Formulating channel strategy Channel participants What is a

Formulating channel strategy Channel participants

What is a marketing channel u A marketing channel is a set of interdependent organisations involved in the process of making a product or service available for use or consumption

Key members of marketing channels u Manufacturer • Producer of product or service being sold u Intermediaries • Means channel member other than manufacturer or end user (wholesaler, retailer) u End users

Why marketing channels Demand-side factors • Facilitating the search • Assortment Sorting u Accumulation u Bulk breaking u Supply side factors • Routinisation of transactions • Reduction in no. of contacts • Carry inventory • Demand creation • Extend credit to end users • service

Marketing flows u u u u Physical possession Ownership Promotion Negotiation Financing Risking Ordering Payment

“Service outputs” Value added services created by channel members along with the product purchased by consumers are called service outputs u Typical service outputs include bulk breaking, spatial convenience, waiting and delivery time, assortment etc. u

Choosing the right distributor u u What marketing functions to assign Product line • Fragmented channels • Specialized products u Size and type of the distributor • Large and reputed distributors • Small distributors u u Exclusive or multiple distribution How to divide selling function b/w company sales team and distributors • House accounts and distributor accounts u Distribution policies

Marketing logistics Physical distribution and customer care

Logistics u In the business area, Logistics refers to the interrelation and management of all the activities involved in making products and raw materials available for manufacturing and in providing finished products to the customers when, where and how they are desired

Various logistical cost centres are Transportation u Inventory management u Warehousing u Material handling u Order processing u

transportation • Mode and carrier selection Road u Rail u Air u Pipeline u waterways u • Carrier routing • Vehicle scheduling

Inventory management u Inventory carrying cost • Inventory acquisition cost • Inventory service cost such as insurance • Storage space costs • Inventory risk cost

warehousing • Private or public facilities • Site location Market centered u Production centered u Intermediate u

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