Distribution Channels and Marketing Intermediary in E marketing

DR. HARI SINGH GOUR CENTRAL UNIVERSITY,SAGAR,(M.P.)
Department of Business Management
A Presentation On
Distribution Channels and
Marketing Intermediaries In E- Marketing
Submitted To Presented By:
Dr. (Mrs.) Babita Yadav Prajul Jain
(Assistant Professor) Nancy Soni
Pradeep Patel
Nischal

S.No Title Slide No.
01 Distribution Channel 02-04
02 Importance of Distribution Channel 5
03 Role of Distribution Channel 6-7
04 Functions of Distribution Channel 8-11
05 Types of Distribution Channel 12-15
06 Online Channel Intermediary 16-17
07 Advantages of Channel Intermediary 18
08 Disadvantages of Channel Intermediary 19
09 Functions of Channel Intermediary 20-21
10 Distribution System 22
11 Channel Management and Power 23-24
12 Intermediary Models 25-27
a) Agent Model
b) Brokerage Models
c) Online Retailing Models
26
27
28
13 Distribution Strategy of Amazon India 29-31
12 Conclusion 32
REFERENCES 33
TABLE OF CONTENTS

Distribution Channel
A distribution channel is a group of interdependent firms that work
together to transfer product and information from the supplier to the
customer.
It is composed of the following participants:
Producers, Manufacturers, or originators of the product or services
Intermediaries – the firm that match buyers and sellers and mediate
the transaction among them
Customer or buyers who consume or use the product or service.

•The structure of the distribution channel can either make or impede
possible opportunities for marketing on the internet.
Channels are broken into direct and indirect forms:
A direct channel allows the consumer to buy the good from the
manufacturer, and an indirect channel allows the consumer to buy the
good from a wholesaler or retailer.
A distribution channel is the path by which all goods and services
must travel to arrive at the intended consumer. Conversely, it
also describes the pathway payments make from the end consumer to
the original vendor.
Distribution channels can be short or long and depend on the amount
of intermediaries required to deliver a product or service.

Importance of distribution channels:
 Channels of distribution for a product the route taken by the title to goods they are
from the producers to the ultimate consumers. It is very important because product in
one place while the consumption scattered in many place.
 So there is big gap between producers and the consumers. So through channels of
distribution can only fill the gap. A channel of distribution connects a link between
the producers and the consumers.
 The middle man plays an important role in consumer orientation demand. The
middlemen are specialist in concentration equalization and dispersion, i.e.
 collects output of various producers
 subdivide the products according to the needs of the consumers.
 disperse this assortment to the consumers.

Role of channels of distribution
Channel of Distribution plays a very important role in achieving the
marketing objectives of a company.
The searching out of buyers and seller.
Matching goods to requirements of the market(merchandising)
Offering products in the form of assortments packages of items usable
and acceptable by the consumers /users.
Implementing pricing strategies in such a manner that would be
acceptable to the buyers and ensure effective distribution functions.
Participating actively in the creation and establishment of market for a
new product.

•Transferring of new technology to the users along with the supply of
products and playing green resolution in our country.
Offering pre- and after sales service to customer.
Providing feels back information, marketing intelligence and sales
forecasting services for their regions their suppliers.
Offering credit to retailers and consumers.
Risk- bearing with references to stock holding transport.

Function of Distribution Channel
Transactional Function –
Transactional function refers to making contact with buyers and using
marketing communication strategies to make them aware of products.
They also include matching product to buyer need, negotiating price,
and processing transactions.
Contact with buyers- the internet provides a new channel for making
contact with buyers.
Marketing communication- marketing communication encompasses
advertising and other types of product promotion.

•Matching product to buyer’s needs- the web excels at matching product to
buyer’s needs. Given a general description of the buyer’s requirement, shopping
agents can produce a list of relevant products
 Negotiating price- true price negotiating involves offers and counter offers
between buyers and sellers such as might be conducted in person, over the
phone, or via e-mail-a two way dialogue. Even so, shopping agents
implicitly negotiate price downward on behalf of the customer by listing
companies in order of best price first.
 Logistical Function-
 Logistical function include physical distribution activities such as
transportation and inventory storage, as well as the function of aggregating
product. Logistical function are often outsourced to third-party logistics
specialists.

•Physical distribution- Most products sold online are still distributed
through conventional channels. Yet any content that can be digitized can
be transmitted from producer to consumer over the internet: text,
graphics, audio and video content.
Aggregating product- suppliers operate more efficiently when they
produce a high volume of a narrow range of products. Consumers, on
the other hand prefer to purchase small quantities of wide range of
products.
Channels intermediaries perform essential function of aggregating
products from multiple suppliers so that the consumer can have more
choices in one location.

•Facilitating Function-
 Facilitating functions performed by channels members include market
research and financing.
 Market research- Market Research is a major function of distribution
channel. The benefits include an accurate assessment of the size and
characteristics of the target audience. Information gathered by intermediaries
helps manufactures plan products development and marketing
communication.
 Financing- Financing purchases is an important facilitating function in both
consumer and business markets. Intermediaries want to make it easy for
customers to pay in order to close the sale. Most online consumer purchases
are financed through credit cards or special financing plans, similar to
traditional store purchases.

There are four major types of distribution channels, which are as
below.
• Direct Channel.
• Indirect Channel.
• One Level Channel
• Two Level Channel
• Three Level Channel
• Selective Distributive Channel.
• Intensive Distributive Channel.

1. Direct Channel
When the manufacturer or the producer supplies goods directly to the consumers is called direct
channel. The manufacturer in this stage of distribution channels performs all the marketing
functions himself. No middleman is involved.
2. Indirect Channel
Indirect channel are also called exclusive distribution channels. It can be defined as marketing of
goods first to retailer who in turn sell it to consumers is known as Indirect Channel of distribution.
Following are the main types of it:
a) One Level Channel:
In this method an intermediary is used. Here a manufacturer sells the goods directly to the retailer
instead of selling it to agents or wholesalers. This method is used for expensive watches and other
like products.
Manufacturer Customer
Manufacturer Retailer Customer

b) Two Level Channel:
In this method a manufacturer sells the material to a wholesaler, the wholesaler to the retailer and
then the retailer to the consumer. Here, the wholesaler after purchasing the material in large
quantity from the manufacturer sells it in small quantity to the retailer.
c) Three Level Channel:
Under this one more level is added to Two Level Channel in the form of agent. An agent facilitates
to reduce the distance between the manufacturer and the wholesaler. Some big companies who
cannot directly contact the wholesaler, they take the help of agents.
Manufacturer Wholesaler Retailer Customer
Manufacturer Agents Wholesaler Retailer Customer

3. Selective Distributive Channel
The marketing through Wholesaler is one of the widely used ways of distribution in all over
the world. These distribution Channels enables the manufacturer to sell goods in lot to a few
selected wholesalers, who sell it to retailers, who further in turn to sell products to the
consumers. These types of distribution channels are effective for the promotion of drugs,
hardware, tobacco, toys, food products etc.
4.Intensive Distributive Channel
In intensive distribution channels, the producer uses many wholesalers and retail middlemen
for the promotion of the product. The producer uses this route of marketing for saturating the
market with the product.

ONLINE CHANNEL INTERMEDIARY
 Channel intermediaries include wholesalers, retailers, brokers, and agents.
 Wholesalers buy products from the manufacturer and resell them to retailers. Both
brick-and-mortar and online retailers buy products from manufacturers or
wholesalers and sell them to consumers.
 Brokers facilitate transactions between buyers and sellers without representing
either party. They are market makers and typically do not take title to the goods.
 Agents usually represent either the buyer or seller, depending upon who hires and
pays them. They facilitate transactions between buyers and sellers but do not take
title to the goods. Manufacturer’s agent represent the seller, whereas purchasing
agents represent the buyer.

Wholesalers
Producer
Retailers
Consumers
Online Distribution Channels

Advantages of Intermediaries
• Choosing the right distribution channel for your products is vital
to the success of your business.
• An intermediary acts as a link between the manufacturer and the
consumer.
• Provide Logistic Support
• Provide Transactional Functions
• Burden Sharing, Cost and Time Saving
• Adversely Affect Revenue and Communication Control
• Products are sidelined

Disadvantages of an Intermediary
• Manufacturers quite often see intermediaries as parasites rather than assets. The
disadvantages of using an intermediary may be:
• Revenue loss
The intermediaries procure the product of the manufacturer at the price which is
lower than the M.R.P. This leads to loss in revenue.
• Loss of Communication Control
Along with loss over the revenue the manufacturer also loses control over what
message is being conveyed to the final customers.
• Loss of Product Importance:
The significance allotted to a manufacturer’s product by the intermediaries cannot be
monitored by the manufacturer. In various cases like transportation, which might lead
to delay in the delivery of the product as a consequence, a product loses its
significance in the channel

Functions Of Marketing Intermediaries
1) Information: One big function of marketing intermediaries is that they are
helpful in provision of useful information about the forces and actors in the
markets in the management and marketing research teams.
2) Promotion: They also communicate with the customers about the new offering
of the businesses.
3) Contact: Prospective customers are found by the marketing intermediaries and
then they are effectively communicated by these intermediaries.
4) Matching: Marketing intermediaries also match the various diversified needs
and wants of customers to the different supplies of the manufacturers including
the assembling, grading and packaging of products.

5) Negotiation: This is an important function in which the intermediaries
negotiate with the customers in order to reach at a certain price so that
the ownership of the product is shifted.
6) Physical Distribution: The physical distribution of products is also done
by them.
7) Financing: Intermediaries also provide some funding to the businesses
which are properly used by the businesses to cover some of their
distribution costs.
8) Risk Taking: These intermediaries also take some risk in acquiring
different old and new products or services from various businesses.

Distribution System
• The distribution channel = a system of interdependent organizations working together to
build value as products proceed through the channel .
• 3 ways to define the scope of the channel as a systems:
• Consider distribution functions that are downstream from the manufacturer to the
consumer
• Consider the supply chain upstream from the manufacturer working backward to the
raw materials
• Consider the supply chain, the manufacturer, and the distribution channel as an
integrated system
• The supply chain includes upstream and downstream activities as well as
processes internal to the firm.

Channel Management and Power
• A channel structure requires coordination, communication, and
control to avoid conflict among its members:
• A leader (powerful channel member) institute required measures,
• Market competition between entire supply chains increases.
• The supplier that takes the early lead online will receive business
from consumers and firms eager to shop in this channel.
• When multiple firms are online, suppliers can gain power by
establishing structural relationships with buyers.

Intermediary Models
Three intermediary models are in common use
on the internet:
• Brokerage models
• Agent models for sellers and buyers
• Online retailing models

Agent Models
May represent sellers or buyers.
 Agent models that represent sellers include:
 Affiliate programs (Amazon Associates)
 Manufacturer’s agents (Travel Agents)
 Other (Virtual malls, The Knot)
 Agents that represent buyers include:
 Shopping agents
BizRate.com
 Reverse auctions
Priceline
Buyer Cooperatives (buyer aggregator) pool many buyers together
to drive down the price.

Brokerage Models
 The Broker creates a market in which buyers and
sellers negotiate and complete transactions.
 E*Trade, Schwab and Ameritrade allow customers
to place trades online.
 The B2B market has also spawned brokerages. For
Example : Global wine and Spirits
 Online auctions are available in the B2B, B2C, and
C2C markets. For Example : eBay, uBid

Online Retailing Models
Online retailing is one of the most visible e-business
models.
Online merchants set up storefronts online that can
sell a greater assortment of products than offline.
Shopping cart abandonment during the purchasing
process is one of online retailing’s biggest problems.
The manufacturer sells directly to the customer in
the direct distribution model.

Distribution Strategy of Amazon India
• As we have seen Amazon being the world’s largest retailer has created a storm in the
e market place giving a tough competition to its contemporaries like Flipkart, Jabong,
Snapdeal,etc.
• Amazon India has been using a hybrid model of delivery system, where it uses its in
store delivery network for shipping some products while for others a third party
logistics company is used.

30
Customer
Warehouse
Online
Order
through
Computer
Inventory
Check
Items
in
Stock?
No, Customer
Notified of
Backorder
Yes, Item Packed
for Shipment
Accounts
Receivable
Processes
Payment
Item Shipped
Actions to
Facilitate
Order
Processing
Online
Order
through
MobileApp

CONCLUSION
The internet increased the power of buyers and suppliers. It also changed
the way electronic data interchange is used to establish structural
relationships between suppliers and buyers. A distribution channel is a
group of interdependent firms that work together to transfer product and
information from the supplier to the consumer. The transfer may be either
direct or through a number of intermediaries that perform certain
marketing functions in the channel between suppliers and customers. By
specializing, intermediaries are able to perform functions more efficiently
than a supplier could.

REFERENCES
1. Retrieved from 7th International Edition [ISBN-13: 978-0-13-295344-
3] [ISBN-10: 0-13-295344-7] 1. Internet marketing. I. Frost, Raymond,
II. 2014 The Internet for Distribution Chapter 11
2. Retrieved From http://articles.economictimes.indiatimes.com/2015-
01-01/news/57581219_1_amazonindia-flipkart-easy-ship
3. http://www.supplychain247.com/article/amazon_indinews/50738968_
1_thirdpartylogistics-firms-fulfilment-centres-amazon-india
4. https://www.bigly.io/posts/roles-of-distribution-channels-in-the-
eCommerce-industry

Distribution Channels and Marketing Intermediary in E marketing

More Related Content

What's hot

Similar to Distribution Channels and Marketing Intermediary in E marketing

More from Nischal16

Recently uploaded

Distribution Channels and Marketing Intermediary in E marketing