Distribution Plan Week-8 Tutorial 12/19/2015Dr. Yuvaraj 1

Types of Intermediary 12/19/2015Dr. Yuvaraj 2 Agents and brokers Wholesalers RetailersFranchisees Distributors and dealers

12/19/2015Dr. Yuvaraj 3 ConsumerProducerAgent Wholesaler Retailer Producer WholesalerRetailerConsumer RetailerConsumer eg Insurance eg A pint of beer (UK) eg Most supermarket goods eg Imported goods Consumer Channels

12/19/2015Dr. Yuvaraj 4 Producer Industrial customer eg High value, complex products Producer Industrial distributor eg Components via Radio Spares Industrial customer Producer Agent Industrial customer Producer Agent Industrial distributor Industrial customer Industrial Channels

How Many Levels?  Considerations:  How many customers & where they are  How fragile / bulky / valuable the goods  Whether offering is a tangible product or a service  How much control you want over the contact with the customer 12/19/2015Dr. Yuvaraj 5

 Supply chain management:  Production  How many items to produce, materials lead times  Transportation  Mode, e.g. road, rail, air etc.  Facility  Location of factory, warehouse etc.  Inventory  How much stock, materials, work-in-progress etc.  Communication  Systems for orders, billing, stock control, payment etc. 12/19/2015Dr. Yuvaraj 6 Tangible Products

Which is better? 12/19/2015Dr. Yuvaraj 7

Services Distribution  Services are consumed at point of production:  Both provider and consumer are present  People are part of the service  Consider:  How to make service easily available to target market  How to maintain service quality if intermediaries are used 12/19/2015Dr. Yuvaraj 8

Service Location  How to ensure service is available and accessible to target market  Are customers willing / able to travel for your service  Use of technology, e.g.  ATMs, telephone and Internet banking  Telephone / Internet travel booking 12/19/2015Dr. Yuvaraj 9

 Many organisations have multiple distribution systems  Often needed to address needs of different segments, e.g.  Customers can buy BT phones direct from BT via the Internet  BT also sells its phones  via third party high street retailers - Dixons, Argos etc.  Sales account managers (large industrial customers) 12/19/2015Dr. Yuvaraj 10 Managing Distribution

Selecting Channel Members  Own strengths & weaknesses  e.g. company size, brand strength  Channels used by competitors  Characteristics of the product / service  Range and nature of tasks needed to move product / service to end customer  Effectiveness of the channel alternatives 12/19/2015Dr. Yuvaraj 11

Selecting Channel Members  Effectiveness of the channel:  Sales and marketing  e.g. skills, image, coverage, quality of sales staff  Product and service  e.g. product knowledge, storage facilities, quality of service staff  Risk and uncertainty  e.g. their stability, track record 12/19/2015Dr. Yuvaraj 12

Knowledge Vs Performance 12/19/2015Dr. Yuvaraj 13

Reconfiguring the market  Substitute/configured products example /post.  Disintermediation- removing a part of the channel e-commerce.  Reintermediation- replacing an existing intermediary, EBay, reverse auctions.  Partial channel substitution- some functions of the intermediary lost, Car websites.  Media switching/addition- using the internet as the main means of communication, Dell. 12/19/2015Dr. Yuvaraj 14

Channel strategy  Single channel provider  Channel migrator- moving from one type to another  Online ticketing, ATM  Activity based strategy- Based upon customer life-cycle. Call centers to take insurance orders  Integrated multi-channel strategy- telephone and internet sales/banking.  Needs based-direct selling versus internet selling  Graduated customer value strategy- channel based upon customer financial value. 12/19/2015Dr. Yuvaraj 15

How important is it? 12/19/2015Dr. Yuvaraj 16

Differences between country markets  Stage of economic development  Market structure and competition  Rate of growth in similar markets  Diverse cultures and languages  Politics, regulations and associated risk  Legal and financial systems and bodies  Business rules and customs  Currency and exchange risks  Customer profiles  Data expensive and difficult to obtain  Control & coordination difficult 12/19/2015Dr. Yuvaraj 17

Planning Regulations, Tenders/Bribes Consideration to Environment, Compliance Issues/H&S Local Materials, Earthquakes Level of development Climate (Materials required) Level of technological advancement Family culture (size of house) Amount of available land Use of Sub Contractors Communication/Logistics, Availability and skill/knowledge of labour, Low cost supplier, Cultural differences, Low income, Poor infrastructure/distribution Different eating habits (ie more family meals, less packaged food), No fridges/freezers (or electricity) MR difficult Lesser developed Countries 12/19/2015Dr. Yuvaraj 18

Questions? 12/19/2015Dr. Yuvaraj 19