DISTRIBUTION

MANAGEMENT
BY

GROUP 12

SURBHI SOMANI 19PGDM118

UDIYT GHAI 19PGDM119
UTANKA DAS 19PGDM120
VANSHIKA DUA 19PGDM121
VEDIKA KHETAN 19PGDM122

UNDER SUPERVISION OF

DR. SACHIN MODGIL

ASSISTANT PROFESSOR (OPERATIONS AND SUPPLY CHAIN)

IMI KOLKATA
 Certificate

This is to certify that the dissertation entitled, “DISTRIBUTION MANAGEMENT” Submitted

by GROUP 12 in the partial fulfillment of the requirements of IMI KOLKATA, embodies the
work done by him under my supervision.

Signature of the supervisor

Dr. Sachin Modgil

Asst. Professor , IMI Kolkata

 Abstarct

Distribution management is all about reaching the product as near to the

customer as possible and making the product and service available to the
customer. The products must be available to the customer at the right place
and at the right time and with an assortment which gives a lot of choice to the
customers. The intermediaries in the marketing channel performs a lot of
activities for the manufacturer and serves as the go-between of the
manufacturer as well as the consumer. The value addition of the distribution
system is tremendous and that is why it is now a very important component of
the marketing strategy. It is the fourth P in the 4Ps of the marketing mix and
has not been given much importance traditionally. However, now the situation
has changed primarily because it is very difficult nowadays to differentiate in
the market through the use of product, price, and promotions alone.
Distribution systems can help the company in differentiating themselves from
the competitors. The distribution system understands the end-customers very
well and thus guides the company in offering the best product mix to the
consumers. The distribution system also expects a lot of support and
motivation from the company and when the company is able to do that well, a
long-term relationship is formed. This is crucial as the then the commitment
level of the system goes up and tends to support the company and the brand
in every possible manner. It has been seen time and again that when the long-
term relationship forms, the company gets a very positive response and return
from the market. The idea here is that the distribution systems should not be
treated as a combination of some marketing tactics, but a significant and
important part of the company's strategic intent and goals.

Signature of Student Signature of Supervisor

GROUP 12 DR. SACHIN MODGIL

06/03/2020 06/03/2020
 Acknowledgement

We take this opportunity to express my profound gratitude and deep regards is to all my
group members for their immense help during the course of this work. In those moments
when things used to turn dark their presence had a soothing effect.

We are grateful tomy guide Dr. Sachin Modgilfor his exemplary guidance, monitoring and
constant encouragement throughout the course. The blessing, help and guidance given by
them,time to time shall carry me a long way in journey of life on which we are about to
embark. Our several well-wishers helped me directly or indirectly; we virtually fall short of
words to express my gratefulness to them. Therefore we are leaving this acknowledgement
incomplete in their reminiscence.

GROUP 12
 Table of Contents

 CHAPTER 1-Introduction

1.1 Distribution Management in Operations

1.2 Distribution Management in Marketing
1.3 Importance of Distribution Management
1.4 Attributes of Distribution Management
1.5 Elements of Distribution Management
1.6 Modern Distribution Management

 CHAPTER 2-
2.2 Types of Distribution Channels
2.2 Direct Distribution
2.3 Indirect Channels in Distribution Management with Coca Cola Company Example

 CHAPTER 3 -Patterns of distribution in Distribution Management

 CHAPTER 4-Beeta Toilet Paper

 CHAPTER 5-Case Example- Mc Donald

 List of Tables

 Table 1Short and Long channels

 Table 2BEETA TOILET PAPER

 Table 3 BEETA TOILET PAPER

 Table 4BEETA TOILET PAPER

CHAPTER 1
 Introduction: Distribution Management

1.1 Distribution Management in Operations

Distribution management can be defined as the process of overseeing and managing the
movement of goods from supplier or manufacturer to point of sale. It is an overarching term
that refers to various activities and processes such as packaging, inventory, warehousing,
supply chain, logistics etc.

1.2 Distribution Management in Marketing

Distribution management can be defined as the sequential flow of procedures, systems and
activities which are designed and linked to facilitate and monitor the movement of goods
and services from the source of manufacturing to the end user or consumer. Basically,
distribution is about making products and services available to the end user when and
where they require them.

1.3 Importance of Distribution Management

1. It is an important part of the business cycle for distributors and wholesalers.

2. The profit margins of businesses depend on how quickly they can turn over their
goods.
3. Having a successful distribution management system is also important for businesses
to remain competitive and to keep customers satisfied.
4. Customer satisfaction can also be achieved with well managed distribution system.

1.4 Attributes in Distribution System

1. Time: When the end user wants to obtain the product or service.
2. Place: The place attribute is where the end user wants to obtain the product or
service.
3. Control: Control here means consumer ownership or possession of the product or
service.
4. Method: Here method means the distribution channel company adopts for its
product service.

1.5 Elements of handling Distribution

Material Handling: It basically includes moving products in and out of a stock. It involves
routine tasks that can be performed through mechanization and standardization. Efficiency
can be improved through use of electronic data processing to control conveyor systems,
order picking, maintaining stock and other traffic flaws.

Inventory Planning and Control: Inventory can be defined as the stock of products a firm
has on hand and ready for sale to its customer base. Inventories are kept to meet market
fluctuations promptly. Inventory is the link interconnected the customer’s orders and the
company’s production activity.

The physical distribution management rotates around the inventory management.

Marketing managers carry on the inventory planning to develop adequate assortments of
products for the target market and also try to control the costs involved in procuring and
maintaining inventory.

Order processing: Order processing and inventory control are linked to each other. Order
processing is considered as the important link to customer service and satisfaction. It
includes receiving, recording, making, fulfilling and assembling of products for dispatch or
sale to the customer. The amount of the time required from the dates of receipt of an order
up to the date of dispatch of goods must be reasonable and as short as possible.

Transportation: Transportation is an essential element of physical distribution. It mainly

involves integrating the advantages of each transportation method by adopting containers
and physical handling products to permit transfers among different types of carrier services.
For example, to place containers in railway flat cars and then loading the containers on
motor vehicles is termed as “piggy back” and if the containers are off loaded to water
carriers, it is called “flash back”. Exchange of containers between air and truck carriers are
referred as “Air truck” or “birdy back”.

Communication: Here Communication is a process of passing information and undertaking

system which must link producers, manufacturers, distributors, intermediaries, and
customers. Computers, memory systems, display equipment and other IT &communication
technology facilitate the flow of relevant information among other members in the channel.

Organization Structure: The person responsible for the physical distribution should co-
ordinate all activities into an effective& efficient system to provide the desired customer
service in the most efficient manner.

1.6 MODERN DISTRIBUTION MANAGEMENT:

Modern distribution management includes more than just moving products from point A to
point B.

 It also helps in gathering and sharing relevant information that can be used to
identify key opportunities for growth and competitiveness in the market.
 Most progressive companies now use their distribution forces to obtain market
intelligence which is vital in assessing their competitive position.
CHAPTER 2
The distribution channel may be involved in different ways, to a large extent and at various
stages, in delivering the product from the manufacturer to the customer. The role of the
distribution channel has several functions that can be performed by one or multiple
intermediaries. Distribution channels are intended to limit the number of the transactions
goods have to go through on their way to their final destination. Wholesalers and retailers
break the bulk. Which means that they order large quantities of products from the
manufacturer and then sell single products to the end customers. Channel intermediaries
create assortments, which means that they will source a variety of products and allow the
consumers a wider choice.

The main task of a distribution channel is to have high efficiency. Transportation and storage,
which is also a task of distribution channels, should be used at maximum capacity with
minimum cost. Wholesalers and retailers move the goods from one location to another and
store the goods until there is demand for the product. Intermediaries offer more value added
services on the product, for example facilitate returns, offer customer support, etc.

A common value added service for all distribution channels is they all share the risk with the
manufacturer. Hence, manufacturers have vested interest to sell in bulk, while retailers have a
vested interest to carefully asses if a particular product will be sold.

Distribution channel personnel handle communication with end customers. Distribution

channels are responsible to create a two-sided connection from the manufacturer to the
customer and vice versa. We usually focus on one aspect of that relationship – getting the
product from the factory to the customer.

However, the distribution channel returns profits, products for repair and customer feedback
back to the manufacturer. The selected distribution channel member’s policies regarding any
of those three functions, should influence a manufacturers decision whether or not they use
them in theirs channel. The amount and role of distribution channel members determines the
level of the distribution channel. Philip Kotler came up with the definition of the zero-level
distribution channel where one manufacturer sells directly to the customers. If the
manufacturer uses a distributer to get the customer, that would be a one-level channel. And if
that distributer sells to a retailer, that would be a two-level distribution channel. Channels of
distribution can be divided into the two following types:

1. Direct Channels
2. Indirect Channels

DIRECT CHANNEL
The producer can sell directly to his customers without the help of middlemen, such as
wholesalers of retailers:
(i) By opening retails shop;
(ii) Through travelling salesmen;
(iii) Through mail order business.
These channels take the shortest route to the consumer. Certain goods, like the industrial machinery,
are directly sold to the consumers. Costly goods like computers and luxury automobiles, are also
directly sold. Some manufacturers open their own retail shops in many localities and sell goods
directly to consumers. The best example is that of the Bata Shoe Company Shops. The manufacturers
also try to sell through their own mail order departments.
All these indicate that producers are now taking steps to approach the consumers directly. Though this
is possible for some types of goods, the fact remains that the services of intermediaries, such as
wholesalers and retailers, are often essential in the distribution of goods to consumers. For example,
food outlets, confectionaries etc

INDIRECT CHANNEL

Definition: The indirect channel is additionally known as exclusive distribution channels.. it's the
foremost effective technique of product distributions and effectively used for promoting garments,
machines, vehicles, furniture’s, etc. benefits of those are:

• Better management of the availability of products.

• Speedy disposal of product.

• Lesser expenses on commerce.

• Better coaching of salespeople and

• Rapid feedback

Introduction:

Indirect commerce, or channel business, means an organization uses a middleman (often observed
as a partner, price additional Reseller [VAR] or distributor), to place their customers involved

Example: Dell's direct commerce strategy, as an example, has worked okay for them. Why? as a
result of target client base should buy a pc with actual specifications and private touches. Of course,
dingle currently additionally has multiple indirect routes to promote so as to expand their reach but
their direct sales technique can invariably be the company's core commerce strategy.

Indirect sales strategy permit you to greatly expand your reach geographically while not the
requirement to rent a lot of sales reps .You may additionally like international growth and entry into
new markets while not the requirement for intensive marketing research .Its a nice plan for tiny
firms or startups World Health Organization need to enter new markets in an exceedingly cost-
efficient method.

Indirect channels sorts square measure more divided into:

Indirect Channels (Selling Through Intermediaries)

Manufacturer involves a negotiant to sell its product to the top client, it's same to be exploitation
associate degree indirect channel. that classified into 3 types:

• One-level Channel (Manufacturer to retail merchant to Customer): Retailers get the

merchandise from the manufacturer then sell it to the shoppers. It works best for makers dealing in
product like garments, shoes, furniture, toys, etc.

• Two-Level Channel (Manufacturer to middleman to retail merchant to Customer):

Wholesalers get the majority from the makers, breaks it down into tiny pack and sells them to
retailers World Health Organization sell it to the top customers. It works for product that square
measure sturdy, standardized or somewhat cheap and whose audience isn't confined.

• 3-Level Channel (Manufacturer to Agent to middleman to retail merchant to Customer):

Three level channel of distribution involves associate degree agent besides the middleman and retail
merchant in commerce product.Agents come back handy once product have to be compelled to
move quickly into the market presently when the order is placed. they're given the duty to handle
the merchandise distribution of a nominal space or district reciprocally of an explicit share
commission. The agents will be categorised into super stockiest and carrying and forwarding agents.
each these agents keep the stock on behalf of the corporate. Super stockiest get the stock from
makers and sell them to wholesalers and retailers of their space and additionally carrying and
forwarding agents work on a commission basis and supply warehouses and cargo experience for
order process and walk deliveries. makers prefer three-level promoting channel once the user-base
is unfold everywhere the country and therefore the demand of the merchandise is incredibly high

Indirect channels sorts square measure more divided into:

• Consumer channels

o Producer direct to shopper

o Producer to retail merchant to shopper

o Producer to middleman to retail merchant to shopper

o Producer to Agent to middleman to retail merchant to shopper

• Business to business channel

o Producer to Business

o Producer to Agent to Business

o Producer to Distributor to Business

o Producer to Agent to Distributor to Business

• Service channels

o Service supplier to client

o Service supplier to Agent to client

How does one manage it effectively?

Firstly outline your company’s overall goals and work on orientating them with the objectives you've
got for your indirect channel. If you're getting to style, re-design, re-activate or re-structure your
indirect channel, you wish to be puzzling over the subsequent phases:

Pre-design

Creating a beautiful and easy partner program that specializes in the applied scientist steps,
coaching and main edges.

Design
1. Outline the list of potential partners/distributors that may match along with your portfolio of
solutions, taking into account:

a) Prioritization betting on partner sort

b) earth science

c) Revenue, solutions portfolio and current purchasers

2. Approach the potential partner list:

a) to elucidate World Health Organization you're and why the partner ought to be part of your
program

b) to seek out synergies between you and your potential partner

c) to figure on a business case for a lot of proactive activity

d) Signature of LOI and/or NDA, as a proof of compromise

3. On boarding method and signature primarily based on:

a) Follow-up and help throughout the on boarding method

b) choice of partner sort

c) Negotiation and closure

4. Activation of the partner primarily based on:

a) Technical coaching and certification

b) industrial coaching

c) promulgation to the market

d) Sales & promoting objectives - business case

e) Sales ware preparation providing industrial electronic messaging

5. Channel management is that the key to success if you're ready to lead your partners through a
win-win partnership, providing data and sharing chance leads so as to extend sales. it's essential to
hold out weekly cadence calls and supply technical and industrial support.

Example of Coke company

Distribution System of Coke Company

In the recent times, merely manufacturing product isn't enough, the marketers got to make sure the
indisputable fact that the product square measure delivered to the proper market at the proper time
to the proper folks at the proper value (Aylott and Brindle-Wood-Williams, 2007). thus this
emphasizes upon the importance of distribution channels within the modern-day business
operations.

Thus taking into thought the higher than aspects, the report emphasizes upon analyzing the product,
the ways and therefore the practices of the Coke Company that provides its food bases and syrups to
Coca-Cola Amatol (CCA) that is one in all the biggest bottlers of non-alcoholic beverages within the
Asia-Pacific region. it's one in all the world’s 5 major coca-cola bottlers and is headquartered at
North Sydney, New South Wales, Australia (Coca-cola, 2014). The report tends to spot the gaps
within the current offerings of the corporate and supply suggestions within the context of the
opportunities. It additionally analyzes the marketing and promoting topics that embody the vertical
and horizontal combination. it's analyzed the issues featured by the corporate in delivering its
product and has provided suggestions for improvements. It additionally incorporates the utilization
of technology within the distribution channels and enhancements to be created. The role of
innovation in future growth of business has been analyzed. The reports additionally incorporate the
channel power and conflict and enhancements revamped the years, the SWOT analysis and
challenger analysis. It additionally includes conclusion as a outline of the higher than findings.
Table 1

Characteristic of Short Characteristic of long

Factors
Channel channel

Business users Consumers

Geographically concentrated Geographically dispersed

Market factors
Extensive technical Little technical knowledge
knowledge & regular service & regular servicing not
required required

Large orders Small Orders

Perishable Durables

Product Factors Complex Standardized

Expensive Inexpensive
 Manufacturers or producer Manufacturer lacks
has sufficient resources to sufficient resources to
perform channel functions perform channel functions

Producer Factors

Broad Product Line Limited product line

Channel control not

Channel control important
important

Manufacturer feels
Manufacturing feels satisfied
dissatisfied with marketing
Competitive Factors with marketing intermediaries’
intermediaries’ performance
performance in promotion
in promotion
CHAPTER 3
Based on the patterns of distribution, Distribution can be of 3 types namely,

1) Exclusive Distribution

It is an agreement between a distributor and a manufacturer, whereby the manufacturer or supplier

authorizes only one distributor to carry out distribution of goods and services within a definite
region.

Example of Exclusive Distribution

Rolex watches wants a distributor in region A. So ROLEX appoints an exclusive distributor in case of
Region A. This distributor starts their own exclusive reseller ROLEX shops and also sells the brand
through few cream outlets of Region A.

Now, Rolex is satisfied with this concept of exclusive distribution and also repeats it when it wants to
enter Region B. Rolex can use the same distributor as Region A or it might give the exclusive
distribution to another dealer. However, because Rolex dont want to dilute the brand equity, it will
not enter in the region directly and won’t hire too many distributors so that it has “premium” and
“exclusive” positioning of the brand.

2) Intensive distribution

It is whereby the manufacturers make use of more than one channel to distribute their products and
reach the target audience or customers. The intension of this method is usually to make the
manufacturer’s product brand available in abundance and distributed over a large geographical area
and that customers are not faced with any kind of shortage

Example of Intensive Distribution

Cold drinks and cigars are some of the examples on which intensive distribution is followed. Under
this strategy, all the possible outlets can be used by a company to distribute the product. This
method is particularly useful for products like cold drinks, cigarettes etc
3) Selective Distribution

Under this approach where few selective outlets are chosen through which the product is made
available to the customers on the basis of a company specific set of rules. Selective distribution can
to some extend limit the competition in a market especially where there is an agreement between
the producer and retailer. The agreement usually places restrictions on the distributors to sell only
to other approved distributors or directly to the ultimate consumer, influencing the prevalence of a
product on the market.

Selective Distribution Example

Whirlpool and GE sells their major appliances through dealer networks and selected large retailers.
They develop a good working relationship with these partners and also expect a better-than-average
selling effort.

Advantages of Selective Distribution

The advantages of selective distribution are

1. Good market coverage,

2. Increased control and

3. Reduced costs as compared to intensive distribution

CHAPTER 4
 BEETA TOILET PAPER

BEETA TOILET PAPER is a company based out of NOIDA NCR. It has its only one factory in
Noida. Earlier it was operating only out of Delhi NCR and Kolkata. However since last year
following the water scarcity in Chennai, the company decided to start selling its products in
Chennai. However, although the number of units sold for Chennai were more compared to
other cities, yet the company started incurring huge losses primarily as it had to bear huge
transportation cost.

A brief glimpse of the cash flow of the company is depicted in the tables below

Table 2

QUA LOGISTIC Store

NITIT SO PERCE COST( per Manufact commissi Total
Beeta toilet tissue Y LD NTAGE unit) uring Cost on Cost
KOLKATA URBAN
(General Third party 10 66.666
STORE) 150 0 67 40 60 20 120
KOLKATA URBAN 11 73.333
(Exclusive STORE) 150 0 33 40 60 0 100
DELHI URBAN (General 15
Third party STORE) 200 0 75 10 60 20 90
DELHI URBAN (Exclusive 16
STORE) 200 0 80 10 60 0 70
CHENNAI URBAN
(General Third party 30
STORE) 400 0 75 80 60 20 160
CHENNAI 38
URBAN(Exclusive STORE) 400 0 95 80 60 0 140

Table 3

Total Rent Of
Selling price Profit Profit stores Final Profit
140 20 2000 0 2000
140 40 4400 1000 3400
140 50 7500 0 7500
140 70 11200 1000 10200
140 -20 -6000 0 -6000
140 0 0 1000 -1000
Table 4

Sales city
Profit city wise wise
KOLKATA  
5400 210
DELHI  
17700 310
CHENNAI  
-7000 680

Suggestions

In order to be profitable the company might consider the following options

1) Set up a manufacturing plant in Chennai

2) As the No of units sold for Chennai is more, the demand is more, so the company
might consider increasing the prices.
3) The company might consider opening its own exclusive stores to reduce the
commission of the stores

Note:- If Point 1 and 3 are adopted by the company, they might require huge investments,
however these costs would be one time costs as their operating costs would reduce.
CHAPTER 5
McDonald’s distribution channel and the way in which fast food restraunts chain gets it's
product to the market. McDonalds is the leading global food service retailer ,with more than
30,000 local restaurants serving nearly 46 million people each day in different countries.

Approximately 80% of all McDonald's restaurants worldwide are owned and operated by
independent franchisers.

Distribution arrangements tend to be a long term in nature. Because of this time horizon ,
channel decision are usually classed as strategic , rather than tactical and operational onea.
Many of McDonalds restaurants are open 24 hours per day which satisfies the customers
needs and wants , especially for exists their hunger. This type of distribution strategy is
called "intensive distribution" , means marking the product available for sale through all
possible channels of distribution. This strategy must be designed to reach the consumer
wants at anytime and anywhere.

McDonalds has adopted the service firm sponsored retailer franchise network,in which a
service firm licensed a network , in which a service firm licenses a network of retailers to
bring it's service to consumers.

Since the consumers are spread worldwide that why it distributes it's product through
franchisers who are aware of the taste and preferences of there country.
Appendix

ED Exclusive Distribution

ID Inclusive Distribution
References

 https://www.investopedia.com/

 http://www.economicsdiscussion.net/

 http://www.yourarticlelibrary.com/

 http://parisinnovationreview.com/