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Place
Channel of Distribution
Created by Dr. V. R. Malkar, Professor
1
Marketing
Syllabus
3.1 The role of Marketing Channels- Channel
functions and flows, Channel levels
3.2 Channel Design Decision- Analyzing customer
desired service output levels, establishing
objectives and constraints, Identifying and
evaluating major channel alternatives.
3.3 Channel Options : Introduction to wholesaling,
Retailing, Franchising, Direct marketing,
E-Commerce Marketing Practices.
3.4 Market Logistics decision – Order processing,
Warehousing, Inventory & Transportation.
Created by Dr. V. R. Malkar, Professor
2
Marketing
Introduction
“Marketing channels are sets of
interdependent organizations involved
in the process of making a product or
service available for use or
consumption”
Philip Kotler
Manufacturers/products
Agents/brokers
Wholesalers/distributors
Retailers Retailers
Marketing Agents
Retailers/Wholesalers/Distributors
• Exclusive Distribution
– Limiting the distribution to only one
intermediary in the territory
• Intensive distribution
– Distribute from as many outlets as
possible to provide location convenience
• Selective distribution
– Appoint several but not all retailers
• Newspapers
• Most fast moving consumer goods you see
in the newsstand
• Photo processing shops
• Advantages:
– Increased sales, wider customer recognition,
and impulse buying
• Disadvantages:
– Characteristically low price and low-margin
products that require a fast turnover
– Difficult to control large number of retailers
Facilitate
Process
local Take
returns
Provide a distribution responsibility
trained for inventory
sales force obsolescence
Wholesalers
Provide provide some or all Handle
marketing & of these functions financial
research support records
Gather Provide
Purchase
assortments warehousing & Offer financing
large quantities
for customers delivery facilities
• What is franchising?
• Types of franchising
• Why franchise? Why is franchising important
to SMEs?
• Considerations for franchisor/franchisee
• Pitfalls/Be careful
• Singapore Experience
Created by Dr. V. R. Malkar, Professor
35
Marketing
What is franchising?
Retail Stores
Vending Machine
Restaurants & F&B
Operators
Outlets
outlet in outlet in
Sale, Australia Marseille, France
• Demand
• Profitability of franchise, and length of time
required to recoup investment
• Track record of franchisor
• Support rendered to other franchisees
• Department stores
• Specialty stores
• Convenience store
• Discount store
• Off-price retailer
• Super store
• Sorting
• Breaking Bulk
• Holding stock
• Communications
• Assist small suppliers
• Customer service
PDS Outlets
Khadi Stores
Cooperatives
Convenience Stores
Mom and Pop/Kiranas
Weekly Markets
Village Fairs
Melas
40%
20%
0%
US Taiwan Malaysia Thailand Brazil Indonesia Poland China India
600 486
500 445
373 408
400 342
300
200 200
100 87
26 39 59
0 12 18
2007 2008 2009 2010 2011 2012 2017
Bharti-Walmart (with $2.5 Food & grocery, electronics & appliances, clothing & Hypermarkets, Supermarkets and
Billion investment by footwear, furniture & furnishing, household articles. Convenience
Bharti)
Carrefour-Landmark Food and groceries, FMCG, apparel and electronics Hypermarkets
Home Retail Group plc - Franchising the Argos concept under the terms of the Multi Channel propositions
Shopper's Stop Ltd and arrangement, Argos will be providing its brand,
Hypercity Retail India catalogue and multi-channel expertise and IT support
Private Ltd
Tata-Woolworths Sourcing agreement for Consumer durables and Multi brand retail chain
Foods under brand name CROMA
Staples Inc – Pantaloon Global Sourcing of Office equipments across various Cash and carry
Retail businesses
Reliance Food & grocery, electronics & appliances, clothing & Multi format and Multi Category
footwear, furniture & furnishing, household articles.
Birla Food & grocery, electronics & appliances, clothing & Convenience and Supermarket
footwear, furniture & furnishing, household articles.
Latest Information on Indian Retail
Scenario
• Singapore-based CapitaMalls Asia, which
develops, owns and manages malls across
Asia, has pledged US$ 400 million to its
growth in India up till 2014. Mr Kevin Chee,
CEO and Country Head of CapitaMalls Asia,
has said that apart from funding the two malls
that are operational now, this money would
be used to develop seven more malls in India.
• Heterogeneous market
– Product offerings in different stores across the country will be very
different
– No standard mode of operation across formats
– Market not mature (has to be validated)
• Infrastructure will bring about logistical challenges
– Though, improvements in road networks, power supply are
underway
Retail Challenges
• Trained employees with understanding of retail business are inadequate
compared to the needs of organized retail
• Barriers to Entry
– High taxes, bureaucratic clearance process and labour laws
• High cost of real estate
– though over 600 malls are to come up all over the country by the
next 4 years
• Indian retailers are deeply entrenched, are expanding and building on
logistics and technology initiatives
Key Challenges to
overcome
Internal External
• Attracting & retaining qualified manpower • High real estate cost
• Implementing SOP’s & best practices • Anarchic laws
• Focus on improving operational efficiency • Shortage of qualified manpower
• Cost control • Poor infrastructure
• CRM & Service levels • Unorganized & poor supply chain
• Import of know how and logistics techniques from developed retail countries
IT Infrastructure
Manpower
Advertising
Public Relations
Personal Selling
Sales Promotion
Support Media
Catalogs Inclusions
Reprints
Flyers
Sales letters
Folders Self-mailers
Postcards
Advantages Disadvantages
Advantages Disadvantages
Inbound
Advantages Disadvantages
Inventory
Warehousing
management
Logistics
Transportation information
management
Created by Dr. V. R. Malkar, Professor
108
Marketing
Marketing Logistics and
Supply Chain Management
Warehousing Decisions
• How many
• What types
• Location
• Distribution centers
Marketing Logistics and Supply Chain
Management
Inventory Management
• Just-in-time systems
• RFID
– Knowing exact product location
• Smart shelves
– Placing orders automatically
Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Transportation affects the pricing of products, delivery
performance, and condition of the goods when
they arrive
DISTRIBUTION MANAGEMENT OF
HUL
Enhancing livelihoods.
• How?
– RDs will start from base town.
– Appoint wholeseller
– Star seller for long distance
Created by Dr. V. R. Malkar, Professor
127
Marketing
Conclusion
DETTOL ANTISEPTIC
4. RETAILER :
RETAILER It is an important link as its effectiveness will only benefit the other
links above it to survive in the competitive market. It is the final link where
companies effective marketing strategy will decide the demand and will make
the public aware of its existing product as retailers are medium for product
display. They have a profit margin of 7-8% over dettol.
5. CUSTOMERS:
Finally customers can buy dettol products from these retail shops or from
local grocery and medical stores.
Q.3.2 Do you think that Organised retailing in India will gradually eliminate locality
retail and Kirana shops in India? Give your reasons.