Methods of Distribution in Marketing
Rahima Tukur
Management- 15/0102
What is Marketing?• Marketing is the
management process responsible for identifying, anticipating, and satisfying customer requirements profitably.
• Its goal is to attract new customers by promising superior value and to keep current customers by delivering satisfaction.
Distribution and Distribution Channels
• Distribution is a set of interdependent organisations involved in the process of making a product available for use by the consumer or business user.
• The channel of distribution is therefore those organisations through which a product must pass between its point of production and consumption.
The Role of Intermediaries
In distribution channels, intermediaries buy large quantities of many producers & break them down into the smaller quantities and broader assortments wanted by consumers.
A.Number of contacts without a distributor (M x C= 3 X3=9
Number of contacts with a distributor (M+ C= 3+3= 6)
M= Manufacturer C= Consumer D= Distributor
NUMBER OF CHANNEL LEVELS
• Each layer of Marketing intermediaries that performs some work in bringing the product and its ownership closer to final buyer is a Channel Level.
• Consumer Distribution Channel• Industrial Distribution Channel
1. Consumer Distribution Channel:
• Channel 1- Direct Marketing Channel(no Intermediary level)
• Channel 2- Indirect Marketing(One Intermediary level)
• Channel 3- Indirect Marketing(Two Intermediary level)
• Channel 4- Three Intermediary level)
Consumer Marketing Channels
2. Industrial Distribution Channel:
Business marketer
Business customer
Industrial distributors
Business customer
Organisational Channels of distribution
• New channel organisations have evolved to challenge conventional channels. A recent one is the VMC to challenge CMC.
Types of Vertical Marketing Systems
• Corporate VMS- Conflict management & co-ordination are attained through common ownership at different levels of the channel
• Contractual VMS- Independent organisations at different levels of production & distribution, which join together through contract to obtain more economies or sales impact than each could achieve.
• Administered VMS- Co-ordinates successive stages of production & distribution through size &power of one of the parties.
Horizontal Marketing System
Two or more companies at one level join together to follow a new marketing opportunity.
Hybrid Marketing System
• Occurs when a single firm sets up two or more marketing channel to reach one or more customer segments.
Hybrid Marketing Channels