Lesson 2: Distribution Management

What are Marketing Channels?

Marketing channels are the medium by which goods and services are made available to the customers for use or consumption.

It is the connection between individuals and/or organizations that contributes to the occurrence of exchange. Marketing channels are a group of intermediaries who direct products to customers.

What are Intermediaries in Marketing Channels?

• Merchants – They take title of the merchandise and resell it. (Example: wholesalers and retailers)

• Agents – Represent the company and sell the products; they enjoy commission from reselling the products.

What are the Factors Affecting Marketing Channels?

Economic variables – Macro and micro environment

Fundamental behavior dimensions – Conflicts, power roles, and communication processes

Who are the Members of Channel Marketing?

• Wholesalers – Bulk purchases

• Bottlers – Buy ingredients in large quantities

• Dealers – Inventory of a product

• Retailers – Sell in small quantities

What are the Channel Functions?

1. Gather information about potential and current customers, competitors, etc.

2. Develop and disseminate persuasive communication

3. Reach agreement on price and other terms

4. Place orders with the manufacturers

5. Acquire funds to finance inventories

6. Assume risks connected with carrying out channel work

7. Provide storage and movement of physical goods

8. Provide for buyers' payment

9. Oversee the actual transfer of ownership from one organization to another

What is the Marketing Concept and who introduced it?

• Robert Keith (1951) – Vice President of Marketing at Pittsbury

• Focus on customers

What is the Background Development of Marketing Channels?

Marketing channels emerged from the need to connect producers with consumers, evolving from simple word-of-mouth to sophisticated digital platforms, with the primary function being to facilitate the flow of goods and information.

What are the Evolutionary Stages of Marketing Channels?

1. Early Forms – In pre-literate societies, relied on word-of-mouth and simple branding to identify goods.

2. The Rise of Mass Production – Introduced quality control and more structured marketing practices.

3. Different Forms of Marketing Channels Over Time:

4. Print Media

5. Broadcasting

6. Telemarketing

7. Networking

8. Out-of-Home Advertising

9. Face-to-Face Meetings

What are the different Marketing Eras?

1. The Trade Era

2. The Production Orientation Era

3. The Sales Orientation Era

4. The Marketing Orientation Era

5. The Relationship Marketing Era

6. The Social Marketing Era

What is Contractual Efficiency?

Ensuring each participant is assigned to their most preferred contractual term, promoting optimal resource allocation and outcomes.

What is Sorting in Marketing Channels?

Arranged systematically.

Tasks Associated with Sorting:

Categorizing

Breaking bulk

What are the three types of Uncertainty in Marketing Channels?

1. Need uncertainty

2. Market uncertainty

3. Transaction uncertainty

How do Marketing Channels Satisfy Needs?

• Facilitating strategic aims

• Fulfilling interaction requirements

• Satisfying delivery and handling requirements

• Managing inventory requirements

What are the different Channel Structures?

1. Manufacturer → Retailer → Consumer

2. Manufacturer → Wholesaler → Retailer → Customer

3. Manufacturer → Agent → Wholesaler → Retailer → Customer

What are the Levels of Channel Structure?

• One Level – Manufacturer → Retailer → Consumer

• Two Levels – Manufacturer → Wholesaler → Retailer → Customer

• Three Levels – Manufacturer → Agent → Wholesaler → Retailer → Customer

What are the Functions Performed by Channel Members?

1. Physical distribution

2. Matching

3. Time and place

4. Finance

5. Transferring title

6. Risk-taking

7. Research and prospecting

8. Promotion and selling

9. Service

10. Support services