2. What is a Distribution Channel?
• A distribution channel, in simple terms, is the flow that a good or service
follows from production or manufacturing to the final
consumer/buyer. Distribution channels vary but typically include a
producer, a wholesaler, a retailer, and the end buyer/consumer.
3. TRADITIONAL or DIRECT DISTRIBUTION IN MARKETING
• Direct distribution would mean that the manufacturer finds a way to
directly communicate to customers without using any market
intermediaries and will deliver the goods themselves.
4. Here are some strategies to encourage in direct sales:
• Features. As soon as you establish contact with a potential customer, they will
want to assess if your product can be useful to them. The basis of your
conversation needs to center around the features of your product and its
purpose. If the features do not match the customer’s needs they will not be
interested.
• Advantages & Benefits. . If you have captured the customer’s attention, after
listing the features you will be in a place to defend your product against the
competition. What makes your product unique?
• Give your customers the logic between using your product and finding a
solution to their needs. Tell them how it will save them time, how it will make
them money, or how it will resolve their organization issues.
• Intimacy & closeness . Establish a personal connection with the user. At this
point of the conversation you have grabbed their attention, but you have not
necessarily closed the deal. Spend the time to convince them you have their
best interest in mind – go off topic if you have to.
5. • Reasoning. Studies have proved giving multiple reasons, even if they are
obvious reasons will tip the scales in your favor.
• Q&A. Learn more about the customer – when and how they use their
training shoes. Tell them how you believe they should be used. Tell them
you are not just selling them shoes. You are selling them a pathway to a
healthy and beautiful body. Then ask for your favor back and close the
deal.
• Disclaimer. Close the deal by reminding the customer once again they will
have a choice. They can buy the item now but then they would have to
approve of it upon delivery, or return it to the delivery person. And even
then they can return their item in a 30-day period. And even then within the
next 60 days they can still get a replacement or store credit. They still have
a choice.
6. Advantages of introducing a broker to a distribution channel
• if the manufacturer contracts a broker, they would sign a contract and said
broker would be responsible for the offerings to the shops. Brokers are
normally not responsible for the shipping itself. The broker is mainly
responsible to close the sale.
• A broker would have a portfolio of manufacturers they work with in a
particular geographic area. They have key retailers they work with and their
incentive is to completely satisfy the needs of those retailers.
• Brokers will be very selective about the portfolio they assemble. They will
not offer a manufacturer as a part of their line to a retailer unless they are
sure the retailer will list their items. Therefore they usually have quick
access to retailers and have well established relationships with them.
7. Disadvantages of introducing a broker to a distribution channel
• Brokers work for a high fee of the invoiced price of the total production –
around 5% – 10%.
• At the same time, they will not take responsibility over the shipping of the
produce.
• Brokers do not have a great incentive to get to know a product or introduce
it as a new line to a retailer. Their services normally do not include
promotion.
• If sales of one of the products of the manufacturer slow down, an entire line
may be dropped from the broker’s portfolio and be substituted by another,
more lucrative line.
8. E-COMMERCE CHANGES THE GAME OF DISTRIBUTION
• E-commerce completely changes the game of distribution for several
reasons.
• An e-commerce company, depending on their business model may see
themselves as the manufacturer, a wholesaler, or a retailer. Those roles have
become more fluid.
• E-commerce in general immediately makes products available for a large
customer base and therefore less intermediaries are needed. Storage
locations needs are limited, too.
10. A Zero Level Channel:
• A zero level channel, commonly known as direct marketing channel has no
intermediary levels. In this channel framework manufacturer sells
merchandise directly to customers. An example of a zero level channel
would be a factory outlet store. Many service providers like holiday
companies, also market direct to consumers, bypassing a traditional retail
intermediary – the travel agent.
11. A One Level Channel:
• A one level channel contains one selling intermediary. In consumer
markets, this is usually a retailer. The consumer electrical goods market in
the United Kingdom is typical of this arrangement whereby producers such
as Sony, Panasonic, Canon etc. sell their goods directly to large retailers
such as Comet, Dixons and Currys which then sell the goods to the final
consumers.
12. A Two Level Channel:
• A two level channel encompasses two intermediary levels – a wholesaler
and a retailer. A wholesaler typically buys and stores large quantities of
merchandise from various manufacturers and then breaks into the bulk
deliveries to supply retailers with smaller quantities. For small retailers
with limited financial resources and order quantities, the use of wholesalers
makes economic sense.
13. A Three Level Channel:
• A third level channel, as the name implies, encompasses three intermediary
levels – a Distributer a wholesaler, a retailer and a consumer .
Manufacturer Distributor wholesaler Retailer Consumer
14. Marketing Channel conflicts
• There are 3 types of channel conflicts which
can arise in a channel marketing
company. Horizontal, vertical and
Multichannel conflicts channel conflicts are
explained.
15. Horizontal channel conflict
• At same level conflicts Could be regional /area
wise divisions.
• Distributors sales in same area or others area
• Price level
• Consumer benefits
16. Vertical channel conflicts
• Vertical channel conflict is the most common type businesses tend
to run into. It happens when issues arise between two partner
types operating in different channels.
• Because multiple channels are involved, it can be a challenge to
maintain a fair and competitive environment, especially when
incentives are at play.
Causes & Examples
Some of the causes of vertical channel conflict are:
• Poor communication
• Lack of role clarity
• Unfair advantages offered to a partner type compared to another
• Lucrative incentives that may not apply to everyone
• Disputes over pricing across channeld
17. Multi-channel Level Conflict
• Multi-channel Level Conflict When the
manufacturer uses multiple channels for
selling the products, it may face multi-channel
level conflict where the channel partners
involved in a particular distribution channel
encounters an issue with the other channel.
• Online & retailer
18. Project Detail
1. Policies
2. Requirements from owner Related
3. Place / Space / Area / City
4. Capital
5. Experience
6. Hr policies
7. Facilitation
8. Raw material
9. Written contract
10. Royalty if any
11. Financial terms & conditions
12. Decision making involvement
13. Targets
14. Sales
15. Department
16. Channel conflict
17. R& D policy
18. Wholesale market if any
Others will after discussion
