File

advertisement
Distribution management &
Marketing Mix
 Distribution refers to bringing the product
to the market and giving it to the final
consumer
According to Mossmam & Norton
“distribution is the operation which creates
time,place & form utility through the
movement of goods and persons from one
place to another”.
 Are sets of interdependent organizations involved
in the process of making a product or service
available for use or consumption
 Right product in
Right quantity in
Right condition at the
Right time and
Right place for the
Right customer at
Right cost
 Are intermediaries or middlemen
 Exist because producers cannot reach all their
consumers
 Multiply reach and provide efficiency to the marketing
process
 Facilitate smooth flow and create time, place and
possession utilities
 Have the core competence and reach
 Provide contact, experience, specialisation and scales of
operation
5
 Product
 Place
 Price
 Promotion
 Distribution channels help in the ‘place’ aspect of
the marketing mix
 Distribution provides place, time and possession
utility to the consumer
6
 Consumer wants to buy a tube of toothpaste
 Made available at a retail outlet close to her residence –
place
 Made available at 8 pm on a Tuesday evening when she
wants it – time
 She can pay for the toothpaste and take it away –
possession
 The company distribution function has made all
this possible.
 The situation would be similar if a customer wants
to buy a refrigerator or medicines or even an
electric motor
7
 Spatial discrepancy :- the difference between the
location of a producer and the location of widely
scattered markets
 Temporal discrepancy:- a situation that occurs when
a product is produced but a customer is not ready to
buy it
 Need for breaking the bulk
 Need for assortment
 Derived from the corporate strategy and the
marketing strategy
 Steps for designing the distribution strategy are:






Defining customer service levels
Distribution objectives and steps
Set of activities
The distribution organization
Key performance indicators
Critical success factors
9
 Defined by the nature of the industry, the products,
competition and market shares.
 Affordability also decides the service level
 It should at least match competition.
 Customer expectations have no limit
10
 Influenced by the customer expectations
 Defines the extent of time, place and possession utility
which the customer can expect out of the channel
network
Set of activities….
11
 Manner in which the company and its marketing
channels go about achieving the customer service
levels
 Some of these steps could be:






Sales forecasts
Despatch plans
Market coverage beat plans
Journey plans for service engineers
Collection of sales proceeds
Carrying out promotional activities
 The company also decides as to who is to perform
which task
Organization….
12
 Extent of company support and outsourcing to be




decided
Budget for the cost of the distribution effort
Select suitable channel partners – C&FAs, and
distributors
Setting clear objectives for the partners
Agree on level of financial commitments by the
channel partners.
Policy and procedure..
13
 Define policy and implementation guidelines through
Operating Manuals
 Policy guidelines include





Code of conduct for channel members
System for redressal of complaints
Any additional subsidies etc
Handling institutional business
Service policy for engineering products
KPIs….
14
 For measurement of effectiveness. Some of these
could be:
 Consistent achievement of targets by product groups,





periods and territories
Achievement of market shares
Achievement of profitability
Zero complaints from customers
No stock returns
Ability to handle emergencies and sudden spurts in
demand
15
 For measurement of effectiveness. Some of these could
be:
 Balanced sales achievement during a period – no period




end skews
Market coverage with ready stocks
Excellent management of accounts receivables
Minimize losses on account of stock-outs
Minimize damages to products
CSFs…
16
 The distribution strategy also needs the support
and encouragement of top management to succeed
 Some of the CSFs could be:
 Clear, transparent and unambiguous policy and






procedure
Serious commitment of the channel partners
Fairness in dealings
Clearly defined customer service policy
High level of integrity
Equitable distribution at times of shortage
Timely compensation of channel partners
17
 C&FAs and CSAs
 Distributors, dealers, stockists, value-added re-





sellers
Agents and brokers
Franchisees
Electronic channels
Wholesalers
Retailers
18
 C&FA: carrying and forwarding agent and C&SA:




carrying and selling agent – both are on contract
with a company
Both are transporters who work between the
company and its distributors
Collect products from the company, store in a
central location, break bulk and despatch to
distributors against indents
Goods belong to the company
C&SA also sells the goods on behalf of the company
but remits proceeds after sale
19
 Name denotes the extent of re-distribution






done by them
Distributors invest in the products – buy
products from the company
Are on commission, margins or mark-up
May or may not get credit – but extend credit
Distributors cover the markets as per a beat
plan. All others merely finance the business.
Distributors could be exclusive for a company
Agents bring buyer and seller together
20
 Operate out of the main markets
 Deal with a number of company products of




their choice
Are not on contract with any company
Sell to other wholesalers, retailers and
institutions
Negotiate about 15 days credit from company
distributors – also provide credit to their
customers
Operate on high volumes and low margins
21
 The final contact with consumers
 Operate out of their shops and sell a large




assortment and variety of goods
Located closest to consumers
Buy from company, distributors or wholesalers
Highest margins in the network
Provide personalised services to their customers
22
Customers may also direct from company sales force
Producer
Producer
Agent/middleman
Industrial Distributor
Industrial Distributor
Industrial Customer
Industrial Customer
23
Retailers may also direct from company sales force
Producer
Producer
Producer
Distributor
Distributor
Wholesaler
Retailer
Retailer
Retailer
Customer /
consumer
Customer/
Consumer
Customer/
Consumer
24
 Determines the intensity of the distribution
 Intensity decides the service level provided
 Types of distribution intensity:
 Intensive
 Selective
 Exclusive
25
 Intensive distribution:- a form of distribution aimed
at having a product available in every outlet where
target customers might want to buy it.
 Selective distribution:- a form of distribution
achieved by screening dealers to eliminate all but a few
in any single area
 exclusive distribution:- a form of distribution that
establishes one or a few dealers within a given area
 Intensive: distribution through every reasonable
outlet available – FMCG
 Selective: multiple, but not all outlets in the market –
pharma, frozen food
 Exclusive: may be only one outlet in a market - car
dealers
27
 Strategy is to make sure that the product is available in
as many outlets as possible
 Preferred for consumer, pharmaceutical products and
automobile spares
28
 A few select outlets will be permitted to keep the
products
 Outlets selected in line with the image the company
wants to project
 Preferred for high value products
 Tanishque jewelry
 Keeps distribution costs lower
29
 Highly selective choice of outlets – may be even one
outlet in an entire market
 Could include outlets set up by companies – Titan,
Bata
 Producer wants a close watch and control on the
distribution of his products.
Channel strategy…
30
Download