CHANNELS OF DISTRIBUTION
RENUKA MEHRA
LECTURER INB.B.B.A.III
GCCBA-42
INTORDUCTION


According to American Marketing Association,
“Distribution channel is a structure of intra-company
organization units and extra-company agents and dealers,
wholesale and retain , through which a commodity,
product or service is marked.”
According to EW Cundiff and RS Still, “ Channel of
distribution is the route taken by title to the goods as
they move from the producer to ultimate consumers or
industrial users.”
Marketing system comprising channels of
distribution
Manufacturers
and processors
Perform functions like
-Financial
-advertising
-transportation
-warehousing
-others
Marketing Intermediaries
-retailers
-agents
-brokers
-wholesalers
-dealers
End users
Characteristics of Channel of Distribution




It is a pathway composed of intermediaries through which
products and services flow from manufacturers to
customers.
Flow of goods is sequential and usually undirectional
constitutes a contractual organization
Function performed by intermediaries include buying ,
sorting out, accumulation, allocation , selling and
transferring title of products to consumers.
Need Channel of Distribution



Helps in making product visible to customer
Provides valuable feedback to the producer regarding
consumer’s preference, taste , habits, fashion and
consumer’s response to a product.
Further provides consumer services like credits, home
delivery, warranties and guarantees
Functions of Distribution Members
Research
 Contact
 Promotion
 Matching
 Sorting
 Accumulation
 Allocation

Contd.




Negotiation
Physical distribution
Financing
Risk taking
Importance of Channel of Distribution








Cost saving in specialization
Minimum total transactions
Principle of searching
Facilitates distributive system
Reduce exchange time
Creates time, place and ownership utility
Stabilize
Provides information
Types of Channel of Distribution
Direct
Selling
Indirect
Selling
Channels
Direct Selling



Personal Selling
Direct Mailing
Telemarketing
Indirect Selling



Manufacturer- Retailer- Consumer Channel
Manufacturer- Wholesaler-Retailer-Consumer Channel
Manufacturer- Agent -Wholesaler-Retailer-Consumer
Channel
Figure showing relationship
Marketing
Channels for
Consumer
Products
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Agents
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers
Consumers
Consumers
Consumers
A
B
C
D
Types of Marketing Intermediaries
1)


Merchant Intermediaries- they are further of following
types
Wholesalers
Retailers
2) Agent Intermediary
Wholesalers are of following types







Full functions wholesaler
Limited function wholesalers
Convertor Wholesaler
Rack jobbers
Drop shippers
Limited line wholesalers
Specialty time
Retailers
Small Scale Retailers
 Large scale retailers- for eg.
 Departmental store
 Multiple shops
 Supermarkets
 Mail order houses
 Franchising
 Consumer cooperatives

2) Agent Intermediary





Commission agents
Brokers
Factors
Auctioneers
Facilitators
Factors affecting Selection of channels
Market Consideration
 The nature of the market
 Number of potential customers
 Size of order
 Geographic location of consumers

•Product Consideration
 Cost
of the product
 Nature of product
 Technical nature of the product
 Range of product
 Level of services required
 Weight of products
•
Company Consideration
 Financial
soundness
 Volume of production
 Post-sale service ability
 Company reputation
 Company marketing policies
•Middlemen Consideration
 Functions
performed by middlemen
 Financial ability
 Terms and conditions
•Environment consideration
 Economic
 Legal
 Fiscal
Policies
Channel selection process
Identity target consumers
Determining consumer behavior
Ascertain
channel
alternatives
Evaluation of
channel
alternatives
Locate
potential
customer
Select channel
members
THANK YOU