UNIT 4

Define: Distribution.

Distribution is the process of making a product or service available for the consumer or
business user who needs it. This can be done directly by the producer or service
provider or using indirect channels with distributors or intermediaries.
Nature of Marketing Channels

Pathway or Route: Distribution channel is the route through which goods

and services are transmitted from the manufacturers to the consumers.

Flow: In a distribution channel, the goods and services flow in a sequential,

smooth and unidirectional manner.

Composition: The channel comprises of intermediaries like agents,

distributors, retailers, wholesalers, etc.

Function: The functions of distribution channel are performed by

intermediaries. They assist in the transfer of title, ownership, and possession
of goods and services between manufacturers and consumers.

Marketing Tool: Distribution channel acts as a medium for screening the

external aspects of the marketing organization and for bridging the physical
and non-physical gaps which occur while transferring goods from the
manufacturers to the consumers.

Supply-Demand Linkage: It bridges the gap between the manufacturers

and consumers by eliminating all the spatial and temporal discrepancies
related to supply and demand.

Importance of Marketing Channels

Relive from Marketing Problems: They help the producer in his production
function by relieving him of marketing problems. Thus, the producer can pay
his full attention towards organizing the production function only smoothly to
earn a high rate of return.

Information to the Producer: The channels of distribution provide information

to the producer regarding the taste and needs of consumers, competition in
the market, current market trend and the product conditions for the increased
volume of sales because they have complete knowledge of the market.
Storage of Finished Goods: The channels of distribution keep the producer
free from the problems of storage of finished goods.

Finance the Producer: Channels of distribution finance the producer as well as

the consumer.

Fixing the Price: Channels of distribution assist the producer in fixing the
price of a product.

Channel Levels:
Each layer of distribution intermediaries that performs some work in bringing the product to its
final consumer is a channel level.
Zero Level Channel:
A zero level channel, commonly known as direct marketing channel has no intermediary levels.
In this channel framework manufacturer sells merchandise directly to customers. An example
of a zero level channel would be a factory outlet store. Many service providers like holiday
companies, also market direct to consumers, bypassing a traditional retail intermediary – the
travel agent.
One Level Channel:
A one level channel contains one selling Intermediary. In consumer markets, this is usually a
retailer. The consumer electrical goods market in the United Kingdom is typical of this
arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to
large retailers such as Comet, Dixons and Currys which then sell the goods to the final
consumers.

Two Level Channel:

A two level channel encompasses two intermediary levels – a wholesaler and a retailer.
A wholesaler typically buys and stores large quantities of merchandise from various
manufacturers and then breaks into the bulk deliveries to supply retailers with smaller
quantities. For small retailers with limited financial resources and order quantities, the
use of wholesalers makes economic sense.

Three Level Channel:

A third level channel, as the name implies, encompasses three intermediary levels – a
wholesaler, a retailer and a jobber. In the poultry industry, products like mutton, chicken, eggs
etc. are first sold to wholesalers; he then sells it to jobbers, who sell to small and unorganized
retailers.
Horizontal Marketing system is a form of distribution channel wherein two or more companies
at the same level unrelated to each other come together to gain the economies of scale.

A vertical marketing system (VMS) can be defined as a form of cooperation between

multiple levels of a distribution channel, including producers, wholesalers, and retailers. They
work together to promote economies of scale and efficiency to finally meet consumer needs in a
specific vertical market.

Channel design decision: Designing a marketing channel system involves analyzing customer
needs, establishing channel objectives, identifying major channel alternatives, and evaluating
major channel alternatives.

Marketing channels: A marketing channel is the path or the route a company’s products and
services take from the point of production to the end-user.

Functions of Channels:

Sorting- First of all, the middlemen buy goods from different manufacturers and

sort the products that are similar in quality, features, and size.

· Accumulation- Marketing channels make sure that there is a regular supply and

circulation of goods in the market and because the middlemen are involved in the

process, they are responsible for maintaining the required stock in enough

quantity.

· Allocation- It is a known fact that goods are manufactured in bulk quantities but

the customers prefer to purchase less quantity. Here again, the role of the

middlemen comes who breaks the volume into small packages per the needs of

customers.
· Assorting- The customers can get a large variety of goods because middlemen

purchase goods from different manufacturers or suppliers located in different

places and make them available to the customers in a single place.

· Product Promotion: The middlemen involved in the channel of distribution

sometimes in a direct way or indirect way promotes the sales of a particular item

through a special display, loyalty programmes, discounts or sale, etc.

· Negotiation- the middlemen bargains with the manufacturers and the consumer

both for the product's price, proportion, quality, guarantee, after-sale service, etc.

· Risk-Taking- Generally, the middlemen like the wholesalers and the retailers have

to bear the risk associated with any product from expiry, damage, breakage, and

spoilage, etc. These risks even include issues related to transportation and

warehousing.

Promotion: Promotion is a marketing tool, used as a strategy to communicate between the

sellers and buyers. Through this, the seller tries to influence and convince the buyers to buy their

products or services.

Types of Promotion:

Advertising-
It helps to outspread a word or awareness, promote any newly launched service, goods or an
organization. The company uses advertising as a promotional tool as it reaches a mass of people in
a few seconds. An advertisement is communicated through many traditional media such as radio,
television, outdoor advertising, newspaper or social media. Other contemporary media that supports
advertisement are social media, blogs, text messages, and websites.
Direct Promotion-
It is that kind of advertising where the company directly communicates with its customers. This
communication is usually done through various new approaches like email marketing, text
messaging, websites, fliers, online adverts, promotional letters, catalog distributors, etc.

Sales Promotion-
This utilizes all sorts of a marketing tool to communicate with the customers and increase sales.
However, it is for a limited time, used to expand customers demand, refresh market demand and
enhance product availability

Self-promotion-
It is a process where the enterprises send their agents directly to the customers to pitch for their
product or service. Here, the response for the feedback of the customer is prompt and therefore,
easy to build trust.

Public Relation-
Popularly know as PR is exercised to broadcast the information or message between a company
(NGO, Government agency, business), an individual or a public. A powerful PR campaign can be
valuable to the company.

Online Promotion-
This includes almost all the elements of the promotion mix. Starting from the online promotion with
pay per click advertising. Direct marketing by sending newsletters or emails.
Advertising:
Advertising is the action of calling public attention to an offering through paid announcements by an
identified sponsor. Advertising is any paid form of non-personal presentation & promotion of
ideas, goods, or services by an identified sponsor.
Characteristics Of Advertising

Paid Form: Advertising requires the advertiser (also called sponsor) to pay to create an
advertising message, buy advertising media slot, and monitor advertising efforts.
Tool For Promotion: Advertising is an element of the promotion mix of an organisation.
One Way Communication: Advertising is a one-way communication where brands
communicate to the customers through different mediums.
Personal Or Non-Personal: Advertising can be non-personal as in the case of TV, radio,
or newspaper advertisements, or highly personal as in the case of social media and
other cookie-based advertisements.
The major advantages of advertising are as follows:

✓ Expansion of the market

 ✓ Introduces a new product in the market
✓ Fights competition
✓ Increased sales
✓ Enhances goodwill
✓ Elimination of middlemen
✓ Educates the consumers
✓ Supports the salesmanship
✓ Better quality products
✓ A higher standard of living
✓ Increase employment opportunities
✓ Reduction in the prices of magazines and newspapers etc.
Sales Promotion:
Sales promotion is a part of the promotional mix where the business uses many short-
term customer-oriented strategies to stimulate the demand for its product by making it
look more attractive and/or worthy.
Definition: Personal selling is also known as face-to-face selling in which one
person who is the salesman tries to convince the customer in buying a
product. It is a promotional method by which the salesperson uses his or her
skills and abilities in an attempt to make a sale.

Importance of Sales Promotion

Sales promotion has the following importance in business:
1. It is used for spreading information about the brand to the customers in the market.
2. It is useful in stabilising sales volume and also required to increase short term sales of the
products or services.
3. It is helpful in stimulating the demand for a product in the short term by making the product
appear as a great deal for the customer.

Objectives of Sales Promotion

Following are some of the objectives of sales promotion:
1. Sales promotion is used to create a market for new products. It can be achieved by using the
techniques of offering discounts, penetration pricing, etc.
2. It is used by companies for competing with the marketing strategies of the competitors.
3. It is helpful in gaining trust of the dealers by increasing the sales of the products, which results in
an increase in income of the dealers.
4. It can be used for launching a product into a new market. Sales promotion strategies can be used
to propel customers to try out the new product.
5. It serves as a great way of increasing brand awareness about the product in the market and
among customers.
What is Personal selling?
Personal selling is a face-to-face technique where a sales representative approaches a
potential customer or the lead personally to sell a product or service.

Objectives of personal selling

Of course, the main objective of any sales is to sell the products or services and build a
long-lasting, profitable relationship with the customer. But some major objectives of
personal selling are described below:

Attracting and Engaging the Potential Buyer/Lead. The first objective to attract a
potential customer who has shown any interest in your product or service.
Properly Educating the Potential Client. It involves properly educating the potential
customer. This includes educating about the benefits, value-added features, price, and
everything about a product or service.
Urging or Convincing the Potential Client to Buy. Educating the potential client
is not enough. A salesperson needs to convince the potential buyer that this
product or service is the best solution to his/her specific need(s).
Making the Sales. This is indeed the basic motive to conclude the sale. In fact,
the number of sales is the measure of success in personal selling.
Sales Repetition. As mentioned earlier, It is about making sales and building a
long-lasting, profitable relation.re inow about running a

What is Direct Marketing? Direct marketing is a promotional method that involves

presenting information about your company, product, or service to your target customer
without the use of an advertising middleman. It is a targeted form of marketing that
presents information of potential interest to a consumer that has been determined to be
a likely buyer.

What Is Public Relations? Public relations is a strategic communication process

companies, individuals, and organisations use to build mutually beneficial relationships
with the public.

Types of Public Relations

Public relations is often divided into different agencies or departments. Each
department is specifically suited to handle a specific aspect below:

• Media relations is the emphasis of forging a strong relationship with

public media organizations. A media relations team often works directly
with external media by directly delivering them company news,
providing validated content sources, and being accessible for public
comment on other news stories.
 • Production relations is closely related to the direct operations of a
company. This department supports broad marketing plans and is often
related to specific, one-time endeavors such as the launch of a new
product, a special campaign, or management of a major product
change.
• Investor relations is the oversight of the relationship between the
company and its investors. This aspect of public relations handles
investor events, oversees the communication of the release of financial
reports, and handles the complaints of investors.
• Internal relations is the public relations branch between a company
and its employees. Internal relations pertain to counseling employees,
ensuring all workers are satisfied with their working conditions, and
mediating issues internally to avoid public disclosure of dissatisfaction.
• Government relations is the connection between a company and
related governing bodies. Some public relations departments want to
forge a strong relationship to provide feedback to politicians, sway
decision-makers to act in specific ways, and ensure fair treatment of
the company's clients.
• Community relations is public relations focused on brand and
reputation within a specific community. The community could be
physical (i.e. a specific city) or non-physical (i.e. the dog-owner
community). This branch of public relations keys in on the social niche
of the community to align itself with its members.
• Customer relations is the bridge that connects the company and
its customers. Public relations often involves handling key relationships,
conducting market research, understanding the priorities of its
customers, and addressing major concerns.

Integrated marketing communication refers to integrating all the methods of brand

promotion to promote a particular product or service among target
customers. In integrated marketing communication, all aspects of marketing
communication work together for increased sales and maximum cost effectiveness.

Online marketing is advertising and marketing the products or services of a business

over Internet. Online marketing relies upon websites or emails to reach to the users and
it is combined with e-commerce to facilitate the business transactions. In online
marketing, you can promote the products and services via websites, blogs, email, social
media, forums, and mobile Apps.

Promotion Budget An advertising budget is a money a company plans to spend on

advertising over a period of time. The allocation decision considers various aspects,
including the type of media, marketing budget, and production costs involved in
preparing an advertising message for placement in various media.