Introduction to Distribution
Management
Prof. Suvendu Kr. Pratihari
spratihari@mimts.org
Prof. Suvendu Kr. Pratihari
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Learning Objectives
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To discuss how distribution channels play a vital
role in value delivery. (RN-P-505)
To discuss the factors that governs the
development of the Distribution Channel (GuptaP-427)
To understand the major roles of the distribution
channel
Prof. Suvendu Kr. Pratihari
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What is Distribution Channel (Ref – Stanton-413/14E)
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A Distribution channel consists of a the set of
people and firms involved in the transfer of title of
a product as the product moves from producer to
the ultimate consumer or business user.
It is the management of all activities which
facilitates the movement and co-ordination of
supply and demand in the creation of time and
place utility.
Prof. Suvendu Kr. Pratihari
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Channel Flow (Ref. Saxena-P-449/4E)
Physical Flow
Input Supplier
Transporter &
Warehouses
Manufacturer
Customer
Retailer
Transporter
Transporter &
C and F
agents or
Company
Warehouse
Title Flow
Supplier
Wholesalers/
Dealers
Manufacturer
Retailers
Customers
Payment Flow
Supplier
Bank
Manufacturer
Wholesalers/De
alers
Retailers
Customers
Information Flow
Prof. Suvendu Kr. Pratihari
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Factors that governs the development of the
Distribution Channel (Ref.- Gupta P-427/2E)
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Market Factor
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Customer Preference -The channel which is most
preferred by customers.
Organizational Customers – They have buying habits
that are different from the other consumers.
Geography – Consumer location is one of the major
factor in developing the distribution channel.
Competitor
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Analyzing the competitors’ channel and finding one’s
own channel is the most challenging task for the
marketer.
Prof. Suvendu Kr. Pratihari
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Factors that governs the development of the
Distribution Channel …Contd.
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Nature & Availability of the intermediary
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It is important to find out the intermediary that can handle the
product capably and provide adequate service to the final
customers.
Product Factor
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Product Life Cycle
Complexity
Value of the product (Low cost & High Cost)
Size and Weight
Customer perception about the product
Nature of the product itself
Prof. Suvendu Kr. Pratihari
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Major Role of Distribution Channel
Reducing the Distance between the producer & the consumer
Speeding up in meeting the requirement of the customer
Reduce large quantities in to acceptable lot size
Provide variety to the consumers
Helps fund the activities of reaching the product to the
customer
Prof. Suvendu Kr. Pratihari
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Types of Middleman/Intermediary (Ref. R Saxena-P448/4E)
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There are three types of middlemen, that facilitate the flow of
goods and services from the manufacturer to the consumer.
Merchant Middleman : Take title of the goods and services
and resell them. E.g. Distributor, Dealers, Retailers, they share
the risk with the manufacturer.
Agent: They don’t take title to the goods or services, but help in
identifying potential customers and even in negotiation. E.g.
C&F agent, broker etc.
Facilitator: These are the independent business units. Facilitate
the flow without taking a title or negotiation on behalf of the
producer. E.g. Transport Companies, Banks, Independent
warehouses. They are being paid for their services.
Prof. Suvendu Kr. Pratihari
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Different Types of Intermediaries (Ref. RN-P-509)
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C&F Agent
Wholesaler/stockiest/distributor
Retailer/Dealer
Reseller
Broker
Franchise
Authorized Representative
Commission Agent
Consignment Agent
Transporter
Prof. Suvendu Kr. Pratihari
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Functions of Intermediaries
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Making the Product Available: Provide for
storage and physical movement of the goods.
Minimizing the Distribution Cost: Believing in
routine and simplified transactions and work with a
large no of products (at the wholesaler and retailer
level), so that the distribution cost get minimized.
Providing Information: Collect the information
about customers, competitors and any other entities
which can affect he company’s marketing effors.
Prof. Suvendu Kr. Pratihari
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Functions of Intermediaries…contd.
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Helping customers in taking the purchase
decision: They do the actual selling.
They are the link for transfer of ownership of the
goods from one party to another.
Reducing the no of touch points: The company
will not be able to meet the demands of thousands
of its customers directly and hence need
intermediation.
Prof. Suvendu Kr. Pratihari
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Functions of Intermediaries…contd.
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They finance the inventories after the goods
leave the manufacturer till they reach the end user.
They also provide credit facilities to their buyer.
Helping the manufacturer to effectively run trade
and consumer promotions.
Prof. Suvendu Kr. Pratihari
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Intensity of Distribution
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Intensive Distribution
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Selective Distribution
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The product is made available in as many outlets as
possible. Exp-FMCG sector
Few select outlets. Exp- Tanishq Jeweler
Exclusive Distribution
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Here the producer is interested in keeping a close watch
and control on the distribution of his products.
Exp-Bata Showroom, Raymond showroom, Exclusive
women apparels
Prof. Suvendu Kr. Pratihari
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Channel System
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Vertical Marketing Channel System
Horizontal Marketing Channel System
Multi-Channel Marketing System
Prof. Suvendu Kr. Pratihari
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Vertical Marketing Channel System
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It is the conventional marketing system of a producer,
distributor and retailer.
Each of the channel members including the company act
independently and trying to run a profitable business.
When all these entities were to act together to provide
service to the end user, it would be called Vertical
Marketing System (VMS)
Prof. Suvendu Kr. Pratihari
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Horizontal Marketing System
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This system operates between two or more unrelated
companies, but arrangement of working together
provided benefits to both, Commonly known as “tieups”
Each companies has seen their respective strength,
which can be exploit to its advantage.
Example – Supermarkets and airports having ATM of
leading banks
Exp – Big hotels having CCD outlets, Cell Phone
outlets etc.
Prof. Suvendu Kr. Pratihari
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Multichannel Marketing
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Here, companies use two or more marketing
channels to reach different customer segments.
Prof. Suvendu Kr. Pratihari
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Thank You
Prof. Suvendu Kr. Pratihari
suvendupratihari@gmail.com
Prof. Suvendu Kr. Pratihari
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