Unit IV 1.4 Distribution Management

Unit -4
Distribution Management
Syllabus
01 02
Pharmaceutical marketing channels: Professional sales representative
Designing channel, channel members, (PSR): Duties of PSR, Purpose of
selecting the appropriate channel, detailing, selection and training,
conflict in channels. supervising, norms for customer
Physical distribution management: calls, motivating, evaluating,
Strategic importance, tasks in physical compensation and future prospects
distribution management. of the PSR.
Distribution Channels
A distribution channel is the route through which goods or
services move from the company to the customer or the
transfer of payment happens from the customer to the
company.
Distribution channels can mean selling of products directly or

selling through wholesalers, retailers etc. The same applies for
payment transfer from customers to company; it can move
through a path or can be sent directly to the company.
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Channels of distribution
• Meaning of distribution: it is the last stage of marketing process. It
is a process of transferring goods from manufacturer to the
consumer
• It is done through many channels :
What is called channels of distribution?
It is a group of individuals and organizations that direct the flow of
products from producers to consumers .
Its main objective is to find appropriate ways to make the product

available in the market
Manufacture of industrial goods
Agent
Distributor Agent
Distributor
Users or consumer

Channels of distribution
• The channels of distribution is the chain of business or
intermediaries through which a good or services passes until it
reaches the customer.
Manufacture of industrial goods
• Channels for industrial goods
Agent
Distributor Agent
Distributor
Users or consumer
Functions of Distribution Channels
• Distribution channels basically function to deliver goods from the manufacturer to
the customer.
• The following are the functions of distribution channels −
• Facilitate selling by being physically close to customers
• Gather information about potential and current customer competitions, other
factors and forces of the environment
• Provide distributional efficiency by bridging the gap between the manufacturer
and the user efficiently and economically
• Assemble products into assortments to meet buyers’ needs
• Match segments of supply with segments of demand

Functions of Distribution Channels…..
• Assist in sales promotion
• Assist in introducing new products
• Assist in implementing the price mechanism
• Assist in developing sales forecast
• Provide market intelligence and feedback
• Maintain records
• Take care of liaison requirements
• Standardize transaction

Objectives of Distribution Channels
• Objectives of a distribution channel are planned as per the target of the enterprise and
executed respectively. The following are the various objectives behind the planning of
distribution channels −
• To ensure availability of products at the point of sale
• To build channel member’s loyalty
• To stimulate channel members to put greater selling efforts
• To develop management efficiency in channel organization
• To identify the organization at the level
• To have an efficient and effective distribution system for making the products and
services available readily, regularly, equitably and fresh.

Major Channels of Distribution
Here is a list of some of the major channels of distribution −
1. Manufacturer → Consumer
2. Manufacturer → Retailer → Customer
3. Manufacturer → Wholesaler → Customer
4. Manufacturer → Wholesaler → Retailer → Customer
5. Manufacturer → Agent → Retailer → Customer
6. Manufacturer → Agent → Wholesaler → Customer
7. Manufacturer → Agent → Wholesaler → Retailer → Customer
• Profit distribution decreases as the channel length increases.

Distribution - HKS
Advantages of channels of distribution
• Time and place utility - Consumers can get the goods at the place and
at the time they require the goods.
• Marketing costs are less.
• Due to financial pooling from different sources, financial burden on
producer is less.
• Due to large net-work, more promotional efforts by each category,
hence more advertisement for the product.
• Creation of more employment potential and standard of living.
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Distribution - HKS
Advantages of channels of distribution

Stability in price:
• Channels of distribution helps in stabilizing product through proper
stocking, balancing and supply of goods.
Storage of finished goods: it helps in avoiding storage problems of
goods.
Fixing the price:

• It helps in fixing the price of product
• It helps in routine the sales of the product
• It helps the consumer to buy goods in convenient units, lots packs
and assorted varieties of product. Jun 9, 2024 12
Distribution of industrial goods
• Four different channels are used in reaching industrial users.
1.Producer- user (Zero level): this direct channel accounts for a grater money volume of
industrial produces than any other structure. Manufacturers of large installations
usually sell directly to users. (Zero Stage – Manufacturer → Consumer)
2.Producer- industrial distributor –user( 1Stlevel):producers of operating supplies and

small accessory equipment frequently use industrial distributors to reach their markets.
(One Stage - Manufacturer →indu. distributors → Consumer)

Distribution level...
3. Producer-agent(2) -user( 2nd level):firms without their marketing depts., find this as desirable
channel. Also a company which wants to introduce a new product or enter a new market may
prefer to use agents than its own sales force.
(Manufacturer → Wholesaler → Retailer → Consumer )
4. Producer-agent- industrial distributor-user( 3rd level):this channel is similar to the previous one
except that for some reason it is not feasible to go through agents directly to the industrial user.
(Producer → Distributor → Wholesaler → Retailer → Consumer)
The reasons may be either unit sale is too small to sell directly or decentralized inventories are
needed to supply the users rapidly. in such cases storage services of industrial distributors are
needed.

Designing Distribution Channels
• The following steps are involved in the designing of a channel system −
1. Formulating the channel objectives
2. Identifying the functions to be performed by the channel
3. Analyzing the product and linking the channel design to the product characteristics
4. Evaluating the distribution environment, including legal aspects
5. Evaluating competitor’s channel designs
6. Evaluating company resources and matching the channel design to the resources
7. Generating alternative designs, evaluating them and selecting the one that suits the
firm best

Factors affecting choice of channels of
distribution....
To ensure smooth and proper delivery of product the channel’s choice is very important.
1.Factors based on market:
1. Industrial or consumer market: if the product is a heavy machine. Direct delivery to
consumer industry.
2. Number of potential consumer: if potential consumer is less then the product can be
sold by the manufacturer and vice versa.
3. Size of order: if the order is less or in small quantities, a middle man is required for
sale.
4. Buying habits of customer: factors like money, time , credit facilities home delivery
and availability of wide range of products to choose from.

2.Product considerations
• 1.Unit value: if the unit value is low then the channel chosen will be longer Ex:cosmetics:
• 2.Product line: if the product line is narrow and it has to be sold to consumers by middle man.
• 3.Standardized product: can be distributed through long channels of distribution.
• 4.Technical nature: product of high technical nature can be delivered to industry by the sales
persons.
• 5.Products: heavy products are directly sold to consumers to minimize physical handling.

Factors affecting choice of channels of
distribution....
3.Company/ manufacturer’s considerations:
• Volume of production: large scale manufacturers produce wide range of products and
they can sell products by retail outlets
But small scale manufacturers have to sell through both wholesaler and retail saler.
• Services provided by manufacturers: manufacturer who provide sales service,

advertising, and promotion to the retailers ,can get reputed and permanent
wholesalers and retailers to sell his products.

Thank You

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Unit -4

Distribution channels can mean selling of products directly or

Its main objective is to find appropriate ways to make the product

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Advantages of channels of distribution

Advantages of channels of distribution

Fixing the price:

2.Producer- industrial distributor –user( 1Stlevel):producers of operating supplies and

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• 3.Standardized product: can be distributed through long channels of distribution.

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• Services provided by manufacturers: manufacturer who provide sales service,

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