Unit 4 physical distribution decision

Marketing
Management
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Marketing Management
Unit 1 – Marketing Concepts
Unit 4 – Physical Distribution Decision
Unit 2 – Product Decision
Unit 3 – Price Decision
Unit 5 – Promotion Decision
Unit 6 – Consumer Behavior

Meaning & Definition
Nature & Scope of Marketing
Importance of Marketing Management
Marketing orientation / Concepts
Functions of Marketing
 Marketing Mix – 7 P’s
Unit 1 – Marketing Concepts

Unit 2 – Product Decision
 Why New product fails
 Branding Functions
 Types of Branding labeling

Unit 3 – Pricing Decision
 Concepts of Price
 Factors affecting Price determination
 Pricing Policies
 Types of Price

Unit 4 – Physical Distribution Decision
 Meaning
 Functions & Types of Channels of
Distribution
 Channel Intermediaries
 Channel Management Decisions
 Retailing & Wholesaling

Distribution Channel

13-9
Channel of Distribution
Is the 4th Component of Marketing Mix
Primary function
Find out suitable ways through which
goods have to be moved from
Producers to final
Consumers.
Marketing Channel

13-10
Channel of Distribution
Pathway composed of Intermediaries who
perform such functions to ensure smooth
flow of goods & services from Producers To
Final Consumers.

Definition
Philip Kotler
“Physical distribution involves Planning,
Implementing & Controlling the physical
flow of materials & final goods from the
point of origin to meet consumer needs at
a profit.”

Definition
William J. Stanton,
“Physical distribution involves the
management of physical flow of
products & establishment &
operation of flow systems.”

To Conclude
A distribution channel (also called
a Marketing Channel) is the path or route
decided by the company to deliver its
good or service to the customers.

Importance & Functions
1. Timely Delivery of Products
Important function of distribution channels.
Distribution channel helps in the delivery of
products to customers on the right time. If
products are not available at the right time to
customers, company may loose business.

2. Maintain Stock of Products
• Distribution channel has an efficient role in
maintaining sufficient stocks of goods. It helps
in maintaining the supply of goods as per the
demands.
• Distribution channels performs functions of
storing the products in warehouses &
supplying them according to demand in the
market. It avoids all cases of shortage of
supply of goods in market..

3. Provides Market Information
• Served as the medium through which business
acquire all required information from the market.
• It takes all information like demand, price & nature of
competition in the market and Also, customers provide
information & various suggestions to producers
through these channels.
•It helps in formulating strategies according to
that.

4. Promotion of Goods
• Helps in marketing & promotion of products.
• These intermediaries inform the customers about the
product.
• They explain new products & its specifications.
Customers are induced & motivated to buy these
products by intermediaries. Hence, the distribution
channel has an efficient role in promotion &
marketing of goods.

Thursday, October 1, 2020
5. Provide Finance
•Intermediaries buys goods in bulk from
producers. These intermediaries give payment
to producers while purchasing.
•Then these middlemen sell these goods to customers
in quantities demanded by them. They even provide
credit facilities to the customers.
•However, producers get timely payment & are saved
from blocking of their funds through credit selling.
Therefore distribution channel regulates the
funds’ movement of businesses.

6. Generates Employment
There are large number of peoples who are
involved in the distribution system of
businesses.
These people are wholesaler, retailers &
different agents. All these people earn their
livelihood through working in these distribution
channels.
Therefore, distribution channels are creating
employment opportunities for large peoples.

7. Distribution of Risk
Risk is something which is associated with each &
every business. Distribution channels save the
producers from the risk of delivering products to
customers safely & timely.
It becomes the duty of intermediaries that are involved
in the channel to deliver it to customers timely.
Producers focus only on their production activities &
don’t need to consider issues about delivering
products.

Major Channels of Distribution

Types of Channel of Distribution
Broadly divided into two categories namely
13-23
Direct ( Zero Level)
Indirect

Direct Marketing Channel ( Zero Level):
13-24
Producer
Direct
Selling at Manufacturers Plant
Door to Door Selling (Salesman)
Mail Order Houses
Sales by Opening Own Shops
Shortest channel a producer can adopt
Goods move directly from the producers to the
consumers without any middleman
Methods of Selling

13-25
• Types of Marketing Channels
– Consumer Goods

13-26
Indirect Marketing Channel
• Producer sells through various middlemen
like Agents, Wholesalers, Retailers.
• Manufacturer loses personal contact with his
consumers but collects information through retailers
about the trend.

Agents and Brokers
They help deliver products from the
producer to the consumer.
They make their profits by collecting a fee
or commission based on the amount of
sales

Wholesaler
•Wholesalers buy the goods from the producers
directly in bulk at a lower rate than retail price.
They store & warehouse huge quantities of the
products & sell them to other intermediaries in
smaller quantities for a profit.
•Wholesalers generally do not sell to the end
consumer directly. They sell to other middlemen
like Retailers or Distributors.

Distributors
•Distributors are similar to wholesalers in their
function.
•Except they have a contract to carry goods from
only one producer or company.
•They do not stock a variety of products from
various brands. They are under contract to deal in
particular products of only one parent company

Retailers
• Basically shop owners.
• Retailers will procure the goods from
wholesaler or distributors and sell it to the
final consumers.
• They will sell these products at a profit
margin to their customers.

13-31
 Types of Marketing Channels
 Business Goods
 Services

3 Principal Strategies
1 •Extensive Distribution
2 •Selective Distribution
3 •Exclusive Distribution

1 •Extensive Distribution
A distribution strategy that utilizes multiple
delivery channels and a high distribution volume
to reach as many potential customers as
possible. An extensive distribution strategy is
often used for low unit value products.

Involves a producer using a limited number of
outlets in a geographical area to sell products.
An advantage of this approach is that the
producer can choose the most appropriate or
best-performing outlets.

Selective distribution works best when
consumers preferred for a particular brand
or price and will search out the outlets that
supply.

Exclusive distribution is an extreme form of
selective distribution in which only one
wholesaler, retailer or distributor is used in
a specific geographical area.

When the firm distributes its brand through
just one or two major outlets in the market,
who exclusively deal in it and not all
competing brands.
This is a common form of distribution in
products and brands that seek a high
prestigious image

Producer Factors
Product Factors
Market Factors
Factors
Affecting
Channel
Choice
Exclusive Distribution
Selective Distribution
Intensive Distribution
Level of
Distribution
Intensity
What makes you choose a particular
channel?

Product Factors
that Affect
Channel
Choices
Product Factors
Product characteristics play an
important role in influencing the
channel selection.
The Marketing Executives must study
the
 uses of a product,
 its frequency of purchase;
 Perish ability, the service required etc

Product Factors
that Affect
Channel
Choices
Purchase frequency
Perishability
Industrial & Technical Products
Seasonal Products
PRODUCT FACTORS
Need Direct Channel Of
Distribution
So as to Reduce The Cost and
burden of distribution of
such products.

Product Factors
That Affect
Channel
Choices
Purchase frequency
Perishability
Seasonal Products
PRODUCT FACTORS
Nature need lesser number of
the intermediaries or agents
for their sale

Product Factors
That Affect
Channel
Choices
Purchase frequency
Perishability
Seasonal Products
PRODUCT FACTORS Products which are highly
technical in nature are
usually distributed Directly
To The Industrial Users
and take lesser time and
adopt shorter channel of
distribution

Product Factors
That Affect
Channel
Choices
Purchase frequency
Perishability
Seasonal Products
PRODUCT FACTORS such as woolen goods,
umbrellas, rain coats etc… can
be distributed through selling
agents to retailers &
customers
• Selling agents who
undertake the sale of
production by booking orders
from retailers

Market Factors
that Affect
Channel
Choices
Customer Profiles
Consumer or Industrial
Customer
Size of Market
Geographic Location
MARKET FACTORS
Large no of consumers
Indirect channel is desirable
(Scattered)
Small no of consumers Direct
channel is desirable

Market Factors
That Affect
Channel
Choices
Customer Profiles
Customer
Size of Market
Geographic Location
MARKET FACTORS
If the size of the order placed by the
customers is big, direct selling can be
undertaken by the manufacturer as in
case of industrial goods. But where
the size of the order is small,
middlemen are appointed to distribute
the products.

Market Factors
That Affect
Channel
Choices
Customer Profiles
Customer
Size of Market
Geographic Location
MARKET FACTORS
Customers scattered
Indirect channel is desirable
Customers concentrated
Direct channel is
desirable

Producer Factors
That Affect
Channel
Choices
Producer Resources
Number of Product Lines
Desire for Channel Control
PRODUCER FACTORS
A company having good financial
resources may engage itself in
direct marketing in a profitable
manner.

Unit 4 physical distribution decision

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