SALES AND DISTRIBUTION MANAGEMENT
MBA Fall Semester Year 2
(July – December 2020)
Harjot Singh, LM TSM, TIET
12/23/2020
Channel Design
2
Are Channels Necessary?
• EXAMPLES OF AMAZON AND DELL
• BATA
• EUREKA FORBES
• TECHNICAL PRODUCTS LIKE MEDICAL
EQUIPMENTS
3
Sell Directly or Indirectly?
• MOST COMPANIES USE A COMBINATION OF EACH
MODE.
CHOICE DEPENDS ON:
• NATURE OF COMPANY AND ITS PRODUCTS
• NATURE AND DISPERSAL OF CUSTOMERS
• BUSINESS GOALS OF THE COMPANY
4
Sell Directly or Indirectly? Other factors….
• MARKET EXPECTATION OF CREDIT
• COMPANY’S CAPABILITIES AND STRENGTHS
• SPEED WITH WHICH COMPANY WANTS TO INCREASE SALES
AND COVERAGE
• NATURE OF COMPETITION
• COMPANY’S MARKET SHARE
5
Intermediation: Cost and control
aspects
Control Cost
efficiency
Direct Distribution Indirect distribution
6
Factors affecting Channel Design
LIST OF MARKETS TO BE COVERED
MARKET SHARE OBJECTIVES
TRACKING COMPETITION
HIGHEST CALL PRODUCTIVITY
SALES PROMOTION EFFORTS
NEW PRODUCT / PACK LAUNCHES
SHELF SPACE MAXIMISATION
MARKET FEEDBACK AND REPORTS
7
Designing International Distribution Channels
Evaluating the Major Alternatives
Responsibilities of Number of Types of
Intermediaries Intermediaries Intermediaries
Identifying Major Alternatives
Setting Channel Objectives & Constraints
Analyzing Consumer Service Needs
Channel Design Decisions
FRAMEWORK FOR CHANNEL DESIGN AND IMPLEMENTATION
Channel Design Process: Channel Implementation Process:
SEGMENTATION:
Recognize and respond to target customers’ CHANNEL POWER: CHANNEL CONFLICT:
service output demands Identify sources for all Identify actual and potential
channel members sources
Decisions About
Efficient Channel Response:
MANAGE/DEFUSE
CHANNEL STRUCTURE: CONFLICT:
What kinds of intermediaries are in my Use power sources strategically,
channel? subject to legal constraints
Who are they?
How many of them?
SPLITTING THE WORKLOAD:
With what responsibilities? GOAL:
DEGREE OF COMMITMENT: Channel Coordination
Distribution alliance?
Vertical integration/ownership?
GAP ANALYSIS:
What do I have to change?
INSIGHTS FOR SPECIFIC CHANNEL INSTITUTIONS:
Retailing, Wholesaling and Logistics, Franchising
Number of Marketing
Intermediaries
Intensive
Intensive Selective
Selective
Distribution
Distribution Distribution
Distribution
Exclusive
Exclusive
Distribution
Distribution
Patterns of Distribution
• INTENSIVE..NUMEROUS OUTLETS
• SELECTIVE..A FEW SELECT OUTLETS
• EXCLUSIVE..ONE OR TWO OUTLETS…NOT CARRY
COMPETING LINES
11
Example of Distribution Models of telecom
companies like Spice Telecom / Reliance/
Connect
Multi Channel
• DMAs for field sales
• Retailers for walk-in sales, some branding
• Franchisees (examples Web World, Planet
Connect) for walk-in sales, branding /image-
building/ customer feedback
• How many depending on market potential
Examples of Distribution Models of Godrej
Pacific Technology Ltd. / Samtel India Ltd. in IT
Distribution
• Selective number of dealers for most branches
• Exclusive arrangement in small territories
• Intensive distribution through many small dealers in
case a single big dealer was not available
• Preferred model was selective distribution….why?
DISTRIBUTION STRATEGY (Continued)
• OUTLINING THE STEPS
• DECIDING ON STRUCTURE OF NETWORK
• CLEAR POLICY AND PROCEDURES
• STATING KEY PEROFRMANCE INDICATORS
• UNDERSTANDING CRITICAL SUCCESS FACTORS
14
Trend toward Disintermediation
A Major Trend is Toward Disintermediation Which
Means that Product and Service Producers are
Bypassing Intermediaries and Going Directly to Final
Buyers or That New Types of Channel Intermediaries
are Emerging to Displace Traditional Ones.
References
• Marketing Channels by Bert Rosenbloom, Cengage
Learning
• Basics of Distribution Management — A Logistical
approach by Satish K. Kapoor and Purva Kansal, PHI
Learning
• Distribution and Logistics Management — A Strategic
Marketing Approach by D K Agrawal, Macmillan
• Marketing Channels (MC) by
Coughlan/Anderson/Stern/El-Ansary,Pearson Education
• Google images
16
SUGGESTIONS FOR TELECOM SERVICE PROVIDERS
• Telecom service providers need to put greater focus on pre-
paid consumers to prevent them from availing MNP and
churning.
• Telecom service providers need to focus more on the
functional dimension of service quality rather than the
technical dimension of service quality.
Thank You
• Service providers need to make greater efforts to retain
those customers who have been on the network for a longer
time and who have been contributing more to the top line
or bottom line.
