Lesson 1 Introduction To Distribution Management

DISTRIBUTION
MANAGEMENT
LESSON 1: MARKETING CHANNELS CONCEPT
Dennis T. Perez
Teodoro M. Luansing College Of Rosario
LESSON 1:
MARKETING CHANNELS
CONCEPT
DISTRIBUTION MANAGEMENT
Distribution management refers to the process of
overseeing the movement of goods from supplier or
manufacturer to point of sale.
It is an overarching term that refers to numerous
activities and processes such as packaging,
inventory, warehousing, supply chain, and logistics.
Distribution management is an important part of the
business cycle for distributors and wholesalers.
The profit margins of businesses depend on how
quickly they can turn over their goods.
Source: https://www.investopedia.com/terms/d/distribution-management.asp
LESSON 1:
MARKETING CHANNELS
CONCEPT
Distribution management focuses on the
timely delivery of goods and prevention
of loss (such as ensuring delivery of
perishable goods without spoilage)
through distribution channels.
It involves several aspects, such as
packaging, routing, warehousing storage,
and fleet management.
Source: https://corporatefinanceinstitute.com/resources/valuation/distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
A distributor may be any individual or
business that delivers goods to a customer.
For example, a pharmaceutical company is
a distributor of products to pharmacies,
while an e-commerce business, such as
Amazon, is a distributor of goods to
consumers.
Effective distribution management reduces
shipping costs and delivery times and
increases customer satisfaction.
Source: https://corporatefinanceinstitute.com/resources/valuation/distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
ADVANTAGES OF DISTRIBUTION
MANAGEMENT
1. Reduced wastes and spoilage
2. Reduced warehousing costs
3. Decreased shipping charges
4. Faster delivery to customers
5. Customer loyalty
Source: https://www.netsuite.com/portal/resource/articles/erp/distribution-management.shtml
LESSON 1:
MARKETING CHANNELS
CONCEPT
CHALLENGES
Natural Disruption
 severe weather events
 raw material shortages (e.g. bad crop
years)
 pest damages
 epidemics or pandemics
LESSON 1:
MARKETING CHANNELS
CONCEPT
CHALLENGES
Human Disruption
 Riots
 Protests
 Wars
 Strikes
 Poor personnel performance
LESSON 1:
MARKETING CHANNELS
CONCEPT
CHALLENGES
Transportation Disruption
 Transport vehicle disrepair
 Maintenance downtimes
 Accidents
 Delayed flights
 Restrictive or new transportation
regulations
LESSON 1:
MARKETING CHANNELS
CONCEPT
CHALLENGES
Product Disruption
 product recalls
 packaging issues
 quality control issues
LESSON 1:
MARKETING CHANNELS
CONCEPT
CHALLENGES
Buyers Disruption
 order changes
 shipment address changes
 product returns
LESSON 1:
MARKETING CHANNELS
CONCEPT
WHY DISTRIUTION
MANAGEMENT IS IMPORTANT?
Some of the reasons behind the importance
of distribution management systems are
1. Improved Customer Service
 Offering goods and services to customers
as per their requirements leads to
improved customer service. This, in turn,
helps to build a good relationship with
the customers and enhances
customer loyalty toward the company.
Source: https://www.marketing91.com/distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
WHY DISTRIUTION MANAGEMENT
IS IMPORTANT?
2. Enhanced Sales and Profits
 An effective distribution strategy helps to reach
the target audience quickly and efficiently. This
results in increased sales and profits for the
company.
3. Increased Efficiency
 A well-managed distribution system ensures
that goods are delivered to the customers on
time and in good condition. This leads to
increased efficiency and productivity of the
company.
Source: https://www.marketing91.com/distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
WHY DISTRIUTION
MANAGEMENT IS IMPORTANT?
4. Reduced Costs
 An efficient
distribution system helps to reduce distribut
ion costs
by optimizing the use of resources. This
leads to increased profits for the company.
5. Improved Image
 A distribution system that is well-managed
and efficient helps to improve the image of
the company in the market. This leads to
increased
Source: sales and profits for the company.
https://www.marketing91.com/distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
FACTORS THAT INFLUENCE
Many things can influence distribution
management. The five most common are:
 Unit perishability – if it’s a perishable
item then time is of the essence to prevent
loss
 Buyer purchasing habits – peaks and
troughs in purchasing habits can
influence distribution patterns and
therefore varying distribution needs that
can be predicted
LESSON 1:
MARKETING CHANNELS
CONCEPT
FACTORS THAT INFLUENCE
 Buyer requirements — e.g. changes in a
retailer’s or manufacturer’s just in time
inventory demands,
 Product mix forecasting – optimal
product mixes vary according to seasons
and weather or other factors
 Truckload optimization – relies on
logistics and fleet management software to
ensure every truck is full to capacity and
routed according to the most efficient path.
LESSON 1:
MARKETING CHANNELS
CONCEPT
3 DISTRIBUTION MANAGEMENT STRATEGIES
At the strategic level, there are three distribution management
strategies:
1. Mass. The mass strategy aims to distribute to the mass market,
e.g. to those who sell to general consumers anywhere.
2. Selective. The selective strategy aims to distribute to a select
group of sellers, e.g. only to certain types of manufacturers or
retail sectors such as pharmacies, hair salons, and high-end
department stores.
3. Exclusive. The exclusive strategy aims to distribute to a highly
limited group. For example, the manufacturers of Ford vehicles
sell only to authorized Ford dealerships, and producers of Gucci-
brand goods only sell to a narrow slice of luxury goods retailers.
LESSON 1:
MARKETING CHANNELS
CONCEPT
DISTRIBUTION VS LOGISTICS
 While both distribution and logistics
deal with efficient movement and
delivery of goods, there is a major
difference.
 Distribution management is only a part
of the larger logistics management
activity.
 Logistics deals with the precise
planning and various activities that
aim to supply and transport goods
effectively
Source: https://www.tranquilbs.com/importance-distribution-management/
LESSON 1:
MARKETING CHANNELS
CONCEPT
 Bulk shipping and management,
supply management, fleet
management, delivery routing,
security, temperature controls,
warehouse, tracking shipments, etc.
are the various activities involved in
logistics or physical distribution.
 On the other hand, distribution
management is a system within
logistics that is focused on fulfilling
orders through distribution channels.
LESSON 1:
MARKETING CHANNELS
CONCEPT
 The channels mean the agents and
other entities that a product goes
through from its point of origin till it
reaches the end-user.
 Independent or third-party
distributors, retailers, wholesalers,
and e-commerce sites are some
examples of distribution channels.
 Commercial or consumer packaging,
fulfilling orders, and shipping them
are processes involved in distribution.
LESSON 1:
MARKETING CHANNELS
CONCEPT
What Are the Elements of Distribution
Management?
This is simply referring to the steps involved in
sending the product from the manufacturer
through various entities to the eventual consumer.
Typically, this includes:
• Logistics
• Supply chain
• Purchase order and invoicing system
• CRM
• Vendor management
• Warehouse management system
• Transportation management
LESSON 1:
MARKETING CHANNELS
CONCEPT
KEY FEATURES OF DISTRIBUTION MANAGEMENT SYSTEM SOFTWARE
LESSON 1:
MARKETING CHANNELS
CONCEPT
What Is a Distribution Network/Channel
and What Are the Benefits?
 A connected group of transportation systems and
storage services is referred to as a distribution
system.
 It is developed in line with a distribution strategy
created to ensure the movement of goods from a
manufacturer through various agents, till it
reaches the ultimate buyer.
LESSON 1:
MARKETING CHANNELS
CONCEPT
What Is Distribution Channel?
A distribution channel or a conveyance channel is a
chain of organizations or its middlemen or
intermediaries through a distribution channel
chain, a service or a product is moved or proceeds
until this arrives at the end consumer or the final
purchaser of that specific goods or service.
Distribution channels might incorporate retailers,
wholesalers, and surprisingly even web facilities.
A distribution channel is a course by which each
one of the services and products travels to the
designated purchaser.
Source: https://byjus.com/commerce/channels-of-distribution/
LESSON 1:
MARKETING CHANNELS
CONCEPT
What Is Distribution Channel?
A distribution channel is the network of businesses
or intermediaries through which a good or service
passes until it reaches the final buyer or the end
consumer.
Distribution channels can include wholesalers,
retailers, distributors, and even the internet.
Distribution channels are part of the downstream
process, answering the question "How do we get
our product to the consumer?" This is in contrast to
the upstream process, also known as the supply
chain, which answers the question "Who are our
suppliers?"
Source: https://www.investopedia.com/terms/d/distribution-channel.asp
LESSON 1:
MARKETING CHANNELS
CONCEPT
Components of a Distribution Channel
• Producer: Producers combine labor and capital to create goods and services for
consumers.
• Agent: Agents commonly act on behalf of the producer to accept payments and
transfer the title of the goods and services as it moves through distribution.
LESSON 1:
MARKETING CHANNELS
CONCEPT
Components of a Distribution Channel
• Wholesaler: A person or company that sells large quantities of goods, often at low
prices, to retailers.
• Retailer: A person or business that sells goods to the public in small quantities for
immediate use or consumption.
• End Consumer: A person who buys a product or service.
LESSON 1:
MARKETING CHANNELS
CONCEPT
Types of Distribution Channels
 Direct. A direct channel allows the consumer to make
purchases from the manufacturer. This direct, or short channel,
may mean lower costs for consumers because they are buying
directly from the manufacturer.
 Indirect. An indirect channel allows the consumer to buy the
goods from a wholesaler or retailer. Indirect channels are
typical for goods that are sold in traditional brick-and-mortar
stores.
 Hybrid. Hybrid distribution channels use both direct channels
and indirect channels. A product or service manufacturer may
use both a retailer to distribute a product or service and may
also make sales directly with the consumer.
LESSON 1:
MARKETING CHANNELS
CONCEPT
Distribution Channel Levels
 Level 0. This is a direct-to-consumer model
where the producer sells its product directly to
the end consumer. Amazon, which uses its
platform to sell Kindles to its customers, is an
example of a direct model. This is the shortest
distribution channel possible, cutting out both
the wholesaler and the retailer.
 Level 1. A producer sells directly to a retailer
who sells the product to the end consumer. This
level includes only one intermediary. HP or Dell
are large enough to sell their computer products
directly to reputable retailers such as Best Buy.
LESSON 1:
MARKETING CHANNELS
CONCEPT
Distribution Channel Levels
 Level 2. Including two intermediaries, this
level is one of the longest because it includes
the producer, wholesaler, retailer, and
consumer. In the wine and adult beverage
industry, a winery cannot sell directly to a
retailer.
 Level 3. This level may add agent or jobbers,
this level adds the role of the individual who
may assemble products from a variety of
producers, stores them, sells them to retailers,
and acts as a middle-man for wholesalers and
retailers.
LESSON 1:
MARKETING CHANNELS
CONCEPT
6 Factors to Consider While Selecting a
Channel of Distribution
The Nature of the Product: These factors include physical
characteristics of a product and their impact on the selection of a
particular channel of distribution.
Various factors under this category are:
 Perishability
 Size and weight of product
 Unit value of a product
 Standardisation
 Technical Nature of Products
 Product Lines
Source https://www.yourarticlelibrary.com/stores/channel-of-distribution-6-factors-to-consider-while-selecting-a-channel-of-distribution
LESSON 1:
MARKETING CHANNELS
CONCEPT
The Nature of the market. In the words of Lazo and Corbin
“Marketing managements select channels on the basis of
customer wants-how, where and under what circumstances.
Following factors are considered in this regard:
 Consumer of industrial market
 Number of prospective buyers
 Size of the order
 Geographic concentration of market
 Buying habits of customers
LESSON 1:
MARKETING CHANNELS
CONCEPT
6 Factors to Consider While Selecting a Channel
of Distribution
The Nature of Middlemen. Marketing intermediaries are vital
components in the distribution of goods. They greatly influence the
marketing of goods.
Important factors relating to the selection of a particular
middleman are explained as under:
 Cost of distribution of goods
 Availability of desired middlemen
 Unsuitable marketing policies for middlemen
 Services provided by middlemen
 Ensuring greater volume of sales
 Reputation and financial soundness
LESSON 1:
MARKETING CHANNELS
CONCEPT
The nature and size of the manufacturing unit. The nature
and size of manufacturing unit has a great impact on the selection of
a distribution channel.
The various considerations in this regard are as follows:
 Manufacturer Reputation and Financial Stability
 Ability and Experience of the Undertaking
 Desire for Control of Channel
 Industrial Conventions
 Services Provided By the Manufacturer
LESSON 1:
MARKETING CHANNELS
CONCEPT
6 Factors to Consider While Selecting a Channel of
Distribution
Government Regulations and Policies. Government policies and
regulations also influence the choice of distribution channels. The
Government may impose certain restrictions on the wholesale trade of a
particular product arid takeover the distribution of certain products. All
these restrictions have a direct impact in selecting the channel of
distribution.
Competition. The nature and extent of competition prevalent in a
industry is another detrimental consideration in selecting a distribution
channel. Different manufacturers producing similar products may
employ the same channels of distribution.
DISTRIBUTION
MANAGEMENT
LESSON 1: MARKETING CHANNELS CONCEPT
Dennis T. Perez
Teodoro M. Luansing College Of Rosario

Lesson 1 Introduction To Distribution Management

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Lesson 1 Introduction To Distribution Management

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DISTRIBUTION

 Size and weight of product

 Unit value of a product

 Technical Nature of Products

 Number of prospective buyers

 Size of the order

 Geographic concentration of market

 Buying habits of customers

 Availability of desired middlemen

 Unsuitable marketing policies for middlemen

 Services provided by middlemen

 Ensuring greater volume of sales

 Reputation and financial soundness

 Ability and Experience of the Undertaking

 Desire for Control of Channel

 Services Provided By the Manufacturer

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