disrtibution ppt
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DistributionDistribution
BY:BY:--AshishAshish kumarkumar lambalamba
MBAMBA
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IntroductionIntroduction
Marketing channels are sets ofMarketing channels are sets of
interdependent organizationsinterdependent organizationsinvolved in the process of making ainvolved in the process of making aproduct or service available for useproduct or service available for useor consumptionor consumption
Philip KotlerPhilip Kotler
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Distribution ChannelDistribution Channel
What is a Distribution Channel?What is a Distribution Channel?
A set of organizations (intermediaries) involved inA set of organizations (intermediaries) involved in
the process ofthe process of making a product or servicemaking a product or service
availableavailable for use or consumption by the consumerfor use or consumption by the consumer
or business user.or business user.
Used to move the customer towards the productUsed to move the customer towards the product
Selling through wholesalers and retailers usually isSelling through wholesalers and retailers usually is
much more efficient and cost effective than directmuch more efficient and cost effective than direct
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Nature and Importance ofNature and Importance of
Distribution ChannelsDistribution Channels Distribution channels is the circulatory system of aDistribution channels is the circulatory system of a
hospitality company.hospitality company.
Competition, a global marketplace, electronicCompetition, a global marketplace, electronic
distribution techniques have increased thedistribution techniques have increased the
importance of distribution.importance of distribution.
In the global economic market, companies shouldIn the global economic market, companies shouldcreate innovative ways to approach to new andcreate innovative ways to approach to new and
existing marketsexisting markets
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Information
Information
Promotion
Promotion
Contact
Contact
Matching
Matching
Negotiation
Negotiation
Physical
Physical
Gathering and distributing marketing research aboutthe environment
Gathering and distributing marketing research aboutthe environment
Developing and spreading persuasive communicationsabout an offer
Developing and spreading persuasive communicationsabout an offer
Finding and communicating with prospective buyers
Finding and communicating with prospective buyers
Shaping and fitting the offer to the buyers need
Shaping and fitting the offer to the buyers need
Agreeing on price and terms of the offer so ownershipor possession can be transferred
Agreeing on price and terms of the offer so ownershipor possession can be transferred
Distribution: transporting and storing goods
Distribution: transporting and storing goods
Financing
Financing Acquiring and using funds to cover the costs ofchannel work
Acquiring and using funds to cover the costs ofchannel work
Distribution Key FunctionsChannel
Risk Taking
Risk Taking Assuming financial risks such as the inability to sellinventory at full margin
Assuming financial risks such as the inability to sellinventory at full margin
Distribution Channel Functions
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Wholesaler
Wholesaler Jobber
Jobber Retailer
Retailer Consumer
Consumerp p p p
Consumer
Consumer
Retailer
Retailer Consumer
Consumerp
Producer
Producer
0-level channel
Wholesaler
Wholesaler Retailer
Retailer Consumer
Consumerp pProducer
Producer
2-level channel
Producer
Producer
3-level channel
1-level channel
Producer
Producer
Channel Level - E
ach L
ayer of M
arketing
Intermedi
aries th
at Perform Some Work inBringing the Product and its Ownership Closer to the Final Buyer.
Number of Channel Levels
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Basic Channels ofBasic Channels of
DistributionDistributionManufacturers/products
Agents/brokers
Wholesalers/distributors
RetailersRetailers
Consumers and organizational end users
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Distribution ObjectivesDistribution Objectives
Minimize total distribution costs for aMinimize total distribution costs for agiven service outputgiven service output
Determine the target segments and theDetermine the target segments and thebest channels for each segmentbest channels for each segment
Objectives may vary with productObjectives may vary with productcharacteristicscharacteristics e.g. perishables, bulky products, non-standard
items, products requiring installation &maintenance
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Transaction Cost byTransaction Cost by
ChannelsChannelsAs the valueAs the value--added increases, the cost ofadded increases, the cost of
transaction also increasestransaction also increases
Direct marketing channelsDirect marketing channelslow valuelow value--added;added;low cost of transactions e.g. elow cost of transactions e.g. e--commerce,commerce,telemarketingtelemarketing
Indirect marketingIndirect marketing channelschannelsmedium valuemedium value--
added; medium cost of transactionsadded; medium cost of transactions e.g. retaile.g. retailstores, distributorsstores, distributors
Direct sales channelshigh valuehigh value--added; highadded; highcost of transactions e.g. own sales forcecost of transactions e.g. own sales force
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Competitive Advantage ofCompetitive Advantage of
ChannelsChannels Traditional means of achieving competitiveTraditional means of achieving competitive
advantage is through products but can beadvantage is through products but can be
easily copiedeasily copied LowLow--cost as a competitive advantagecost as a competitive advantage
Also suffer from sustainabilityAlso suffer from sustainability
Brands as competitive advantageBrands as competitive advantage
Only if you are a strong brandOnly if you are a strong brand Marketers are turning more and more toMarketers are turning more and more to
channels as a competitive advantage e.g. Dellchannels as a competitive advantage e.g. DellComputerComputer
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DistributionDistribution--Scope StrategiesScope Strategies Exclusive DistributionExclusive Distribution
Limiting the distribution to only oneLimiting the distribution to only one
intermediary in the territoryintermediary in the territory Intensive distributionIntensive distribution
Distribute from as many outlets asDistribute from as many outlets aspossible to provide locationpossible to provide location
convenienceconvenience Selective distributionSelective distribution
Appoint several but not all retailersAppoint several but not all retailers
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Exclusive Distribution:Exclusive Distribution:
AdvantagesAdvantages
Maximize control over service level/outputMaximize control over service level/output
Enhance products image & allow higherEnhance products image & allow highermarkupsmarkups
Promotes dealers loyalty, betterPromotes dealers loyalty, betterforecasting, better inventory andforecasting, better inventory and
merchandising controlmerchandising control Restricts resellers from carryingRestricts resellers from carrying
competing brandscompeting brands
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Example of IntensiveExample of Intensive
DistributionDistribution
NewspapersNewspapers
Most fast moving consumer goods youMost fast moving consumer goods yousee in the newsstandsee in the newsstand
Photo processing shopsPhoto processing shops
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Advantages:Advantages:
Increased sales, wider customerIncreased sales, wider customerrecognition, and impulse buyingrecognition, and impulse buying
Disadvantages:Disadvantages:
Characteristically low price and lowCharacteristically low price and low--marginmargin
products that require a fast turnoverproducts that require a fast turnoverDifficult to control large number ofDifficult to control large number of
retailersretailers
Intensive DistributionIntensive Distribution
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Selective DistributionSelective Distribution
Advantages:Advantages:
Better market coverage than exclusiveBetter market coverage than exclusive
distributiondistributionMore control and less cost than intensiveMore control and less cost than intensive
distributiondistribution
Concentrate effort on few productive outletsConcentrate effort on few productive outlets
Selected firms capable of carrying full productSelected firms capable of carrying full productline and provide the required serviceline and provide the required service
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The Future: MThe Future: M--CommerceCommerce Mobile commerce is going to be the nextMobile commerce is going to be the next
revenue stream once the killer mobilerevenue stream once the killer mobile--application isapplication is rolledrolled outout
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Thank youThank you
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