alternative channels

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Alternative channels

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Page 1: Alternative channels

Alternative channels

Page 2: Alternative channels

Channel:

Physical distribution channel is the term used to describe the method and means by which a product or a group of products are physically transferred, or distributed, from their point of production to the point at which they are made available to the final customer.

Page 3: Alternative channels

Alternative: 5km 7km

20km

8km 8 km

3km

3km 4km

8km

AB

F

C

D

E

Page 4: Alternative channels

Identifying channels alternative: Company can choose from a wide

variety of channels from reaching customers.

Most companies use a mix of channels. So that the product reaches a different segment of buyers.

Page 5: Alternative channels

A channel alternative is described by three elements:1. Type of intermediaries

2. No. of intermediaries Exclusive distribution Selective distribution Intensive distribution

Page 6: Alternative channels

3. Terms and responsibilities of channels members:

Price policyCondition of sale Mutual services and

responsibilities

Page 7: Alternative channels

Evaluating alternatives:Economic criteria

Control criteria

Adaptive criteria

Page 8: Alternative channels

Economic criteria:

Firms tries to align customer and channels to maximise demand at the lowest overall cost.

Page 9: Alternative channels

Rs .10 Rs.14

Rs.5

Rs.8

Rs.6 Rs. 9 Rs.6

Rs.10

C

BA

F

E

D

Page 10: Alternative channels

Control Criteria : Firm tend to achieve proper

control over the channel.

Adaptive Criteria : In rapidly changing , volatile or

uncertain product markets, the producer needs channel structures and policies that provide high adaptability.

Page 11: Alternative channels

Chain of Distribution Channels:

Page 12: Alternative channels

Alternative Channel Systems for Consumer Products

Page 13: Alternative channels

Manufacturer Direct To Retail Store.

The manufacturer or supplier delivers direct from the production point to the retail store. As a general rule, this channel is only used when full vehicle loads are being delivered.

Page 14: Alternative channels

Advantages :Loyalty, pride in

company/product

  Control brand image, positioning Disadvantage :

●          Limited coverage●          Cannot call on large

customer base

Page 15: Alternative channels

Manufacturer Via Retailer Distribution Centre to Retail Store.

Manufacturers supplying their products to National Distribution Centers (NDCs), which are sites run by the retail organizations. The retailers then deliver full vehicle loads of all the different manufacturers products to their own stores. Most retailers now use third parties to run these final delivery operations.

Page 16: Alternative channels

Advantage :Focused customer base   Assume financial and inventory

risk

Disadvantage :

Carry competitive products, less loyal

Unmanageable; have own agenda

Page 17: Alternative channels

Manufacturer to Wholesaler to Retail Shop.

Wholesalers acted as the intermediaries in distribution chains, providing the link between the manufacturer and the small retailers' shops.

Ex. Biscuit, grocery items.

Page 18: Alternative channels

Advantage :

●    Good relationships with customers

●    Minimal distribution costs.

Disadvantage :Expensive commissionsIf they leave, you lose the

customer

Page 19: Alternative channels

Mail order. Goods are ordered by catalogue, and delivered to the home by post or parcels carrier. The physical distribution channel is thus from manufacturer to mail order house as a conventional trucking operation, and then to the consumer's home by post or parcels carrier, bypassing the retail store.

Page 20: Alternative channels

Advantage: Relatively inexpensiveCan reach a large customer in

lesser time .

Disadvantage:Postage costs risingCatalog shopping is fun

Page 21: Alternative channels

Internet and shopping from home. Initial physical distribution channels were similar to those used by mail order operations - by post and parcels carrier. The move to internet shopping for grocery products has led to the introduction of specialist home delivery distribution operations. These are almost all run by third-party companies. In addition, it is now possible to distribute some products, such as music, software and films, directly, computer to computer.

Page 22: Alternative channels

Advantage:Instantly global if desired, wide

exposureOpen 24/7/365, access growing

wireless

Disadvantage:Limited audience (not everyone has

it or will use it for shopping)Lack of one-to-one interaction,

impersonal

Page 23: Alternative channels

Factory direct to home.

It can occur by direct selling methods, often as a result of newspaper advertising. It is also commonly used for one-off products that are specially made and do not need to be stocked in a warehouse to provide a particular level of service to the customer.

Page 24: Alternative channels

Some other specific channels:Manufacturer via broker to retail

shop. Manufacturer via small parcels

carrier to retail shop. Manufacturer via third-party

distribution service to retail shop. Manufacturer to cash-and-carry

wholesaler to retail shop

Page 25: Alternative channels

Alternative Channel Systems for Industrial Products

Page 26: Alternative channels

Factory to factory/business to business.

The factory-to-factory or business-to-business channel is an extremely important one, as it includes all of the movement of industrial products, of which there are very many. This may cover raw materials, components, part-assembled products, etc. Options vary according to the type and size of product and order, may range from full loads to small parcels, and may be undertaken by the manufacturers themselves or by a third party.

Page 27: Alternative channels