ch-7 place

Author: yuktiii

Post on 08-Apr-2018

228 views

Category:

Documents


0 download

Embed Size (px)

TRANSCRIPT

  • 8/7/2019 CH-7 PLACE

    1/16

    1

    CHAPTERCHAPTER--1010PLACEPLACE

    (DISTRIBUTION MANAGEMENT)(DISTRIBUTION MANAGEMENT)

  • 8/7/2019 CH-7 PLACE

    2/16

    2

    MEANING..MEANING..

    TheThe organizationorganization whowho produceproduce thethe productsproducts andandserviceservice havehave onlyonly oneone andand ultimateultimate objectobject ii..ee..,,toto sellsell thesethese thingsthings toto customerscustomers oror endend usersuserslocatedlocated inin variousvarious marketsmarkets scatteredscattered allall overover..

    TheseThese productsproducts willwill havehave nono useuse ifif theythey dodo notnotreachreach theirtheir usersusers oror customerscustomers..

    ItIt mustmust bebe mentionedmentioned andand understandunderstand thatthatdistributiondistribution systemsystem isis oneone ofof thethe fourfour elementselementsofof marketingmarketing mixmix..

  • 8/7/2019 CH-7 PLACE

    3/16

    3

    MEANING..MEANING..

    TheThe manufacturersmanufacturers maymay serveserve somesome partpart ofof thethe marketmarketbyby::--

    ByBy transportingtransporting thesethese productsproducts directlydirectly andand sellingsellingthemthem throughthrough theirtheir outletsoutlets locatedlocated nearnear thetheconsumersconsumers..

    ButBut thisthis systemsystem willwill notnot workwork effectivelyeffectively ifif thetheproductsproducts areare consumedconsumed byby aa largelarge segmentsegment ofof thethemarketmarket andand whichwhich areare locatedlocated inin differentdifferent areasareas ororterritoriesterritories..

    Therefore,Therefore, forfor effectiveeffective andand continuouscontinuous distributiondistribution ofofproducts,products, therethere isis aa needneed forfor somesome effectiveeffective ChannelsChannelstoto taketake thesethese productsproducts toto allall cornerscorners ofof thethe marketmarket

  • 8/7/2019 CH-7 PLACE

    4/16

    4

    Meaning continues.Meaning continues.

    DistributionDistribution isis concernedconcerned withwith thethe activitiesactivitiesinvolvedinvolved inin transferringtransferring thethe goodsgoods fromfromproducerproducer oror manufacturermanufacturer toto ultimateultimate buyersbuyers

    locatedlocated inin variousvarious marketsmarkets..

    ItIt includesincludes notnot onlyonly physicalphysical activitiesactivities suchsuchasas

    loading,loading, transporting,transporting, andand storingstoring ofof goods,goods,butbut alsoalso legal,legal, promotional,promotional, financial,financial, andandsellingselling activitiesactivities toto thethe meetmeet thethe distributiondistributionobjectivesobjectives..

  • 8/7/2019 CH-7 PLACE

    5/16

    5

    Meaning continues.Meaning continues.

    ThusThus whenwhen consumerconsumer buybuy aa softsoft drinkdrink ,, aacigarettecigarette packetpacket oror shoes,shoes, wewe mustmust rememberrememberthatthat thesethese productproduct havehave reachedreached consumersconsumers notnotdirectlydirectly fromfrom thethe manufacturermanufacturer unitunit butbut throughthrough

    aa chainchain oror activityactivity centers,centers, whichwhich areare ananimportantimportant andand essentialessential partpart ofof thethe distributiondistributionnetworknetwork thatthat hashas helpedhelped thethe manufacturermanufacturer totoreachreach toto thethe consumerconsumer..

    WithoutWithout thesethese activityactivity centerscenters inin thethedistributiondistribution chain,chain, thethe consumerconsumer willwill notnot getgettheirtheir productproduct atat thethe rightright time,time, atat thethe rightrightplaceplace andand thatthat tootoo atat rightright priceprice..

  • 8/7/2019 CH-7 PLACE

    6/16

    6

    DEFINITION OF DISTRIBUTIONDEFINITION OF DISTRIBUTION::--

    ItIt cancan bebe broadlybroadly defineddefined asas anan ExternalExternalsourcesource forfor effectiveeffective distributiondistribution ofof goodsgoods andandservicesservices thatthat utilizesutilizes transporttransport facilities,facilities,godown,godown, warehousewarehouse andand storage,storage, manpowermanpowerandand creationcreation ofof middlemenmiddlemen andand facilitatorsfacilitators forforcarryingcarrying outout suchsuch distributiondistribution activitiesactivities inin

    closeclose coco--ordinationordination withwith thethe manufacturermanufacturer..

  • 8/7/2019 CH-7 PLACE

    7/16

    7

    OBJECTIVE OF DISTRIBUTION ACTIVITYOBJECTIVE OF DISTRIBUTION ACTIVITY

    TheThe mainmain objectiveobjective ofof thethe distributiondistribution isis toto

    movemove productsproducts fromfrom manufacturesmanufactures placeplace toto thethe buyerbuyer..

    TheThe buyerbuyer maymay bebe usingusing thethe productproduct forfor ownownconsumptionconsumption oror maymay bebe resellingreselling thethe productproduct asas aa tradingtradingactivity,activity, butbut inin bothboth thethe situation,situation, thethe productproduct hashas toto bebemovedmoved fromfrom thethe manufacturersmanufacturers unitunit toto thethe placeplace ofof thethebuyerbuyer..

    AlwaysAlways thethe buyerbuyer oror thethe middlemenmiddlemen oror facilitatorfacilitator isisinterestedinterested inin safesafe andand timelytimely receiptreceipt ofof goodsgoods..

  • 8/7/2019 CH-7 PLACE

    8/16

    8

    CRITERIA FOR SELECTION AND DESIGN OF CHANNELCRITERIA FOR SELECTION AND DESIGN OF CHANNEL

    1.1. PRODUCTPRODUCT CHARACTERISTICSCHARACTERISTICS:: --ItIt alwaysalways playsplays aa dominantdominant rolerole inin designingdesigning andand

    selectionselection ofof channelchannel..ForFor exampleexample nonnon durabledurable goodsgoods requirerequire quickquick

    ReplacementReplacement ofof stockstock && WideWide spreadspread strategiesstrategies toto covercoveraa bigbig marketmarket andand channelchannel designdesign shouldshould alwaysalways

    suitsuit thisthis objectiveobjective..

    PerishablePerishable goods,goods, shelfshelf lifelife andand medicinalmedicinal productsproductsrequiringrequiring specialspecial handlinghandling andand storagestorage shouldshould bebehandledhandled byby channelschannels membersmembers whowho specializespecialize ininselectiveselective distributiondistribution..

    BulkyBulky productproduct comparedcompared toto theirtheir valuevalue likelike buildingbuildingconstructionconstruction materials,materials, softsoft drinks,drinks, steelsteel andand glassglassbottlesbottles etc,etc, requirerequire channelchannel arrangementarrangement withwith minimumminimumtransporttransport distancedistance andand lessless numbernumber ofof handlinghandlingconsumersconsumers durablesdurables..

  • 8/7/2019 CH-7 PLACE

    9/16

    9

    PRODUCT CHARACTERISTICS CONTINUS..PRODUCT CHARACTERISTICS CONTINUS..

    ExpensiveExpensive productproduct requirerequire specializedspecialized channelchannel systemsystem

    withwith showroomshowroom andand financialfinancial strengthstrength..

    IndustrialIndustrial goods,goods, plantplant andand machineriesmachineries areare generallygenerallyshippedshipped directlydirectly fromfrom manufacturersmanufacturers placeplace totocustomerscustomers placeplace..

    ServiceService productsproducts andand purepure serviceservice isis generallygenerally handledhandledbyby manufacturersmanufacturers representativerepresentative oror sometimesometime bybyfranchisees,franchisees, whichwhich areare trainedtrained toto handlehandle suchsuchassignmentsassignments

  • 8/7/2019 CH-7 PLACE

    10/16

    10

    CRITERIA CONTINUES.CRITERIA CONTINUES.

    2.2. MARKETMARKET CHARACTERISTICSCHARACTERISTICS:: --

    ForFor largelarge consumerconsumer productproduct thethe numbernumber ofof levellevelchannelchannel membersmembers willwill bebe large,large, whereaswhereas forfor highlyhighlyspecializedspecialized oror highlyhighly technicaltechnical products,products,manufacturermanufacturer directlydirectly marketsmarkets theirtheir productproduct..

    ForFor UrbanUrban productproduct specialspecial retailretail outlet,outlet, showroom,showroom,departmentaldepartmental storesstores maymay bebe partpart ofof thethe channelchanneldesign,design, WhereasWhereas forfor thethe RuralRural marketmarket channelchannelselectionselection willwill bebe restrictedrestricted toto utilizingutilizing resourcesresourcesavailableavailable inin nearestnearest townstowns andand alsoalso vansvans andand mobilemobilestockieststockiest..

    ForFor salesale ofof foodfood productsproducts andand perishableperishable goodsgoodsbothboth wholesalerswholesalers andand retailersretailers maymay bebe neededneeded..

  • 8/7/2019 CH-7 PLACE

    11/16

    11

    CRITERIA CONTINUES.CRITERIA CONTINUES.

    3.3. CHANNELCHANNEL MEMBERSMEMBERS OROR MIDDLEMENMIDDLEMEN

    InIn designdesign andand selectionselection ofof intermediariesintermediaries thethecharacteristiccharacteristic ofof suchsuch intermediariesintermediaries isis veryveryimportantimportant inin makingmaking distributorsdistributors systemsystem efficientefficient..

    ForFor ConsumerConsumer products,products, infrastructureinfrastructure facilitiesfacilitieslikelike safesafe storagestorage facilities,facilities, transporttransport likelike truckstrucks andandvans,vans, manpower,manpower, communicationscommunications facilitiesfacilities andandgoodsgoods financialfinancial strengthstrength areare essentialessentialconsiderationconsideration..

    ForFor TechnicalTechnical productsproducts availabilityavailability ofof technicaltechnicalstaffstaff forfor sales,sales, afterafter salessales serviceservice andand annualannualmaintenancemaintenance areare alsoalso importantimportant..

    ForFor ServiceService orientedoriented industriesindustries properproper office,office,showroomshowroom andand efficientefficient salessales peoplepeople makemake allall thethedifferencedifference..

  • 8/7/2019 CH-7 PLACE

    12/16

    12

    CRITERIA CONTINUES.CRITERIA CONTINUES.

    4.4. COMPANYCOMPANY CHARACTERISTICSCHARACTERISTICS:: --

    TheThe ReputationReputation ofof thethe companycompany inin maintainingmaintainingqualityquality ofof goodsgoods && serviceservice makesmakes aa bigbig differencedifference ininmotivatingmotivating channelchannel membermember..

    CompaniesCompanies withwith goodgood corporatecorporate imageimage alwaysalwaysattractattract goodgood channelchannel membersmembers..

    TheThe ProfitableProfitable companiescompanies withwith goodgood brandbrand imageimagemakemake themthem attractiveattractive forfor business,business, withwith theirtheir largelargeadvertisementadvertisement andand promotionalpromotional budgetsbudgets cancan helphelptoto motivatemotivate channelchannel membersmembers..

  • 8/7/2019 CH-7 PLACE

    13/16

    13

    CRITERIA CONTINUES.CRITERIA CONTINUES.

    5.5. MARKETING ENVIRONMENT ANDMARKETING ENVIRONMENT AND

    CHARACTERISTICSCHARACTERISTICS:: --

    TheThe channelchannel designdesign isis influencedinfluenced byby externalexternalenvironmentalenvironmental factorsfactors likelike

    EconomicEconomic conditions,conditions,

    Political,Political, culturalcultural andand Social,Social,TechnologicalTechnological andand LegalLegal functions,functions,

    DepressedDepressed economiceconomic conditionsconditions maymay resultresult inin poorpoor

    distributiondistribution activityactivity andand slashingslashing ofof pricesprices andandmarginsmargins andand businessbusiness volumevolume maymay bebe badlybadly affectedaffectedandand resultresult inin shortershorter andand lessless efficientefficient channelschannels..

  • 8/7/2019 CH-7 PLACE

    14/16

    14

    TASK AND RESPONSIBILITY OF CHANNEL MEMBERSTASK AND RESPONSIBILITY OF CHANNEL MEMBERS:: --

    1.1. TransportTransport:: -- TheThe activityactivity ofof transportingtransporting goodsgoods andandservicesservices toto thethe targettarget marketsmarkets..

    2.2. StorageStorage:: -- TheThe activityactivity ofof carryingcarrying oror storingstoring inventoryinventoryofof goodsgoods inin aa coveredcovered andand safesafe placeplace andand distributingdistributing

    themthem toto differentdifferent outletsoutlets basedbased onon ordersorders fromfrom thesetheseoutletsoutlets..

    3.3. PromotionsPromotions:: -- TheThe activityactivity ofof advertisingadvertising forfor informinginformingandand creatingcreating awarenessawareness andand influencinginfluencing purchasepurchase

    activityactivity byby customerscustomers oror carryingcarrying outout salessales promotionpromotionforfor productsproducts inin thethe marketmarket andand alsoalso helpinghelping inin thethe salesaleofof newnew productsproducts andand servicesservices..

  • 8/7/2019 CH-7 PLACE

    15/16

    15

    TASK AND RESPONSIBILITY OF CHANNEL MEMBERS CONTINUESTASK AND RESPONSIBILITY OF CHANNEL MEMBERS CONTINUES

    4.4. CommunicateCommunicate:: -- TheThe activityactivity ofof locationlocation andandcommunicatingcommunicating withwith consumersconsumers..

    5.5. RelationshipRelationship:: --TheThe activityactivity ofof maintainingmaintaining relationshiprelationship withwith thethechannelchannel members,members, ultimateultimate consumers,consumers, salessales forceforce ofofmanufacturer,manufacturer, advertisingadvertising andand promotionalpromotional agencies,agencies,transporttransport andand veryvery essentialessential withwith thethe marketingmarketing

    departmentdepartment ofof thethe manufacturermanufacturer.. TheThe relationshiprelationshipwithwith departmentsdepartments ofof governmentgovernment isis alsoalso donedone bybychannelchannel members,members, eithereither independentlyindependently oror jointlyjointlywithwith thethe manufacturermanufacturer

  • 8/7/2019 CH-7 PLACE

    16/16

    16

    TYPES OF MIDDLEMENTYPES OF MIDDLEMEN:: --TERMTERM DESCRIPTIONDESCRIPTION

    MiddlemanMiddleman Any intermediary between manufacturerAny intermediary between manufacturerand endand end--user marketsuser markets

    AAgent orgent orBrokerBroker

    Any intermediary with legal authority toAny intermediary with legal authority toact on behalf of the manufactureract on behalf of the manufacturer

    WholesalerWholesaler An intermediary who sells to otherAn intermediary who sells to otherintermediaries, usually to retailers; usuallyintermediaries, usually to retailers; usuallyapplies to consumer markets.applies to consumer markets.

    RetailerRetailer An intermediary who sells to consumersAn intermediary who sells to consumers

    DistributorDistributor who perform a variety of distributionwho perform a variety of distributionfunctions, including selling, maintainingfunctions, including selling, maintaininginventories, extending credit, and so on;inventories, extending credit, and so on;

    DealerDealer mean the same as distributor, retailer,mean the same as distributor, retailer,wholesaler and so forth.wholesaler and so forth.