10-07-2012, 04:38 PM
Physical Distribution and Channel Management
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This is the Final delivery vehicle of marketing
• It deals with the Place P of the marketing mix
• Physical distribution means
–movement of goods (transportation), storage and inventory
management
– Logistics is the other name of physical distribution
• Channel management means
– a set of intermediary to be managed
• Mfg of goods cannot contribute alone
–without distribution, towards growth of GDP
• Intermediaries has taken charge for distribution at a
profit and lower cost
– instead of manufacturers
What is Distribution - Process
• The process that brings a product
–from the place of production to the end user.
• As a part of marketing it has to satisfy
customer.
• To establish a product many factors play an
important role such as
– Quality of the product
– Reputation of the manufacturer
– The brand image
– Packaging and presentation
– Effective channel of distribution is also one of them
Need for distribution channels: Set of Inter.
• Opening case:
–Colgate produced toothpaste which moved
• through C&FA to distributors, wholesalers and further to
retailer and finally to consumers
–The above process also included
• Transportation
• Storage and personnel handling it
• Labor and
– Loading and unloading
• Others who ensured movement
Functions of Channel Members
• Research:
– The gathering of information necessary for planning and
facilitating exchange, who will be the right supplier, how do we
get right quality product
• Promotion:
– The development and dissemination of persuasive
communication about the offer. It includes Personal Selling and
point of purchase.
• Contact
– The searching out and communicating with prospective buyers.
They can reach the prospects and recommend to buy the product
or service.
• Matching
– The shaping and filling of the offer to the buyer’s requirements.
This includes such activities as manufacturing, assembling and
packaging, assortment, range of products, supply and demand.
Distribution management – Utilities served
• Utility being provided to the customers through
distribution management includes:
• Place
–Buying product from the nearest store
–E.g. Colgate from a retailer
• Time and
–E.g. Buying Colgate at 8 P.m.
• Possession
–Through exchange process wherein customer pays
and become the owner of the product
Right channel of Distribution
• This simply depends on the
–nature of product and
• (Textile machine – Direct, Soap – Indirect)
–service to be given to the end user.
• (Technical – Mostly direct and consumer durable - Indirect)
• Each manufacturer shapes his specific channel
objectives from major situational constraints
–such as customer, products, intermediaries,
competitors, company policies and the environment.
–(Major factors affecting choice of COD)
• There is no hard and fast rule of designing a
channel for a product and service.