without

middlemen.

Option-2 Indirect marketing with the use of

middlemen.

Why Channels Are Needed

Bring buyers and sellers together. Make products or services

available to customers at convenient time.

Producers cannot deal directly with customers.

Awareness creation More profitable sales.

Producers can concentrate on core

activity.

Bridging the gap between

customers and producers.

Reduce the number of transactions

and thus transaction costs.

Functions of marketing channels

Facilitate selling by being physically close to customers

Provide distributional efficiency by bridging the

manufacturer with the user, efficiently & economically

Break the bulk & cater to the tiny requirements of buyers

Assemble products into assortments to meet buyers

need; match ‘segments of supply' with ‘segments of

demand’

Look after a part of physical distribution/ marketing

logistics

Facilitation

Information

Promotion

Negotiation

Transfer of title and ownership

Holding the inventory and sharing risk.

Finance

Providing pre-sale and post-sale services.

Change agents

Warehousing and transportation

Market feedback and intelligence.

TIMEPLACE

POSSESSION

Channels of Distribution

…create time, place, possession and information utilities.

Information37 24

5729 1 1

Utility

BoxCreating utilities for customers.

Factors influencing the choice of marketing

channels Nature of product Nature of customers Middlemen consideration Company consideration Market consideration Competitor’s channel

Effective coverage of the target market

Efficient cost-effective distribution

Ensuring that consumers incur minimum

exertion in procuring the product

Helping the firm to carry on manufacturing

uninterrupted, confident that the channels

will take care of sales.

Partnering the firm in financing & sub-

distribution tasks.

Importance of Channels Link producers to buyers

Convert potential buyers to

profitable customers

Achieve targeted service output

levels

Provide distribution efficiency

Provide salesmanship

Help in price mechanism

Look after a part of physical distribution &

financing

Assist in merchandising

Provide market intelligence

Act as change agents & generate demand

Take care of the flows involved in

distribution

Provide pre-sale & after sale service

Assist in sales promotion

Assist in merchandising

Assist in introducing new products

Assist in implementing the price

mechanism

Assist in developing sales forecast

Provide market intelligence & feedback

Types of Marketing Intermediaries

ManufacturerManufacturer

ConsumerConsumer

WholesalerWholesaler

RetailerRetailer

0 Level1 Level2 Level3 Level

LEVELS OF CONSUMER MARKETING CHANNELS

Analyzing Customers' desired service

output levels

Establishing the channel objectives &

constraints

Identifying the major channel alternatives

Evaluating the major channel alternatives

CHANNEL DESIGN DECISIONS

• Lot size

• Waiting and Delivery

time

• Spatial convenience

• Product variety

• Service back-ups

SERVICE OUTPUT LEVEL

•Selecting channel members

•Evaluating channel members

•Modifying channel

arrangements

CHANNEL MANAGEMENT DECISIONS

0 LEVEL

Manufacturer Consumer

World’s largest direct seller of beauty products like

skincare, make-up, fragrances, personal care,

fashion jewelleries, etc.

58 lakh representatives in over 100 countries.

Global turnover- Rs.45,000 crores.

HOW DOES IT WORK?

Customer approaches sales representative and places

order.

Sales representative places weekly orders with the

company.

Products are delivered to the sales representative who

in turn distributes it to the customer

• Lot size

• Waiting and Delivery time

• Spatial convenience

• Product variety

• Service back-ups

SERVICE OUTPUT

TRADE PROMOTION TOOLS

•Sales rep. sells the product at brochure price

•Sales rep. earns discounts depending upon targets

achieved.

•Sales rep. can be promoted after achieving

certain targets.

• They earn commission.

1 LEVEL

Manufacturer Retailer Consumer

A multi-branded discount store with

exclusive tie-ups with various brands.

Currently operates in 150 retail outlets in

Mumbai, Hyderabad, Delhi, etc.

• Lot size

• Waiting and Delivery time

• Spatial convenience

• Product varieties

• Service back-ups

SERVICE OUTPUT

TRADE PROMOTION TOOLS

2 LEVEL

Manufacturer Wholesaler Retailer Consumer

• A multi-branded lady’s accessories and

gifts’ shop availing gift articles,

accessories, gadgets and toiletries.

• Currently based in Cochin, Kottayam, etc.

SERVICE OUTPUT

TRADE PROMOTION TOOLS

•Cash discounts

•Trade discounts

•Schemes

•Offers

•Other promotional

tools