Page 210 - DMGT408DMGT203_Marketing Management

Unit 9: Managing Marketing Channels

5. Retailer: As the last link in many marketing channels, retailers sell directly to final Notes
customers. They purchase goods from wholesalers or in some cases directly from the
producer.
6. Distributor: Distributor is a general term applied to a variety of intermediaries. These
individuals and firms perform several functions, including inventory management,
personal selling and financing. The basic difference between an agent and distributor is
that while agents work on commission basis, distributors deal on their own account.
Distributors are more common in organizational markets, although wholesalers also
occasionally act as distributors.

7. Dealer: Another general term that can apply to just about any intermediary is dealer.
Basically the same type of intermediary acts as a distributor. Although some people
distinguish dealers as those intermediaries who sell only to final customers not to other
intermediaries.

8. Value-Added Resellers (VARs): They are intermediaries that buy the basic product from
producers and add value to it or depending on the nature of the product modify it, and
then resell it to final customers.
9. Merchants: They are intermediaries that assume ownership of the goods they sell to
customers or other intermediaries. Merchants usually take physical possession of the
goods they sell.
10. Carrying and Forwarding Agents (C&F): They are people and organizations that assist the
flow of products and information to marketing channels, including banking and insurance
functions. Assistance is required in services like transportation and storage (C&F Agent),
risk coverage (insurance) and financial services.

Number of Intermediaries

The marketing manager should decide how many intermediaries he should use for distributing
his products. The decision on number of intermediaries should largely depend on the distribution
strategy followed by the firm. After a producer has selected the type of channel that makes the
most sense for his products, the next step is to determine the level of distribution intensity,
which specifies the number of marketing intermediaries that will carry the products. Depending
on a firm’s product, objectives and customers, the levels of intensity may differ from case to case.
Distribution intensity is frequently modified as a product progress through its life cycle. There
are three kinds of distribution strategies namely exclusive distribution, selective distribution
and intensive distribution.
1. Intensive Distribution: A channel strategy that seeks to make products available in as
many appropriate places as possible. This strategy is used for fast moving consumer
goods and products, which are of high and frequent demand, like food items and daily use
personal care product categories.

Example: Consumer product companies such as HUL, P&G, ITC, and Nirma etc. use
intensive distribution. HUL objective for its Lifebuoy bathing soap is to make it available in 80
per cent of the Indian rural markets.

2. Selective Distribution: A channel strategy that limits availability of products to a few
carefully selected outlets in a given market area. This kind of distribution strategy is
followed by established brands and new to the market products. The company prefers to
make the product available at selected outlets and promote with adequate marketing
resources and more control on the market.

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