2. IIM
RAIPUR
Placing (I) - Channel
Management
MANOJ H
RAHUL KHEDKAR
RISHIRAJ SINGH ASHIYA
SHAHUL HAMEED
VAMSY KRISHNA
INDIAN INSTITUTE OF MANAGEMENT RAIPUR
3. AGENDA
CONCEPT
CHANNELS
TYPES
ROLES
FUNCTIONS
SELECTION
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4. DISTRIBUTION
CONCEPT
What is Distribution?
CHANNELS
It is defined as the management of
TYPES all activities which facilitate
,
movement and co-ordination of
ROLES
supply and demand in creation of
time, place utility in goods
FUNCTIONS
SELECTION
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5. DISTRIBUTION
CONCEPT
What is Distribution?
CHANNELS
It is the Art and Science of
TYPES
determining requirements,
,
acquiring them, distributing them
ROLES
and finally maintaining them in an
FUNCTIONS
operationally ready condition for
their entire life
SELECTION
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6. TYPES OF DISTRIBUTION
CONCEPT
CHANNELS
Distribution
TYPES
,
ROLES
Channel Physical
FUNCTIONS management Distribution
SELECTION
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7. CHANNELS
CONCEPT
What are Channels?
CHANNELS
• The path through which
TYPES
,
goods and services
ROLES travel from the vendor
FUNCTIONS
to the consumer or
payments for those
SELECTION products travel from the
12/12/2012
consumer to the vendor
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9. MANUFACTURER CUSTOMER
MANUFACTURER RETAILER CUSTOMER
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10. MANUFACTURER WHOLESALER RETAILER CUSTOMER
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11. CHANNEL FLOW
CONCEPT
Goods/ Services
C
FORWARD
CHANNELS
C U
O S
TYPES Payment for Goods/
, M BACKWARD T
Returns
ROLES P O
A M
FUNCTIONS
N BOTH E
Information
MANUFACT
Y WAYS R
URER
SELECTION
S
12. INTERMEDIARIES
CHANNELS
INTERMEDIARIES
AGENTS
WHOLESALERS
DISTRIBUTORS
RETAILERS
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13. INTERMEDIARIES
CHANNELS
• Links producers to other
INTERMEDIARIES
intermediaries or the ultimate
buyer.
AGENTS
• Promote, sell, and make-
available a good or service through
WHOLESALERS
contractual arrangements or
purchase and resale of the item.
DISTRIBUTORS
• Each intermediary receives the
item at one pricing point and
RETAILERS moves it to the next higher
pricing point until the item reaches
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the final buyer Raipur
Indian Institute of Management 13
14. AGENTS
CHANNELS
INTERMEDIARIES
AGENTS
• An independent individual or company
WHOLESALERS
• Primary selling arm of the producer and
represent the producer to users.
DISTRIBUTORS • Agents take possession of products but
do not actually own them.
• Make profits from commissions or fees
RETAILERS
paid for the services they provide to the
producer and users.
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15. WHOLESALERS
CHANNELS
INTERMEDIARIES
AGENTS
WHOLESALERS
• Independently owned firms that take title to
the merchandise they handle.
• In other words, the wholesalers own the
products they sell.
DISTRIBUTORS
• Wholesalers purchase product in bulk and
store it until they can resell it.
• Wholesalers generally sell the products they
RETAILERS have purchased to other intermediaries,
usually retailers, for a profit.
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16. DISTRIBUTORS
CHANNELS
INTERMEDIARIES
AGENTS
WHOLESALERS • Distributors only carry complementary
product lines, either Pepsi or Coke
products.
DISTRIBUTORS
• Distributors usually maintain close
relationships with their suppliers and
RETAILERS customers. Distributors will take title to
products and store them until they are
sold
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17. RETAILERS
CHANNELS
INTERMEDIARIES
AGENTS
WHOLESALERS
• A retailer takes title to, or purchases, products
from other market intermediaries.
DISTRIBUTORS
• Retailers can be independently owned and
operated, like small “mom and pop” stores, or
they can be part of a large chain, like Walmart.
• The retailer will sell the products it has purchased
RETAILERS directly to the end user for a profit
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18. TYPES
CONCEPT
CHANNELS
INTENSIVE
TYPES
ROLES
SELECTIVE
FUNCTIONS
EXCLUSIVE
SELECTION
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19. INTENSIVE
CONCEPT INTENSIVE SELECTIVE EXCLUSIVE
CHANNELS
TYPES
ROLES
FUNCTIONS
SELECTION
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20. SELECTIVE
CONCEPT INTENSIVE SELECTIVE EXCLUSIVE
CHANNELS
TYPES
ROLES
FUNCTIONS
SELECTION
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21. EXCLUSIVE
CONCEPT INTENSIVE SELECTIVE EXCLUSIVE
CHANNELS
TYPES
ROLES
FUNCTIONS
SELECTION
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22. ROLES
CONCEPT
PROMOTION
NEGOTIATIO
CHANNELS N
INFORMATIO
N
TYPES
ORDERING
ROLES PHYSICAL
POSSESSION
TRANSFER
FUNCTIONS OF TITLE
FINANCING
SELECTION
RISK TAKING
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23. PROMOTION
ROLES
PROMOTION • Marketing intermediaries
NEGOTIATIO attract customers and
N
INFORMATIO persuade them to buy goods
N
and services.
ORDERING
PHYSICAL
• These intermediaries
POSSESSION undertake sales promotion
TRANSFER
OF TITLE activities through media and
FINANCING personal contacts
RISK TAKING
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24. PROMOTION
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER
OF TITLE
FINANCING
RISK TAKING
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25. NEGOTIATION
ROLES
PROMOTION • Intermediaries or middlemen
NEGOTIATIO negotiate prices and other
N
INFORMATIO terms and condi-tions
N
between buyer and seller.
ORDERING
PHYSICAL
• No sale can take place
POSSESSION without an agreement on
TRANSFER
OF TITLE prices and other terms and
FINANCING conditions
RISK TAKING
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26. NEGOTIATION
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER
OF TITLE
FINANCING
RISK TAKING
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27. INFORMATION
ROLES
PROMOTION • Middlemen collect
NEGOTIATIO information about demand,
N
INFORMATIO competition, etc., from
N
consumers and pass on to
ORDERING
manufacturers.
PHYSICAL
POSSESSION • They also provide information
TRANSFER
OF TITLE to consumers about new
FINANCING products, changes in design,
RISK TAKING
style, prices, etc., of existing
products
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28. INFORMATION
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER
OF TITLE
FINANCING
RISK TAKING
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29. ORDERING
ROLES
PROMOTION • WHOLESALERS
NEGOTIATIO
N
INFORMATIO
N
ORDERING • RETAIL OUTLETS
PHYSICAL
POSSESSION
TRANSFER
OF TITLE • Intermediaries collect small
FINANCING orders from consumers
RISK TAKING and on that basis place large
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orders with manufacturers
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30. PHYSICAL POSSESSION
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER
OF TITLE
• Middlemen take possession
of goods from producers and
FINANCING
pass on possession to
RISK TAKING consumers
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31. TRANSFER OF TITLE
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER
OF TITLE • Middlemen transfer
FINANCING
ownership of goods from
producers to consumers
RISK TAKING
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32. FINANCING
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION
TRANSFER • Intermediaries provide financial,
OF TITLE assistances at different stages of
FINANCING the market-ing channel. They buy
goods in cash from producers and
RISK TAKING sell them to consumers on credit
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33. RISK TAKING
ROLES
PROMOTION
NEGOTIATIO
N
INFORMATIO
N
ORDERING
PHYSICAL
POSSESSION • Intermediaries assume most of
TRANSFER
OF TITLE the risks involved in the
FINANCING
distribution of goods. They
relieve producers from these
RISK TAKING risks and enable them to
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Indian Institute of Management Raipur 33
34. FUNCTIONS
CONCEPT
INFORMATION
FLOW
CHANNELS
STIMULATE
TYPES PURCHASING
ROLES
STORAGE AND
MOVEMENT
FUNCTIONS
SELECTION PRICE FIXING
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35. INFORMATION FLOW
FUNCTIONS
INFORMATION
FLOW
STIMULATE
PURCHASING
STORAGE AND
MOVEMENT
Information flows from
Retailers <- >distributors
Distributors <-> Wholesalers
PRICE FIXING
Wholesalers <-> company
36. STIMULATE PURCHASING
FUNCTIONS
INFORMATION
FLOW
STIMULATE
PURCHASING
STORAGE AND
MOVEMENT
For its promotion VIP encourages retailers to
advertise in the city on its behalf, and shares
PRICE FIXING some cost of it
37. STORAGE AND MOVEMENT
FUNCTIONS
INFORMATION
FLOW
STIMULATE
PURCHASING
STORAGE AND
MOVEMENT
GAS CYLINDERS ARE STORED IN THE WAREHOUSES AND
THEN MOVED THROUGH RETAILERS T
PRICE FIXING
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38. PRICE FIXING
FUNCTIONS
INFORMATION
FLOW
STIMULATE
PURCHASING
STORAGE AND
MOVEMENT
PRICE FIXING
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39. Factors Influencing the Selection of
Channel Members
CONCEPT
Cost
CHANNELS Control
TYPES
Image Selection of
Channel
ROLES
Members Performance
FUNCTIONS
Experience
Reputation
SELECTION
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40. SELECTION
CONCEPT
CHANNELS MARKET
FACTORS
TYPES
PRODUCT
ROLES FACTORS
FUNCTIONS
PRODUCER
FACTORS
SELECTION
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41. MARKET FACTORS
MARKET PRODUCT PRODUCER
FACTORS FACTORS FACTORS
CONCEPT
CHANNELS
TYPES
ROLE
• Customer Profiles
FUNCTIONS • Consumer or Industrial Consumer
• Size of Market
SELECTION • Geographic Location
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42. PRODUCT FACTORS
MARKET PRODUCT PRODUCER
FACTORS FACTORS FACTORS
CONCEPT
CHANNELS
TYPES
ROLE
• Product Complexity
FUNCTIONS • Product Price
• Product Life Cycle
SELECTION • Product Delicacy
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43. PRODUCER FACTORS
MARKET PRODUCT PRODUCER
FACTORS FACTORS FACTORS
CONCEPT
CHANNELS
TYPES
ROLE
• Producer Resources
FUNCTIONS
• Number of Product Lines
SELECTION • Desire for Channel Control
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INTENSIVEDistribution through every reasonable outlet availableStrategy is to make sure that the product is available easily in as many outlets as possibleExample: FMCGSELECTIVEPreferred for consumer, pharma products and automobile sparesMultiple, but not all outlets in the marketFew Select outlets will be permitted to keep the productOutlets are selected in line with the brand image the company wants to projectEXCLUSIVEHighly selective choice of outlets – might even be one outlet in an entire marketExample: Car DealersCould include outlets set up by the companies itselfExample: Titan, Bata, Planet Fashion