Introduction to Distribution Management PDF

Distribution Management & Marketing Mix The Marketing Mix  The Marketing Mix 1. WHERE DO 2. IN A 3. DO YOU NEED YOU LOOK FOR TO USE A SALES STORE, WHAT FORCE? OR YOUR PRODUCT KIND? ATTEND TRADE OR SERVIC...

Distribution Management & Marketing Mix The Marketing Mix  The Marketing Mix 1. WHERE DO 2. IN A 3. DO YOU NEED YOU LOOK FOR TO USE A SALES STORE, WHAT FORCE? OR YOUR PRODUCT KIND? ATTEND TRADE OR SERVICE? FAIRS? OR MAKE ONLINE SUBMISSIONS? OR SEND SAMPLES TO CATALOGUE COMPANIES? The Marketing Mix Distribution channels help in the ‘place’ aspect of the marketing mix. Distribution provides place, time and possession utility to the consumer  Example Consumer wants to buy a new shirt Made available at a retail outlet close to his residence – place Made available at 8 pm on a Tuesday evening when she wants it – time He can pay for the shirt and take it away – possession The company distribution function has made all this possible. The situation would be similar if a customer wants to buy a refrigeratoror medicines or even an electric motor  Players Involved The company and its distribution network Direct company to consumer Company to a C&FA / distribution center to distributors to retailers Distributor to wholesaler to retailer All these intermediaries help the process of exchange’ of the product or service. Distribution Management Refers to planning and transporting the products from the place of manufacturing to where they are sold. It involves transporting raw materials from suppliers to manufacturers, finished products from manufacturers to wholesalers or retailers, and lastly The art and science of determining requirements, to customers. acquiring them, distributing them and finally maintaining them in an operationally ready condition for their entire life. Distribution Management Are sets of interdependent organizations involved in the process of making a product or service – Stern & Ansary Whetheravailable selling products or For use or consumption services, marketing channel decisions play a role of strategic importance in the overall presence and success a company enjoys in the marketplace.  So, what does distribution management do?? Distribution management serves the primary function of ensuring the product or service is available to the consumer within an arm’s length of his / her desire. It makes sure that the product or service is available to the consumer, – When they want – Where they want – How they want It provides “time”, “place” and “possession” utility to the consumer Distribution Channels Are intermediaries or middlemen Exist because producers cannot reach all their consumers Multiply reach and provide efficiency to the marketing process Facilitate smooth flow and create time, place and possession utilities Have the core competence and reach Provide contact, experience, specialization and scales of operation  Distribution Channel Consists of a the set of people and firms involved in the transfer of title of a product as the product moves from producer to the ultimate consumer or business user. It is the management of all activities which facilitates the movement and co-ordination of supply and demand in the creation of time and place utility.  Channels of Distribution Management 1.) Wholesaler Purchase bulk quantities of finished products from the manufacturer at a low price. They then send it to distributors or retailers. Some wholesalers also provide raw materials to manufacturers to make finished goods. 2.) Retailer Purchase products from wholesalers, suppliers, or directly from manufacturers. Retailers then sell those products to consumers through various sales vendors.  Channels of Distribution Management 3.) Distributor Ian intermediary between a manufacturer and wholesalers/retailers. When manufacturers increase their product sales, they hire licensed distributors. 4.) E-commerce The digital era has replaced traditional digital channels with e- commerce platforms and direct-to- customer (DTC) models. Mcommerce - buying and selling of goods using mobile, handheld devices such as smartphones or tablets. Online e-commerce website displays the products, and once the customer places an order, items are picked from the inventory or warehouse and distributed directly to the consumer.. Strategies of Distribution Management Distribution management strategies are plans and approaches businesses use to move products to consumers efficiently. Some common distribution management strategies include: 1. Direct 2. Indirect 3. Mass 4. Selective 5. Exclusive  Also termed as Zero-level channel because there are zero intermediaries involved in this channel. Producers directly deliver their products to their customers without using any middlemen. Used by businesses to sell perishable or expensive goods. 1. Direct Distributi One of the oldest forms of distribution channels used by businesses to sell their products. on The advantage of this channel is that it cuts all profit margins of the intermediaries. Businesses are able to deliver at a lower rate to their customers. It also reduces the time involved in delivering process as product directly flows between manufacturers & customers. 2. Indirect Distribution Those in which manufacturers do not directly sell to customers. Various middlemen & intermediaries involved in the distribution channel. Intermediaries work for their commission. They purchase products in bulk from manufacturers & supply products to final customers as per their demand. Saves manufacturers from the risk of delivering products. They sell all their products to intermediaries & receive payment in cash. There are 3 levels of indirect distribution One level, Two-level, & Three-level channels. 3 Levels of Indirect Distribution 3. Mass 4. Selective Mass strategy Selective strategy helps distribute the involves companies products to a large selling their products number of through only a limited customers. number of suppliers. Manufacturers Aims to distribute distribute their products to a selective products through or specific group of numerous people and target markets to ensure channels and better sales control. vendors to reach Outlets selected in line every market. with the image the FMCG (fast moving company consumer goods) wants to project  5. Exclusive Exclusive strategy is applied by companies who want to distribute their products to a highly limited group. It’s for premium and exclusive goods to control brand image and integrity. For example, Apple carefully sells its products to selected authorized retailers or carriers within specific regions or markets. The process of distribution management is as follows: Step 1: Forecast Demand Manufacturers predict customer demand for products using sales patterns and market trends. They forecast the required quantity of products and plan distribution channels, inventory levels, and logistical strategies accordingly. The process of distribution management is as follows: Step 2: Sourcing and Production Manufacturers then buy raw materials and manufacture products and ensure they meet quality standards before distribution. The process of distribution management is as follows: Step 3: Inventory Management Now, finished products get stored in warehouses of manufacturing facilities or distribution centers. Here, inventory levels are managed for efficient distribution, maintaining supply and demand to prevent overstocking  Step 4: Delivery Once orders are received, manufacturers transport products from warehouses to distributors, retailers, or directly to consumers. Step 5: Technology Integration Technology like inventory management systems, logistics software, and tracking tools will help track products, streamline operations, improve efficiency, and simplify the supply chain. Step 6: Continuous Improvement Thus, distribution management requires continuous evaluation and implementation of new strategies to adapt to changing market conditions and optimize the distribution process. Challenges of Distribution Management The following are some distribution management challenges companies face while managing product distribution. 1.Natural disruptions  Climate change or unpredictable weather conditions like floods and earthquakes can damage crops, leading to a shortage of raw materials.  Affects inventory, leading to shortages in warehouses and disturbing supply chains. Management The following are some distribution management challenges companies face while managing product distribution. 2. Transportation Issues  Natural disasters like earthquakes can damage transportation routes and cause delays in delivery services.  Other challenges include traffic, lack of vehicles, accidents that cause an increase in maintenance cost, delays in flight carrying products, and disruption in Management 3. Pandemics  Pandemics can severely disrupt global supply chains.  For instance, the COVID-19 pandemic led to a shortage of raw materials and products, closures of many small-scale industries, shortages in labor or workers, and more. 4. Lack of Skilled Workers  It is challenging for companies to find and retain skilled workers for distribution operations.  A lack of trained workers and specialized professionals can pressure companies to spend more on training and recruiting processes.  A lack of skilled workers may lead to errors in handling goods or inventory management. 5. Economic Issues  Fluctuating currency exchange, market volatility, inflation, recessions, and trade policy changes can impact expenses, demand, pricing, and supply chains.  Companies must adopt proper strategies to adapt to changing economic conditions in distribution management. 6. Inaccurate inventory management  Inaccuracies in inventory tracking and management can result in overstocking or stockouts.  If goods are there in the warehouse for a longer time, they will get damaged, causing a loss to the company.  It will increase storage costs and cause product delays, causing customer dissatisfaction and Challenges of Distribution Management 7. Shipment issues or delays  Issues with shipments, such as damaged goods, customs clearance delays, or documentation errors, can disrupt the flow of products. Other challenges include issues in packaging, quality control problems, changes in shipment address, and returning damaged goods, which also cause a loss to the company. 8. Supply chain shortages  Disruptions in the supply chain due to raw material shortages, production delays, or supplier issues can lead to insufficient inventory levels and hinder timely deliveries. Challenges of Distribution Management 9. Customer Expectations Customer demands for faster deliveries, flexible shipping options, and real-time tracking can cause the implementation of new technologies, which leads to expenses and creates pressure on the distribution systems. 10. Globalization Challenges Companies operating in global markets deal with diverse regulations, cultural differences, longer periods of supply chains, and varying consumer preferences, making it difficult to distribute products across borders.