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Distribution Management and Marketing Mix
Chapter 8 Krishna Havaldar
Distribution Management
This
aspect of the marketing function provides
Place
Time
Possession
Form
Place utility
Time utility Form
Utility to the customer Possession utility
Distribution Management
Consumer wants to buy Colgate
PLACE: Make it available at retail shop close to his residence (alternative places)
TIME: He wants it at 8 pm on Tuesday (not a office time) (At customers chosen time
POSSESSION: He pays and take it home
FORM: He wants a single packet, and not a carton.
Distribution Management
The
management of all activities which facilitates movement and co-ordination of supply and demand in the creation of time and place utility in goods. The art and science of determining requirements, acquiring them , distributing them and finally maintaining them in an operationally ready condition for their entire lives Broad range of activities concerned with the efficient movement of finished products from the end of the production line to the consumer and in some cases it also includes the movement of raw materials from the source of supply to the beginning of the production line.
Supply
chain, and weak link
Supplier¶s Supplier¶s Supplier
Supplier¶s Supplier
Supplier
Company
Customer
Customer¶s Customer
Customer¶s Customer¶s Customer
´Who could be this weak link?µ
Need
for distribution channels
How else can we distribute door-to-door? through exhibitions? through C&F agents? through wholesalers? through distributors? . . . .
?
Need
for distribution channels
Functions of Intermediaries:
To
accumulate right kind of goods, aggregating and sorting to meet consumer needs at POP To believe in routine and simplified transaction and work with large no of products, so that the distribution costs could get minimized. To provide information both to the sellers and the buyers to help them manage their business better To buy a large variety of goods and can compare costs and prices and make the right recommendations to their customers To be aware of the environment in which they operate and hence isolate companies from the direct impact of these local conditions To reduce the no of touch points. The company will be able to meet demands of thousands of customers directly and hence needs intermediation. Help manufacturer to effectively run trade and consumer promotions Provide credit facilities to their buyers
´Are intermediaries necessary?µ
Marketing Channels and Value Networks
Philip Kotler
R ole
of Marketing Channels
M
C
M
M
C
M
M
C
M
C
D
No of contacts
No of contacts
M x C = 3X3 = 9
M + C = 3+3 = 6
M: Manufacturer D: Distributor C: Customer Philip Kotler
C
C
Channel Functions and Flows
Gather
info about potential and current customers, competition, and other actors and forces in the marketing environment Develop and disseminate persuasive communications to stimulate purchasing Reach agreement on terms Place orders Invest in business Assume risks Inventory control Manage financial transactions Delivery and ownership transfer Philip Kotler
Discrepancies and Distribution channels (Wroe Alderson)
Distributional channel members take care of four discrepancies that exist in the market place
Spatial
discrepancy Helps reduce the distance between the producer and the consumer Temporal discrepancy Helps speed up time in meeting the requirement of the consumer Need to break the bulk Reduce large quantities into acceptable lot sizes for the consumer Need to provide assortment Provide variety to the consumer to choose from Financial support Helps fund the activities of reaching the product to the consumer
How
does distribution add value?
Distribution channel strategy
Customer service level ABC analysis of service level and then plan Setting distribution objectives Availability, finance, requirements Set of activities expected by them Provide forecast to them Arrange dispatches Develop beat plan Market visits to sell proceeds Collections Promotions Build long term relationships with A class dealers The distribution organization Extent of company support Affordability Selecting channel partners Set system for monitoring Ensuring financial investment Policy and procedure Key performance indicators (KPIs) Critical success factors (CSFs)
Distribution channel
Distribution channel can broadly be classified as
