Page 233 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes The design of a channel starts with understanding the customer’s service expectations. It
should help in setting objectives and constraints for the channel.

A company may pursue exclusive, selective and intensive distribution strategy for reaching
markets.
Once the channel design decisions are taken and intermediaries are decided upon, the big
task is to manage the selected channel. The marketing manager should select appropriate
channel by evaluating product, market and producer related factors.

Channel management is a dynamic process as it involves participants not directly under
the control of the organization.
There are three types of primary channel participants, namely manufacturer, wholesaler
and retailer.
Logistics represents the value chain of a company, the starting point is the procurement
and at the end of the chain is the customer.

Physical distribution systems must meet the factory needs towards supply chain and the
customers. First of all it is necessary to find out what are customers requirements and
what competitors are providing. Most customers are concerned with speedy and
dependable delivery of what they want and don’t care how a product moves from a
manufacturer to the point of delivery from where they acquire it.
There are two types of merchants, namely wholesalers who purchase in bulk from the
manufacturers and sell in small quantities to retailers and retailers who purchase from
wholesalers and manufacturers and sell in smaller quantities to ultimate consumers.

9.9 Keywords

Agent: Intermediaries with legal authority to market goods and services and to perform other
functions on behalf of the producer are called agents or brokers.
Distribution Channel: A distribution channel for a product is the route taken by the title to the
goods as they move from the producer to the ultimate customer.

Horizontal Marketing System: In this system, two or more unrelated companies put their
resources together to exploit an emerging market situation.
Logistics: The process of strategically managing the physical distribution through the firm and
on to customers
Middlemen: Middlemen refer to just about anybody acting as an intermediary between the
producer and the consumer.
Retailer: As the last link in many marketing channels, retailers sell directly to final customers.
They purchase goods from wholesalers or in some cases directly from the producer.
Value-Added Resellers: 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.

Vertical Marketing System: It comprises manufacturer, wholesalers and retailers working as a
unified system.
Wholesaler: Wholesalers are organizations that buy from producers and sell to retailers and
organizational customers. Wholesalers primarily deal in bulk and will ordinarily sell to the
retailer or other intermediaries.

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