An Introduction

Definition
 It is “path” along which services and marketing
related inputs move from service provider to the
customer and vice-versa .
 It may consists of different layers of intermediaries
such as Agents/ Brokers/ Aggregators etc.
 The choice of the intermediaries is customer /
product specific
 It could be a very important part of overall marketing
strategy – extent of use depends on push vs. pull ,
Intensive vs. Exclusive , corporate vs. retail etc.
Functions
 Functional - Business procurement , business processing ,
transportation , service delivery , flow of revenue etc.
payment etc.
 Marketing – Market information , competitors analysis ,
market research , sales promotion , grievance handling etc.
 It is a part of overall marketing strategy – relates directly to
two Ps Place & Promotion and indirectly to other two
Product & Pricing
 Specialization – Extending supportive / specialized
services.
 In short it helps in increasing efficiency , reducing
complexities & extending specialized support.
Source of Competitive Advantage
 LIC – Riding on individual agents / Corporate sales
 Max Life : Quality agents
 HDFC Life / ICICI Pru / SBI Life – Bancassurance
 ICICI Group / Aegon Religare – Online Insurance
policy distribution
 Bajaj Allianz General – Virtual office
 Aviva Life – Vodafone. Similar tie-ups wit PayTm /
Airtel Bank
 Sriram General – IRCTC tie-up
Formats of distribution
 Owned Vs. Third Party
 Level of distribution channels – zero , one/two level
 Single or Multiple / Hybrid model
 Horizontal system – Bancassurance / ATMs in LIC
branches
Channel Resources
 Manpower
 Distribution
 Training
 Accounting
 Advertising
 Data Processing
 Insurance / Risk Transfer
 Support base for augmented services
Value Proposition
For the company
 Cost saving – Specialization
 Reduce Exchange time
 Bulk - breaking / Sorting
 Creating market
 Sale Support
 Feedback support
For the customer
 Location /Delivery
 Time Management
 Extra Servicing Support
 Add on / Accessories
 Help in purchase decision
Choice of the channel
 Type of product – Goods / Services
 Company objective – STP
 Brand Perception – Exclusivity vs Mass
 Intensive (concentration ) vs Extensive (wide
coverage)
 Existing and potential market trend
 Push vs Pull Strategy
 Cost associated with different layers
 Pl read last two years IRDAI report.
 Basic Chapter of book