Copy Of Channel Of Distribution Presentation Transcript 1.

. DISTRIBUTION A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business users. 2. International distribution A relationship marketing perspective: it is all about creating long-term relationships for building up competitive advantage 3. Channels provide the means by which the firm moves the goods and services it produces to ultimate users Facilitate the exchange process by cutting the number of contacts necessary Adjust for discrepancies in the markets assortment of goods and services via sorting Standardize exchange transactions Facilitate searches by both buyers and sellers The Role of Marketing Channels in Marketing Strategy 4. Types of Marketing Channels Marketing channel : system of marketing institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a distribution channel Marketing intermediary : wholesaler or retailer that operates between producers and consumers or business users; also called a middleman Wholesaler : marketing intermediary that takes title to goods and then distributes these goods further; also called a jobber or distributor Direct Selling 5. Types of Marketing Channels Consumer Goods 6. Types of Marketing Channels Business Goods Services 7. Producer Distributor Dealer Retailer Consumer Segment 1 Consumer Segment 2 Business Segment 1 Business Segment 2 Catalog Telephone Internet Sales Force Dual Distribution : Network that moves products to a firms target market through more than one marketing channel 8. Reverse Channels : Channels designed to return goods to their producers 9. Channel Strategy Decisions Selection of a Marketing Channel Factors which impact the selection of a marketing channel include: 1- External Factor 2- Internal Factor 10. External distribution factors Customer characteristics Product / service nature Nature of the demand Level of competition Legal regulations Local business practices 11. Internal decision factors Types of intermediaries Desired market coverage Channel length (desired levels) Control resources Degree of integration Need for information and process sharing 12. Determining Distribution Intensity Distribution intensity: number of intermediaries through which a manufacturer distributes its goods 13. Intensive distribution : channel policy in which a manufacturer of a convenience product attempts to saturate the market Intensive market coverage M = Manufacturer W= Wholesaler R = Retailer 14. Selective distribution : channel policy in which a firm chooses only a limited number of retailers to handle its product line Selective market coverage M = Manufacturer W= Wholesaler R = Retailer 15. Exclusive distribution : channel policy in which a firm grants exclusive rights to a single wholesaler or retailer to sell its products in a particular geographic area Exclusive market coverage M = Manufacturer W= Wholesaler R = Retailer 16. FAHAD UMER 17. Legal problems of exclusive distribution Exclusive-dealing agreement : arrangement between manufacturer and e-marketing intermediary that prohibits the intermediary from handling competing product lines Closed sales territories : exclusive geographic selling region of a distributor Tying agreement : Arrangement that requires a marketing intermediary to carry items other than those they want to sell

18. Channel Management and Leadership Channel Captain : a dominant and controlling member of a marketing channel Channel Conflict Horizontal Conflict Most often, horizontal conflict causes sparks between different types of marketing intermediaries that handle similar products Sometimes results from disagreements among channel members at the same level 19. Vertical Conflict Channel members at different levels find many reasons for disputes Example: when retailers develop private brands to compete with producers brands or when producers establish their own retail outlets or WWW Sites The Gray Market Grey Good : product made abroad under license from a U.S. firm and then sold in the U.S. market in competition with that firms own domestic output Viewed by producers as undesired competition 20. Physical Distribution A companys physical distribution system contains the following elements: Customer Service Transportation Inventory Control Protective packaging and materials handling Order Processing Warehousing 21. Allocation of Physical Distribution Expenditures 22. Functions performed by intermediaries Carrying of inventory Demand generation Physical distribution After-sales services Credit extension to customers Information sharing 23. A typical export (distribution) procedure Exporter Importer Importers bank 2 Bank in exporters country 3 4 Manufacturing 5 Secure transport and documentation 6 Ship 7 Customs Import warehouse 9 8 1 24. 25. Channels Design (11 Cs) - Customer Characteristics - Cultural Distribution Competition - Company objectives (for market share and profitability) - Character (nature of product, positioning of the product) - Cost (cost incurred in maintaining the channel) - Coverage (intensive, selective, exclusive distributions) - Control (product/service presentations, quality, image) - Continuity - Communication - Capital (financial requirement) 26. Sources for finding Intermediaries - Govt. Agency - Private Sources Criteria for Screening Intermediaries - Performance - Professionalism Distributors agreement includes - Contract duration - Geographic boundaries - Compensation - Products and conditions of sale - Communication between parties 27. MARKETING LOGISTICS & SUPPLY CHAIN MANAGEMENT The tasks involved in planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to point of consumption to meet customer requirements at a profit. Supplier Company Reseller Customer Inbound Logistics Outbound Logistics Reverse Logistics 28. MAJOR LOGISTICS FUNCTIONS Warehousing Inventory Management Transportation (Inter modal transportation) 29. The Supply Chain of a Manufacturing Company 30. Global Channel Design Chosen intermediaries must meet criteria work closely with distributors build sustain brand avoid discounting shops in shops approach e.g department stores 31. Nikes Do it yourself 1970s independent distributors successful brand at home 1980s established own subsidiaries overseas Now controls most subsidiaries even bought some distributors 32. Kodaks own airfreight hub Minimise shipping errors and product handling loaded onto trucks at Rochester plant All paperwork is already completed flight approval is obtained before truck arrives at airport (JFK) 33. WAQAR HUSSAIN

34. CHANNEL DESIGN DECISION PROCESS A- ANALYZING CONSUMER NEED For maximum effectiveness channel analysis and decision making should be more purposeful. Do consumer want to buy from nearby location? They willing to travel to more distant centralized locations? Would they rather buy in person, over the phone, through mail or e-mail? Do consumer want many add on services? etc. 35. B- SETTING CHANNEL OBJECTIVES Targeted level of customer services Decide which segment to solve and the best channel to use in each case Company wants to minimize the total channel cost of meeting customer services requirement It also influenced by the nature of company, its products, its marketing intermediaries, its competitors (Perishable product requires direct marketing.) C- IDENTIFY MAJOR ALTERNATIVES TYPE OF INTERMEDIARIES Company sales force (Assign Territories to Sales Persons) Manufacturer agencies (Hire manufacturers agents) Industrial Distributor (Exclusive Distribution) 36. NUMBER OF MARKET INTERMEDIARIES Intensive Distribution (Coca Cola) Exclusive Distribution (Outlets) Selective Distribution (Use of more than one, but fewer than all) RESPONSIBILITIES OF CHANNEL MEMBERS They should agree on price policies, condition of sale, territorial rights and specific services to be performed by each party. Mutual services and duties need to be spelled out carefully especially in franchise and exclusive distribution channels. D- EVALUATING MAJOR ALTERNATIVE Each alternative should be evaluated as: Economic (Cost, Sales, Profitability) Control (According to Situation) Adaptive Criteria (Flexible, It can adopt to the environmental changes) 37. E- EVALUATING CHANNEL MEMBERS Regularly Check Channel Members performance against standards such as sales quota, average inventory level, customer delivery time, treatment of damage and lost good, cooperation in company promotion and training programmes and services of the customers. Distributors are adding good value for customers. Manufacturers need to be sensitive to their dealers. 38. CONVENTIONAL DISTRIBUTION CHANNEL V/S VERTICAL MARKETING SYSTEM, HORIZONTAL MARKETING SYSTEM CONVENTIONAL DISTRIBUTION CHANNEL A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits. VERTICAL MARKETING SYSTEM A distribution channel structure in which producers, wholesalers, and retailers act as unified system. One channel member owns the others, has contract with them, or has so much power that they are cooperate. 39. TYPES OF VMS Vertical marketing system that combines successive stages of production and distribution under a single ownership channel leadership is established through common ownership. CORPORATE VMS CONTRACTUAL VMS A vertical marketing system in which independent firms of different level of production and distribution joint together through contracts to obtain more economies or sales impact then they could achieve along such as Franchise. ADMINISTERED VMS A vertical marketing system that coordinates successive stages of production and distribution not through common ownership of contractual ties but through the size and power of one of the parties. Manufacturers of top brands can obtain strong trade cooperation and support from resellers. 40. Producer Wholesaler Retailer Consumer Consumer Wholesaler Retailer Producer Conventional Marketing Channel Vertical Marketing Channel 41. HORIZONTAL MARKETING SYSTEM A channel arrangement in which two or more companies at one level joint together to follow a new market opportunity. By working together companies can combine their financial, production or marketing

resources to accomplish more than any one company could alone. e.g; Askari and Daewoo PSO & Pizza Hutt 42. CHANNEL LEVEL A layer of intermediaries that perform some work in bringing the product and its ownership closer to the final buyer. DIRECT MARKETING CHANNEL A marketing channel that has no intermediary level. IN-DIRECT MARKETING CHANNEL A channel involving one or more intermediary level. 43. DIRECT MARKETING 44. STORE ONE DISTRIBUTOR 45. CHANNEL MEMBERS Producer Consumer Consumer Retailer Producer Producer Wholesaler Retailer Consumer ZERO-LEVEL ONE-LEVEL SECOND-LEVEL Direct Marketing In-Direct Marketing In-Direct Marketing 46. HOW CHANNELS ARE CHOSEN PRODUCTS Perishable Grocery items Customized CUSTOMER Need and expectation? Willing to go to buy the Product? How much quantity, they need? MARKETS Urban or rural Distribution Channels There are many distribution channels available for importing goods to Austria: traditional import trade wholesalers direct import by retailers cooperative purchasing associations direct import by industry own branch operations distribution through commercial agents Sales to Wholesale Importers Selling to wholesale importers is the most common method of distributing goods in Austria. Many of these traders also deal with exports. Some importers deal in goods from across the globe, other specialize in specific regions or countries. Import of Goods by Retailers, Industry and Manufacturers The Austrian Business Code also allows the import of goods by retailers. Large chain stores, mail order houses and department stores are all crucial importers, especially for overseas goods. Some industries and smaller manufacturers also work as importers as well as suppliers. Imports from Overseas Austria has a relatively small market, consequently smaller quantities are required. Therefore imports from overseas are often not channelled directly, but instead through an importer from another European country - usually Germany. Sales Representation Search for Sales Representatives

You're looking for a sales representative in Austria? The website of the Austrian Association of Commercial Agents Bundesgremiums fr Handelsagenten has an on-line database. You can search by branch or place an on-line advert free of charge. Advertising opportunities are also available in the monthly 'Commercial Agent' magazine Der Handelsagent . Please contact: Bundesgremium der Handelsagenten Wiedner Hauptstrae 63 1045 Wien sterreich +43 5 90900 3200 +43 5 90900 287 handel5@wko.at http://www.commercial-agent.at/ Agency Law You would like to work together with an independent agent? The conditions are good as cooperation with commercial agents is well-established in Austria. The Austrian Commercial Agent Law (1993) adopted the EU regulations for this field. Legal Basis - Agency Agreements Cooperation terms with an agents should be laid down in an agency agreement. The regulations and responsibilities of both the company and the agency should be clearly specified. The Austrian Commercial Agent Law regulates the minimum requirements of the agent, such as notice periods and redundancy pay. At the end of the business relationship the agent is free to represent a competitor. This right cannot be modified in any way. Agency agreements generally last for between one and five years. Termination of the agreement is subject to a notice period, although immediate termination is possible in exceptional circumstances e.g. breach of confidence, fraud, breach of contract. You can find a sample agency contract, as well as information on EU and Austrian Agency Law on the website of the Austrian Association of Commercial Agents. To download a sample contract in German/ English/ French/ Spanish and Italian please click here: Transport Austria is an important transit country thanks to its central location. HGVs (Heavy Goods Vehicles) are the leading form of international and domestic transport. Around 30% of all goods are transported by rail, considerably higher than the European average. Transport of Goods by Road

Austria has a well developed road network of over 100,000km, with about 2000km of motorways and dual carriage-ways. Please note the following: With the exception of perishable goods, HGVs may not travel during the evening or at weekends. A toll is levied on all vehicles weighing over 3.5 tonnes road toll per kilometre . The speed limit for HGVs over 3.5 tonnes is 50 km/h in built-up areas, 70 km/h on country roads and 80 km/h on motorways. Austria is a member of the TIR convention (Carnet TIR) and the international convention for the import of temporary import of goods under Carnet ATA.

Transport of Goods by Rail Austria has a rail network of approx. 5600km. The largest providers of rail freight services are the Austrian Federal Railways sterreichische Bundesbahnen AG and Rail Cargo Austria AG . Transport of Goods by Ship Austria is land-locked and transport by ship is mostly confined to the main waterway, the Danube. The Rhein-Main-Danube canal enables goods to be transported by ship from the North Sea to the Black Sea. Contact details for freight transport providers can be found on the website of: Ship Austria . Transport of Goods by Air Only 0.3% of goods were transported to Austria by air in 2003. The airports do offer a complete service for air freight handling.