UNIT 12 DISTRIBUTION MANAGEMENT

Objectives
After completing this unit you should be able to:

• understand the concept of distribution management

• appreciate its importance in the marketing mix

• discuss the different channels of distribution

• understand the role, importance and types of intermediaries.

• realise the issues in efficient distribution in contemporary times.

• ascertain the factors that determine choice of channel selection

• understand the distribution strategies adopted by the firm

• role of channel system as an important link between the manufacturer and the ultimate
customer

Structure

1. Introduction to Distribution

2. Definition of Distribution Management

3. Need for Distribution Management

4. Channels of Distribution

5. Types of distribution channels

1. Direct Channel

2. Indirect Channel

6. Intermediaries

1. Wholesalers

2. Retailers
1
 7. Factors determining choice of channels of distribution:

1. Product Related Factors

2. Company Characteristics

3. Competitive Factors

4. Market Forces

8. Distribution Strategies

9. Channel System

10. Channel Conflict

1. Causes of Marketing Channel Conflict

2. Management of channel conflict

11. Distribution Management Challenges

12. Elements of Distribution Management:

1. Traditional Elements

2. Emerging Elements

13. Summary

14. Self-Assessment Test

15. Further Readings

12.1 INTRODUCTION TO DISTRIBUTION

In the earlier units we have discussed and familiarised you with important terms like needs,
wants, customer, markets, competition, sales, marketing and a host of relevant terms pertaining
to marketing function. We have also touched upon how businesses and firms reach out to their
target market segments through well blended and well defined marketing mix elements and
strategy formulation for the business. Besides, we did talk about the elements of marketing mix

2
for products comprising of i.e. product, price, place and promotion (generally referred as 4P’s of
marketing mix). While the elements of services marketing does include the same four elements
i.e. product, price, place and promotion and an additional three more elements namely, physical
evidence, process and people (generally referred as 7P’s of service marketing).Which will be
discussed at length in Unit-13 of this course.

If you notice carefully at the elements of marketing mix of both products and services “Place” is
common to both. This suggests that “Place” play a pivotal role to sell the right product/service to
the right customer at right price at and at right time thus assumes significance to every marketer.
Therefore the focus of this unit will be on “Place” wherein all distribution activities and
functions focus on this aspect of the marketing mix. It is one link in the chain, which starts from
suppliers to manufacturers and finally to the point of sale.
Very often we come across that during festive season or on any other happy occasion we tend to
buy gifts for friends and relatives as we all believe in the joy of giving something to someone
near and dear on such joyful celebrations. Assume that your friends or relatives stay in another
city then what do you do? How do you send the gift to them? Yes, you do have a solution to
either send them by courier or by online delivery. Thus, a delivery company is a type of
distribution process. In the same way firms create a distribution system that enhances the reach
of the firm’s offerings to the end customer at the right place and right time which is at the core of
distribution.

12.2 DEFINITION OF DISTRIBUTION MANAGEMENT

The function of distribution is in providing three utilities namely place, time and possession. For
example, if you need a notebook, you will go to the nearest stationery shop and purchase a
“Classmate” notebook. This nearest stationery shop offers you “Place” utility. You could get the
notebook close by your residence. If you need to buy a gel pen at 9.00 pm then also you can go
and purchase it at that time. So you get “time” utility. Having purchased the notebook and pen
and you can take it back home. You get “possession” utility. In all these instances, ITC, a leading
Indian Multinational company sells “Classmate” notebook and Cello Pens India, which sells
“Cello Pointec Gel Pens”, has ensured that you can avail of all the three utilities very
conveniently without any difficulty.

3
Let’s look at a couple of definitions of distribution as per the American Marketing Association,
“distribution refers to the act of marketing and carrying products to consumers. It is also used to
describe the extent of market coverage for a given product. In the 4 Ps, distribution is represented
by the word place or placement”. According to Mossman & Norton “distribution is the operation
which creates time, place and form utility through the movement of goods and persons from one
place to another”.
To sum up, distribution management can be defined as a combination of all activities which
facilitates movement and co-ordination of supply and demand in creation of time, place and
possession utility in goods. It is the art and science of determining requirements, obtaining them,
distributing them and finally maintaining them in an operationally prepared condition. Therefore,
the broad range of activities concerned with the efficient movement of finished products from the
end of the production line to the consumer and also the movement of raw materials from the
source of supply to the beginning of the production line, fall under the domain of Distribution
Management (Fig 12.1)

Source of Production Consumer

Raw Material Line

Distribution Management

Figure 12.1 Domain of Distribution Management

Through distribution activities a company ensures that a sequential flow of products and goods
from the source of raw material through the production/operation is made available to the final
customer. This involves a sequential flow of procedures, systems and activities which are
designed and linked to facilitate and monitor the movement of goods and service from the source
to the consumer.

12.3 NEED FOR DISTRIBUTION MANAGEMENT

In the previous section, we saw that “Classmate” Notebook was made available at the local
stationery shop through distribution management. It is manufactured by ITC, which has its

4
headquarters in Kolkata. To reach out to its customers, ITC has an unmatched distribution
network. Its products are available in 4.3 million retail shop/outlets/stores in India. ITC
constantly tries to make the products reach to the retailers as quickly as possible. ITC's
Paperboards and Specialty Papers Division has four manufacturing units, eight regional sales
offices and over sixty dealers in India. At the backend ITC sources good quality raw materials
from 17 states in India through its e-choupal network.

A good distribution system performs the following functions for the company;
• It helps in tracking the growth and decline in demand of the company’s products/
services.
• It enables to design and implement a joint marketing strategy with the distributor and
retailers, like customising sales arguments, pricing and discount structures based on the
local situation/conditions.
• The firm can give marketing support, product sales training, after sales support, etc., with
the help of a good distribution network.

The objectives that need to be kept in mind viz., a viz., distribution are;

i. The major objective of distribution is getting the right goods to the right place at the right
time at the least possible cost.
ii. To fully make use of the available human and material resources to the maximum
possible extent without wastage.

iii. To enhance the rapid growth and development of country and organization

12.4 CHANNELS OF DISTRIBUTION

Distribution channels are the methods by which companies deliver products and services to
customers and end users. Some businesses sell directly to their customers, while others might use
a retailer or wholesaler to serve as an intermediary. Companies may also use agents or brokers to
facilitate the movement of products to distributors that sell those wares to the customer. At the
beginning of this unit we had discussed the examples of “Classmate” notebooks. The company
has chosen an extensive network of dealers and retailers to reach you. When the business is on a
5
small scale like a local sweet shop, the customers can directly go and purchase from the shop. In
such cases, the business and the customers are in close proximity. Suppose this sweet shop
expands, and starts making other products, it would require a larger customer base. These
customers might not be in close range of the exact shop. Their product might be sold through
someone to customers who are residing far off. This “someone” becomes an intermediary.
Haldiram is one such sweet company which has gone on such a large scale and expanded its
business that now it has various ways/channels to reach the customer more conveniently.

Philip Kotler defines channel of distribution as “a set of independent organisations involved in

the process of making a product or service available for use or consumption”.

Distribution channel has been defined by Hill, “Distribution channel consists of one or more
companies or individuals who participate in the flow of goods and services from the
manufacturer to the final user or consumer” (Hill, 2010.)

The role of distribution channels through an example

a) When there is no channel of distribution:

When a customer wants to buy soap, rice and toothpaste etc there is no channel of distribution.
Meaning thereby the product has to be delivered to the end customer, directly by the producers
of the above mentioned products. Imagine the difficulty in reaching all the customers that a
manufacturer will face. Secondly farmer growing rice may not have the resources to reach out to
its customers and deliver it in a mutually satisfying transaction.

Producer of Soap

Producer of Rice Customer

6
Producer of Toothpaste
 Fig 12.2. No intermediary in the distribution process

b) When there is a channel of distribution involving a retailer: In the above case, even
if one intermediary (retailer), is involved, the process becomes simplified not only for the
customer but also for the producer. The product can now be available to a larger number
of customers, with less effort on the producer’s side.

Retailer
Producer (Soap, Rice, Customer
Toothpaste)

Fig 12.3 One intermediary in the distribution process

Activity 1
a) List down any six products of the top two FMCG companies in India. Keep in mind that
these companies have rural as well as urban presence..

b) Note down the places/ platforms from where you can purchase the products that you have
listed.

c) Which places/ platforms give you the maximum convenience and why?

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………………………………………………………………….
…………………………………………………………………………………………………….

7
12.5 TYPES OF DISTRIBUTION CHANNELS

Broadly speaking the distribution channels can be classified as follows:

a) Direct Channels
b) Indirect Channels

1. Direct Channel – When the producer or the manufacturer directly sells the goods
to the customers without involving any middlemen, it is known as direct channel
or zero-level channel. It is the simplest and the shortest mode of distribution.
Selling through post services, internet or door to door selling etc. are some of the
examples of this channel. Nykaa, Homeshop 18 etc. are cases of direct channel .

(a) Door to door selling: Very small companies or start-ups sell their products via
this method. You might have seen vendors selling “papad”, clothes etc. This
method of selling directly to customers is more common and visible in semi urban
and rural areas and also in big capital cities across India.

(b) Internet selling: Currently, this has become the most common phenomenon
among most of the marketers across sectors to tap tech savvy customers. In cases
where the target audience is approachable through internet, it is far easier for
companies than other methods. Generally it caters to those potential buyers who
are interested enough in the firm’s merchandise only approach the company. For
example, “HealthifyMe” is selling different types of salads for health conscious
people.

(c) Mail order selling: As the name suggests that the products are generally sold
through mails as they might not be readily available in local markets. In such
cases, the goods need to be durable, and of standardised qualities. The delivery
costs should also be considerably low. Mostly books and magazines are sold
through this method. E.g., Reader’s Digest.

(d) Company owned retail outlets: Instead of using other retailers to sell its products
to customers, company establishes its own company exclusive retail outlets to
cater to customer as one stop shop for all the its merchandise under one roof
examples are Raymond’s Shoppe, Calico Mills, Dell computers etc.

8
 (e) Telemarketing: The products are promoted for selling through call centres over
outbound calls. Sometimes the company can receive calls on a helpline number
regarding their products demonstrated on television. These are inbound calls. For
example Home shop 18 etc.

2. Indirect Channel – When a manufacturer or a producer uses the services of one

or more middlemen to distribute goods, it is known as indirect channel. This is the
most commonly used channel. As businesses expand it is not feasible for
companies to reach all markets directly. The different levels of indirect channels
are;

a) One Level channel: This channel involves the use of one middleman i.e. retailer
who in turn sells them to the ultimate customers. It is usually adopted for speciality
goods. For example – Tata sells its cars through company approved retailers.

Manufacturer→ Retailer→ Consumer

b) Two Level channel: Under this channel, wholesaler and retailer act as a link
between the manufacturer and the customer. This is the most commonly used
channel for distributing goods like soap, rice, wheat, clothes etc.

Manufacturer→ Wholesaler→ Retailer→ Customer

c) Three Level channe: This level comprises of three middlemen i.e. agent,
wholesaler and the retailer. The manufacturers supply the goods to their agents who
in turn supply them to wholesalers and retailers. This level is usually used when a
manufacturer or farmers (growing dry fruits, saffron, etc.,) deals in limited products
and yet wants to cover a wide market.

Manufacturer → Agent → Wholesaler → Retailer → Consumer

12.6 INTERMEDIARIES
As mentioned in the earlier section intermediaries can be an agent, a group of people or an
organization that facilitates the flow of goods from the producer to the final consumer. They can
be broadly classified as a) Agent middlemen and b) Merchant middlemen

9
1.Agent Middlemen: If you intend to sell or purchase property may be a flat or a house, generally
you contact real estate agents who help you in selling or purchasing the desired property.
Similarly when you want to purchase company stocks or shares from the market, you seek the
help of brokers. Even online brokerage houses fall under this category. These are called agent
middlemen. They do not take ownership of what they are selling. They earn money by charging
a facilitation fee.

2.Merchant Middlemen: Merchants are a set of intermediaries like wholesalers and retailers, buy
and re-sell their goods. They not only take the ownership of inventory, but they also bear the
expense of storing and distributing the product. They charge a certain “mark-up” amount to the
actual cost of the product. For example, they might have purchased a toothbrush at Rs. 20 and
might sell you the toothbrush at Rs.25. This five rupee difference is called the mark-up which the
middlemen earn in the transaction for all the tasks that he undertakes from buying to storing to
distributing the product.

12.6.1 Wholesalers
The American Marketing Association has defined the wholesaler as “a business unit which buys
and resells the merchandise to the retailers and the merchants or to the industrial,
institutional and commercial users but does not sell insignificant amounts to the ultimate
consumers.”

Wholesalers are those merchants who act as intermediaries between the primary producers,
manufacturers or importers, on one side, and retailers or industrial consumers on the other. They
buy goods and commodities in large quantities with a view to selling them to retailers in smaller
quantities. They assemble/collect merchandise from many sources, warehouse/store and regroup
the goods for convenient buying by retailers. Thus wholesalers make it possible for the
manufacturer to sell to a large number of retailers to whom the merchandise cannot be easily sold
directly from the factory. In the light of the business activities they perform they play a dual role
as a buyer and as well as seller.

10
The wholesaler performs the following important functions of marketing:
i. Assembling-The wholesaler collects varieties of product from different manufacturers
and keeps them in stock for sale to the retailers at the time when they need them.
ii. Dispersion-The products assembled and stocked by the wholesalers are supplied to the
retailers who may be widely scattered.
Warehousing-The goods purchased by the wholesalers from the manufacturers and
iii.
producers have to be stocked in warehouses pending their sale to the retailers. The
arrangement for such storage is the responsibility of the wholesalers.
iv. Transportation-The wholesaler has to move the goods from the various factories to his
own warehouse and from there to the retail stores. He may do so either by employing his
own vans or by hiring public carriers or a combination of both.
v. Financing-The wholesaler in most cases provides goods on credit to the retailers based
on the credit worthiness of the retailer.
vi. Risk-assuming-The wholesaler by virtue of their business model do assume the risk
arising out of the changes in prices and demand as also loss due to spoilage or destruction
of goods in his warehouse.
Grading and Packaging-The wholesaler has to sort out different grades of products
vii.
according to quality and other considerations and pack the goods into smaller lots for
retailers.

Services provided to the manufacturers by wholesalers include the following:

i. The manufacturers get the benefit of bulk orders from wholesalers. He does not have to
take the trouble or incur the expenses of procuring large number of small orders.
ii. Wholesalers remain in close touch with the retailers and keep themselves informed about
the changes in the direction and pattern of demand and thus help the manufacturers in
planning their production function.
The wholesaler places bulk orders with the manufacturer and thus enables him to
iii.
concentrate on production.
iv. The wholesaler to a great extent relieves the manufacturer of the trouble of performing
most marketing functions.

11
Services provided by wholesalers to the retailers include:
i. The retailer need not stock goods in unduly large proportions and can replenish his
supplies from the wholesalers as and when necessary.
ii. The wholesalers provide goods to the retailers on credit and the retailers need not block
their funds in idle inventories.
The wholesalers generally specialise in a few lines of allied goods and try to obtain their
iii.
supplies from the best and the cheapest source. The advantages of such specialisation are
passed on to the retailers in the form of lower prices or may in the form of discount and
rebate.
iv. The wholesaler assumes most of the risks involved in marketing functions such as price
fluctuations and spoilage or pilferage of goods.
v. Wholesalers keep the retailer informed of the new types of products that are being
introduced in the market. This gives the retailers an opportunity to extend their business.

Types of Wholesalers

Depending on the nature of the product/goods, type of industry and the type of market it caters
to, different types of wholesalers can be found. In highly fragmented industries as with
unbranded clothes or farm produce, there could even be different levels of wholesalers.
Wholesalers could also specialize in one function. For instance a wholesaler could specialize in
warehousing. Such a wholesaler maintains a big warehouse and specializes in the storage
function and depends on others for other functions such as transportation, financing insurance
etc.

Dibb et al. (2006) classify wholesalers into two broad classes- (i) merchant wholesalers and (ii)
agents and brokers.

(i) Merchant Wholesalers:

Merchant wholesalers buy goods from manufacturers and sell them to retailers or industrial
buyers. Such wholesalers therefore take up the tide to the goods. This is an important function
that has to be performed for the flow of goods from the manufacturer to the ultimate customer.
12
 Merchant wholesalers can be classified as either full-service wholesalers or limited-service
wholesalers. Some of the types of merchant wholesalers that are seen around the world are:

(a) General merchandise wholesalers,

(b) Limited line wholesalers,
(c) Cash-and-carry wholesalers,
(d) Truck wholesalers, and
(e) Drop shippers.

(f) General Merchandise Wholesaler:

General merchandise wholesalers deal with a large variety of items without much depth in each
category. A wholesaler could, for instance, deal in grocery items, selling products from a few
manufacturers to retailers. Such a merchandiser provides all the services including warehousing,
transportation, and financing to the manufacturer.
Such large general merchandisers typically dominate a geographic region, supplying
merchandise to most of the retail outlets in a particular region. A general merchandiser typically
deals with multiple brands, though some of them may deal with just one large manufacturer for a
particular line of merchandise.

(b) Limited Line Merchandisers:

A limited line merchandiser typically specializes in just one product category and can either be
an exclusive wholesaler representing a particular firm or a multi brand merchandiser. Limited
line merchandisers deal with products such as pharmaceuticals, hardware, paint, cement, and
steel. Some limited line merchandisers serve a niche market (for example, laboratory equipment
to be sold to medical laboratories and educational institutions etc.).
In certain markets where manufacturers are small and fragmented, limited line merchandisers
can be powerful. The industry must rely on the wholesalers to sell to their customers. Such
wholesalers typically have in-depth knowledge about the market and its players. These limited
line merchandisers are very useful for small niche manufacturers who serve a small but
important market.

(c) Cash-and-Carry Wholesalers:

Cash-and-carry wholesalers are a new wholesale13category in India, but have existed for quite a
long while in other countries. The Wal-Mart group’s is an example to make an entry into India
through a cash-and-carry wholesaling format. In cash-and-carry wholesaling, retailers could buy
 goods in bulk (often carton loads) at a reduced price, to be resold at a higher price in their retail
outlets. Cash-and-carry set-ups are typically large warehouses with little display and fewer staff.
Goods are only sold in bulk and without any credit lines.

Cash-and-carry wholesalers are therefore classified as limited service merchant wholesalers.

Small retailers who can rely on cash-and-carry retailers benefit, as they get access to goods
without any waiting time and at a low priced. Cash-and-carry wholesalers only deal with high
turnover items such as groceries and stationery items. With the entry of large wholesale groups
into India in the future, more such cash-and-carry wholesalers can be expected. Metro cash and
carry is another wholesaler who has a strong presence in the Indian wholesale business.

(d) Truck Wholesalers:

Many small wholesalers in the Indian FMCG sector which serve small independently-owned
retailers are actually truck/mini van wholesalers (sometimes called truck jobbers). These
truck/mini van wholesalers typically transport small quantities of typically perishable
commodities (such as bread, biscuits, snack items etc.) to retail outlets where the retailer could
inspect and purchase goods from the truck.
Such truck/ minivan wholesalers are typically small operators and could carry a variety of multi-
brand items. They often do not provide credit lines and are typically owned by other large
wholesalers. These wholesalers provide critical transportation and stocking services to the
distribution channel. They are also involved in managing the inventory of small retailers.

(e) Drop Shippers:

These intermediaries are sometimes called desk jobbers. They do not take physical possession of
the goods. They collect orders from retailers or industrial buyers and arrange for these to be
transported to the customers from the manufacturer. The ownership of the goods will pass on to
drop shippers from the time the contract is signed with the manufacturer, until the goods are
received in proper condition by the buyer.

Such wholesalers are typically seen in commodity markets, where transaction volumes are
typically very large, such as markets for oil, coal, and iron ore. Drop shippers provide value by

14
linking several fragmented customers to suppliers who are often based in a totally different
continent.

(ii) Agents and Brokers:

Agents and brokers typically provide sales support for the manufacturers by offering the services
of a sales force network and related infrastructure. Agents and brokers thus enable manufacturers
to expand their markets without the overhead associated with establishing a sales force. Agents
could represent just one manufacturer or a group of manufacturers who have complementary
products. Clearing and forwarding (C&F) agents are quite common in Indian markets as they
provide a means to avoid multiple sales tax regimes.

Different types of wholesalers therefore facilitate the transactions between different players in
the market. They provide value by performing several activities that are important to the smooth
flow of goods and services from the manufacturer to the end consumer.
In certain industries, the nature of demand and supply provide opportunities for wholesalers to
grow in stature and become the most powerful entity in the market.

12.6.2 Retailers
A retailer is defined as "a middleman who sells mainly to the ultimate consumer. He may sell
to institutions but most of his sales are made to industrial or household consumers. He usually
sells in small lots".
The retailer is the last link and the most important intermediary in the chain of distribution. Mass

production in the present day set-up is geared to the requirements of the ultimate consumer.

Retailers are directly and intimately in touch with the ultimate consumers and thus occupy a

strategic position in the whole chain of distribution. The basic feature of retail trading is the

purchase of goods from wholesalers and selling it in small lots to consumers. Thus retailing

includes all activities directly related to the sale of goods to the ultimate consumers. The retail

shop is one of the oldest and most widely used business establishments in any country. Retail

business originated through the use of peddlers engaged in house to house sales. This was
15 owned by sole proprietors or small
followed by opening up of small retail shops usually
 partnership firms, which are frequented by customers for obtaining their requirements. In course
of time, large retail stores like department stores, co operative stores, super bazaar etc became
popular in developing countries.

In addition, people living in far off places are served by mail order houses who solicit business by
catalogues, advertisement in popular magazines or correspondence. The latest development is
retailing through automatic vending machines. Most standard items in standard packs including
food items are available in most developed countries through automatic vending machines located
at convenient places like railway stations. Air ports, commercial places etc. Milk-vending machines
are now being used by Mother Dairy in India.

Following are some of the functions of retailers:

i. Estimation of the probable demand of the consumers for the various types of goods dealt
by him.

ii. Assembling of various types of goods from different wholesalers

iii. Sale of the various products to the consumers as and when needed by them
iv. Physical movement of goods from the wholesaler's godowns to their own establishment
in case such a service is not provided by any wholesaler(s)
v. Warehousing/storage of goods to maintain uninterrupted supply of goods to the

consumers

vi. Standardisation, grading and packing of goods in consumer packs, if necessary

vii. Assumption of risk of loss of goods by fire, theft, deterioration, etc., so long as they are
not disposed of to the consumers
viii.
Extension of credit to some selected regular customers
ix.
Providing information about consumer tastes and preferences to
wholesalers/ manufacturers.

Services rendered by the Retailers to consumers:

i. By holding ready stocks of various commodities required by the consumers, retailers

relieve the customers of the need for stocking a wide variety of goods which could be

extremely inconvenient and cumbersome.

16
 ii. By keeping a good assortment of the various varieties of a particular product, say soaps,
toothpastes, etc. retailers provide a wide variety of choice to their customers.
By proper display of new products, the retailers keep the consumers informed about the
iii.
availability of new products and the variety of different goods.
iv. Retailers very often guide their customers about the relative merits of the various brands
of a particular product and thus help them in the selection of goods.
v. Retailers may provide special facilities to their customers, for example, free home
delivery, extension of credit, after-sales service, etc.

Coordination between wholesalers and retailer:

Effective coordination between wholesalers and retailers would lead to a reduction in the

overall operating expenses involved in the distribution function as follows:

• Economical Buying-wholesalers know what, when and how much the retailers

will buy.

• Economical warehousing and delivery-as the wholesaler knows the nature,

amount and frequency of retailer's orders, he can plan his operation in the most

economical manner.
• Economy in selling because the effort involved in selling is substantially reduced.
• Economy in office and administrative expenses-the work involved can be better
planned and organised.
• Reduced wholesale expenses permit the wholesalers to quote lower prices to
retailers and this in turn permits a reduction in retail prices which ultimately
benefit the consumers

Type of Retailers
There is a wide variety of retail trading establishments. They vary from hawkers and peddlers to

big departmental stores. Hawkers and peddlers move from door-to-door in residential localities

to sell their goods. Pavement shops usually arrange their wares at busy street corners or

pavements of busy streets. Some traders sell their wares at weekly markets which are very

common in rural India, and are not uncommon in urban centers. For example, in every state
17
capital and in other major locations of every city weekly markets is a common sight. Then there
are fixed shop retailers who operate from shops in busy markets or even in residential areas.
These stores may be either general stores dealing in a wide variety of goods needed by
consumers in their day to day requirement or may be shops dealing in a particular item, as for
example, cloth, shoes, building materials, electrical goods, confectionary, etc. Stores dealing in a
particular line may further specialise, as for example, children's wear in clothing. Then there may
be bigger stores like departmental stores and multiple shops. As all of us are familiar with small
scale retail establishments and their modus operandi, we will confine our discussion to a limited
variety of large-scale establishments.

a) Department Stores
Thus department stores are characterized by their wide product mixes. That is, they carry many

different types of merchandise, which may include clothing, appliances and other items. The

display of this merchandise is done separately within the store. The depth of the product mix

depends on the store, but department stores’ primary uniqueness is the ability to provide a wide

range of products within a single store. For example, if you visit Big Bazaar, you can shop for

clothes, vegetables, utensils, consumer durables, and groceries etc., all in one store/shop.

Thus a department store is a large-scale retail establishment comprising a number of

departments, each department specialising in a separate line of products. All these departments
are under one roof and one unified control. The consumer can find all what he needs in one store
rather than move around from shop to shop. These stores are located in almost all major cities
including major towns sothat they are easily accessible to customers.

Traditionally, department stores grew up in developed countries mainly to cater to the

requirements of well-to-do people who required articles of high quality and looked forward for
comfortable shopping. But they have also become popular in urban centres in many developing
countries. The launch of departmental stores in India can be traced back to 19 th century the first
being Spencer & Co Ltd. established in the year 1895 in Madras Presidency, and in 1897 it was
Akbar ally’s, in Mumbai, but in mid 1990’s followed some more departmental stores in urban
areas, especially in Metropolitan Cities.

18
Advantages
1. Department stores make shopping convenient to consumers by providing them a

whole range of goods under one roof.

2. Their central location attracts a large number of customers leading to a large

turnover. Thus they can afford to make large profits even with smaller margins.

3. Bulk-buying by department stores enables them to obtain heavy discounts from

manufacturers and thus buy at a cheaper rate. There are savings in freight charges as

well.

4. Department stores can afford to have effective advertising through press, radioand

television and thus they are able to attract more and more customers.

5. Being large business units, department stores can afford to employ skilled and expert

staff for all their operations and thus they are able to achieve a high degree of

efficiency in their working.

Disadvantages;
1. The running costs for such establishments are relatively high, as they are centrally

located.

2. The customers may not get personalised attention.

3. Experience has shown that operating costs of department stores tend to become very high
because of the necessity to run some departments at a loss to attract customers and heavy
emphasis in service. As a result, more often than not, their goods are marked at higher
prices.
4. Central location also involves higher rents and thus higher overheads. Central location
may not be convenient to persons living in far off places which mean that they will make
their purchases of articles of everyday use from nearby shops. However, in recent years,
department stores have branched themselves out to suburban areas as well to reach the
customers nearer their location.

b) Multiple Shops or Chain stores 19

Conventionally, the other term for chain stores is multiple shops which control a number of
stores under one common ownership and management. These multiple shops are located in
various cities and in various localities of bigger cities. Multiple shops refer to a group of retail
stores dealing in similar types of goods. The basic idea behind the establishment of the multiple
shops is to approach the customer in his vicinity unlike department stores which seek to attract
customers to a central location. These shops could be operated by manufacturers or by
wholesalers with the basic objective of eliminating retailers. Bata Shoes and Usha Sewing
Machines are the two classic examples ofproducts for which multiple shops have been opened by
manufacturers in India. Today, almost most of the businesses or brands do operate chain stores
for expanding and penetrating the business.

While a chain store is a retail company having more than one branch in one city/ town. Since
there are many retail points of one chain, the retailer gets the advantage of bulk purchasing.
Therefore, they can substantially lower the prices as compared to retailers who have only one
shop or unit. Furthermore, chains were able to attract many customers because of their
convenient locations, made possible by their financial resources and expertise in selecting
locations. For example 7-Eleven, Easy Day, etc.

Advantages

1. Multiple shops are able to offer lower prices due to the economics of bulk buying.
2. As sales are on cash basis, losses on bad debts are eliminated and accounting is also
made simpler.
3. Rapid turnover and common advertising and promotion strategy for all shops/retail
outlets make their operations more economical.
4. Any shortage of goods faced by one branch can be easily made up by transfer from
some other branch in the same city.
5. Since advertising material and interior layout of each shop is Similar, each shop
serves to advertise the other shops. This leads to further economy in advertising and

a quicker turnover.

20
Disadvantages

1. Multiple shops/chain stores offer less variety of choice in comparison to department

stores or even ordinary retail stores offer.
2. These shops do not normally offer home delivery service or credit sales and thus lose
a good number of customers..
3. Each unit is controlled by the head office and thus branch managers cannot adjust
their sales policy to local conditions and emerging opportunities.
4. Limitations of bureaucratic organisation usually creep in so that the shop personnel
tend to lose initiative.

c) Supermarkets
Supermarkets are large, self-service stores with central checkout facilities. They carry a wide

range of food items and often non-food products. Supermarkets’ entire approach to the

distribution of food and household cleaning and maintenance products is to offer large

assortments of these goods at each store at a minimal price. For example, Reliance Fresh Stores,

Spencer’s fall under this category.

Advantages;
1. The product assortment is large. A customer can get most of their daily need products at

one place.

2. The products are relatively economical.

Disadvantages;
1. Since these are self- service stores, all types of customers may not feel comfortable in

shopping.

2. Invidualised attention cannot be given to customers.

d) Discount Retailers
Discount retailers, like Wal-Mart are characterized by their emphasis on price as their main sales
appeal. The assortments in merchandise have a wide range, but most popular items in terms of
21 basis. The stores are large, have adequate
size, colour and packaging are stored on a priority
space for browsing, are open for longer hours, have self-service and facilities like free parking,
etc. Online retailers such as ebay.com, Flipkart have aggregated products and offered them at
deep discounts.

Advantages;
1. As the name suggests, the major advantage is in terms of much reduced retail prices.
2. All popular items are available, with adequate space for browsing.

Disadvantage;
1. Only popular items are stocked. Products which are less in demand might not be available.

e) Warehouse Retailers
Warehouse retailers provide a bare-bones shopping experience at very low prices. Warehouse

retailers streamline all operational aspects of their business and pass on the efficiency savings to

customers. For example, Costco generally uses a cost-plus pricing structure and provides goods

in wholesale quantities. In India we do not have this format of retailers, although Best Buy can

be a close substitute.

Advantages;
1. Products are available in bulk and bulk purchases are encouraged.
2. Cost effective.
Disadvantage;
1. These stores are not commonly available as they require huge spaces.
2. They are generally on the outskirts of towns and cities, so people have to travel long
distances.

f) Franchises:
The franchise approach brings together national chains and local ownership. An owner purchases

a franchise which gives him the right to use the firm’s business model and brand for a set period

of time. Often, the franchise agreement includes well-defined code of conduct for the owner,

22
training to the staff, and on-going support by the company to the franchiser. The owner, or
franchisee, builds and manages the local business. For example McDonald’s, KFC etc.

Advantages;
1. It helps in wider availability of stores.
2. Since a code of conduct has to be followed, these stores provide standardized and good
services.

Disadvantage;
1. They operate for a set period and in case of disputes with the owner, the shops may have

to close operations.

g) Malls and Shopping centre:

Malls and shopping center are successful because they provide customers with a wide assortment

of products across many stores. If you want to buy a suit or a dress, a mall provides many

alternatives in one location. In big malls in Northern India, like Great India Place, or Select City

Walk, etc you will find many department stores like Spencer’s, Big Bazaar, etc. Strip malls are a

common string of stores along major traffic routes like national highways, while isolated

locations are freestanding sites not necessarily in heavy traffic areas. Stores in remote locations

must use promotion or some other facet of their marketing mix to appeal shoppers.

Advantages;
1. The customers can avail greater variety.
2. People can shop even while travelling as some malls are located on highways, major
traffic routes and outskirts of the main city.

Disadvantages;
1. It cannot be accessed by all the customers. Some less educated customers might not feel

comfortable in shopping in these high profile areas.

h) Online Retailing:
Online retailing is indisputably a dominant force in the retail industry. Companies like Amazon,

Myntra, etc., complete all or most of their sales online. Many established retailers have also

started their online portal to sell their products. For example Pantaloons have their own retail
23
outlets in major cities. They have an online platform pantaloons.com, to reach out to those

customers who do not have access to their retail outlets.

Advantage;
1. The growth in online retailing has been primarily that it provides convenience of

shopping from home/office etc.

2. There is wider reach, as customers in distant places can also access the site for shopping/

browsing.

Disadvantage;
1. It requires an active internet connection.
2. Computer literacy and a certain level of education is a required for shopping online.

i) Non-store Retailing:
Beyond those mentioned in the categories above, there’s a wide range of traditional and

innovative retailing approaches. Vending machines and point-of-sale kiosks have long been a

popular retail device. Today they are becoming more targeted, such as companies selling easily

forgotten items such as small electronics devices and makeup items to travelers in airports.

Each of these retailing approaches can be customized to meet the needs of the target buyer or
combined to span a range of needs.

Advantage;
1. These stores are conveniently located.
2. It is good for travelers, in case they have forgotten to pack any gadget or want to
purchase gifts.

Disadvantage;
1. These are mainly for urban customers.

To sum up, wholesalers and retailers provide a variety of functions. There are different types of
retailers and wholesalers. Almost all of them provide the functions summarized through a flow
chart in the following figure;

Fig 12.4 Marketing Flows in a distribution

24
7. FACTORS DETERMINING CHOICE OF CHANNELS OF DISTRIBUTION

The choice of channel decision is important for two reasons. The costs involved in the use of a
channel enter the price that the consumer has to pay. The channel decision also has a bearing on
other marketing decisions like price of the product and its availability, product line etc. Through
proper market feedback, an appropriate selection of channels can reduce fluctuations in
production. A rational decision regarding choice of channels of distribution should ensure (a)
maximum geographical coverage of the market, (b) maximum promotional efforts and (c)
minimum cost. Thus, choice of distribution channel depends on a variety of factors these can be
product related, company related, market related or competitor related factors. Each of the
factors has been explained in the following sub sections.

1. Product Related Factors ensure:

a) Nature of Product – In case of industrial goods like heavy machinery, radiator, power
generator etc. short channels like zero level channel or first level channel should be
preferred because they are usually technical, expensive, made to order and purchased by
few buyers. Consumer goods like televisions (LEDs), refrigerator can be distributed
through long channels as they are less expensive, not technical and frequently purchased.

25
 b) Perishable and Non-Perishable Products – Perishable products like fruits or vegetables
are circulated through short channels while non-perishable products like soaps, oils,
sugar, salt etc. require longer channels.
c) Value of Product – In case of products having low unit value such as groceries, long
channels are preferred while those with high unit value such as diamond jewellery short
channels are used.
d) Product Complexity – Short channels are preferred for technically complex goods like
industrial or engineering products like machinery, generators like torches while non-
complex or simple ones can be distributed through long channels.

2. Company Characteristics:
a)Financial Strength – The companies having huge funds at their disposal go for direct

distribution. Those without such funds go for indirect channels.

b)Control – Short channels are used if management wants greater control on the channel

members otherwise a company can opt for longer channels.

3. Competitive Factors
Policies and channels selected by the competitors also affect the choice of channels. An

enterprise has to decide whether to adopt the same channel as that of its competitor or select

a different one. For example, if Nokia has selected a particular channel say Big Bazaars for

sale of their hand sets, other firms like Samsung and LG have also selected comparable

channels.

4. Market Factors
b) Size of Market – If the number of customers is small like in case of industrial goods, short
channels are preferred while if the number of customers is high as in case of convenience
goods, long channels are used.
c) Geographical Concentration – Generally, long channels are used if the consumers are
widely spread while if they are located in a small place, short channels can be used.
d) Quantity Purchased – Long channels are used in case the size of order is small while in
26
case of large orders, direct channel may be used.
 Fig 12.5 Channel options in consumer goods market

MANUFACTURER OF CONSUMER GOODS

1 2
3 4 5

SALE

SALE
6 AGENT

SALE

SALE
AGENT

SHORT

LONG CHANNELS
CHANN OWN SHOP OR WHOLESALER
ELS MAIL ORDER
WHOLESALER

SALE

SALE

INDIRECT
BIGGER
DIRECT

REATAILERS
RETAILER

WHOLESALER RETAILER
INDIRECT

INDIRECT

INDIRECT
RETAILER

INDIRECT
MANUFACTURER OF INDUSTRIAL
GOODS CONSUMERS

SALE
SALE

AGENTS
SALE

CHANNELS
LONG
AGENTS
CHANNELS

INDIRECT SALE
SHORT

INDIRECT

INDUSTRIAL
DISTRIBUTORS

INDUSTRIAL
INDIRECT

DISTRIBUTORS
DIRECT

BUYERS

Fig 12.6 Channel options in industrial goods market

12.8 DISTRIBUTION STRATEGIES

In the above sections, we have seen the different types of intermediaries and their functions, as
well as the factors that affect the choice of intermediaries. A business entity chooses whether to
be present at all the possible places where a customer can potentially buy a product or to make its

27
products available at selected places only. Depending upon the need the overall marketing
strategy, the distribution strategy is developed. The different strategies are as follows;

a) Intensive or Mass Distribution Strategies

As the name suggests that mass means distribute in large volumes and in bulk. Bulk in this

context refers to wholesale and when the firm decides to sell its products in a huge quantity.

Also, mass distribution means the company does not provide specific retailers or shops where

they sell the product. For example, different snacks and drinks outlets. You can see in different

locations and across locations.

b) Selective Strategies
In this case, companies decided to sell their products in very limited stores. When special

services are needed, e.g., certain cosmetics to be sold only through chemists, we have selective

distribution. The number of outlets at each level of distribution is limited in a given geographic

area. If the product has long useful life and consumer brand preference can be established,

selective distribution will be more profitable.

c) Exclusive Strategies
If the buyers are demanding and expect considerable product service, the company opts for

exclusive distribution. Exclusive distribution creates a sole agency or sole distributorship in a

given market. Such a system is very useful for consumer speciality goods and industrial

products. For example, Rolls Royce has very few showrooms all over India. To maintain the

exclusivity, the following four legal aspects have to be kept in mind;

i. Exclusive dealing contracts

ii. Tying Contracts
iii. Closed sales territory
iv. Franchise selling

Activity 2
a) List down all the places/outlets where you28can purchase the following items;
1. Pond’s cold cream/lotion
2. Centre Fruit chewing gum
 3. Amul Butter (100gm)
4. Apple MacBook
5. Redmi mobile phones
6. Mercedez-Benz Cars

c) What are the reasons for some of the above products are available in some places
and not in other places? Explain
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…………………………………………………...........................................................
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…………………………………………………………………………………………….
…………………………………………………………………………………………….

12.9 CHANNEL SYSTEMS

The channel systems are generally built around local situational opportunities, and requirements.
The channel system is a connecting link between the manufacturer, and the ultimate customer of
the products or services offered by the company. Therefore, the company has to very carefully
consider its product mix, and marketing mix, as well as the expectations from the channel
partners. The company also considers the kind of involvement it wants in the distribution
process, how much control it wants to exercise on its channel members, as well as the cost
incurred in the designing of the channel. Keeping in mind all the factors, there are three kinds of
options available for the firm to decide upon. These are as follows;

a) Vertical Marketing System:

A distribution channel structure in which producers, wholesalers and retailers act as a unified
system. They formally agree to cooperate with each other. The responsibility of functioning
of each channel member in owned by one member. This arrangement is done through

29
contractual agreement. One channel member owns the other, has contracts with them so that
they all co-operate. The member who has authority over all the others members can be the
manufacturer, wholesaler or the retailer. They work in cohesion, and there will be no
conflicts whatsoever between channel members. This type of channel came into existence to
avoid disagreements and conflicts among channel member. As independent members try to
force their influence to meet their objectives, there is always a possibility of conflict and
powerful channel member influencing the other. Once the channel operates as a one system
and is managed by one member, there is much clarity and coordination among channel
members to achieve the channel objectives. For example, Ikea, Starbucks, etc. The
economies are achieved through size, bargaining power and elimination of duplicated
services. To sum up a vertical marketing system is the type of cooperation between the
members of a distribution channel. It includes a producer, wholesaler, and retailer
collaborating to deliver customers the necessary product and aims at achieving better
efficiency and economies of scale.

b) Horizontal Marketing System:

A channel arrangement in which two or more companies at one level join together to follow a
new marketing opportunity where they can combine their resources and use, them optimally.
These companies are generally unrelated. This technique is adopted by companies which
want to minimize the risk of capital losses, or want to utilize idle manpower, or when they
lack technical knowhow, or lack adequate marketing expertise. For example, Johnson and
Johnson have joined hands with google, with an objective of having a robotic-assisted
surgical platform. Horizontal arrangements can be between two manufacturers, two,
wholesalers, or even two retailers.

c) Hybrid Marketing Systems:

Multi-channel distribution system in which a single firm sets up two or more marketing
channels to reach one or more customer segments. As the name suggests the company can
have a mix of vertical marketing system and horizontal marketing system, depending upon
the area or the customer base it wants to reach.

30
12.10 CHANNEL CONFLICT
Even when a company has set up an effective distribution system, some friction may arise
between the channel members or between the company and channel members. This happens
generally due to conflicting business interest. There are generally three types of channel conflict;

a) Vertical Channel conflict: It is the conflict between different levels in the same channel.
For example, conflict between distributor and retailer.

b) Horizontal channel conflict: It occurs between members at the same level of the
distribution channel. For example, two retailers may have a conflict if they target the
same customers by giving price cuts.

c) Multi-channel conflict: When the company selects, two or more channels to sell its
product in the same market. A company may sell its product to wholesalers and some
important retailers simultaneously in one market. Here the wholesaler may feel that the
company is not giving him sufficient attention and is bypassing him.

12.10.1 Causes of Marketing Channel Conflict:

i. Role Ambiguity: The uncertain act of an intermediary in a multi-channel arrangement
may lead to disturbance in the channel of distribution and cause conflict among the
intermediaries.
ii. Incompatible Goals: When the manufacturer and the intermediaries do not share the
same objectives, both work in different directions to meet their ends, then, these results in
channel conflict.
Marketing or Strategic Mis-Alignment: Sometimes, two-channel partners promote the
iii.
manufacturer’s product in a different manner, which created two different images of the
same product in the consumers’ mindset, which creates conflicting brand perception.
iv. Difference in Market Perception: The manufacturer understands of the potential market
and penetration into a specific region or territory may vary from the perception of the
intermediaries, which can create conflict and reduce the intermediary’s interest in
capturing that particular market.

31
 v. Change Resistant: When the channel leader plans to modify the distribution channel, the
intermediaries may or may not accept this change. Thus, it may result in a condition of
discord or non-cooperation.
vi. Improper Geographic or Demographic Distribution: If the sales territory has a narrow
consumer base, and the channel leader allows many selling partners, they tend to lose

interest.

2. Managing channel conflict:

The conflict between channel members can be resolved in the following ways;

a) Mediation, Arbitration and Diplomacy: To resolve a dispute, the manufacturer can adopt
a strategy of intervention where a third person intervenes to create harmony. The other
option is arbitration, where an arbitrator listens to the argument of the parties involved in
a conflict and declares a decision. Alternatively, the parties can resort to diplomacy
where the representatives of both the parties discuss and find an amicable solution.
b) Co-optation: The manufacturer should hire an expert who has already gained experience
in managing the channel conflicts in other organizations, as a member of the grievance
redressal committee or board of directors, for addressing such conflicts.
c) Dealer Councils and Trade Associations: To handle the horizontal or vertical conflicts,
the manufacturer forms a dealer council where the dealers can unanimously put up their
problems and grievances in front of the channel leader. To bring in unity among the
channel partners or intermediaries, they can be added as members in trade association
which safeguards their interests.
d) Superior Goals: Establishing a supreme goal of the organization and aligning it with the
individual goals or objectives of the channel partners may reduce the channel conflicts.
e) Regular Communication: The channel leader should take regular feedback from the
channel partners through formal and informal meetings to know about market trends and
dynamics. In addition, the channel partner’s issues and conflicts can be addressed through
frequent interactions.
f) Legal Procedure: When the conflict is critical and uncontrollable by the channel leader,
the aggrieved party can seek legal action, by filing a lawsuit against the accused party.

32
 g) Fair Pricing: Most of the channel conflicts are a result of the price war, and therefore,
these can be resolved by ensuring that products have the same price in all the territories
and a fair margin is given to the channel partners.

12.11 DISTRIBUTION MANAGEMENT CHALLENGES

Distribution challenges can arise from a variety of disruptions.
i. Natural disruptions include severe weather events, raw material shortages (e.g., bad crop
years), pest damages, and epidemics or pandemics. Human disruptions include riots,
protests, wars and strikes.

ii. Transportation disruptions include transport vehicle disrepair, maintenance downtimes

and accidents, as well as delayed flights and restrictive or new transportation regulations
such as those regularly seen in trucking.

Economic challenges include recessions, depressions, sudden drops or increases in

iii.
consumer or market demands, new or changes in fees or compliance costs, changes in
currency exchange values and payment issues.

iv. Product disruptions include product recalls, packaging issues and quality control issues.
Buyer disruptions include order changes, shipment address changes and product returns.

12.12 ELEMENTS OF DISTRIBUTION MANAGEMENT

These include the integral components in the distribution system. As the distribution has
evolved over a period of time, new elements have also come into the system. The intervention of
technology has been a great facilitator as well as disrupter in the existing flow of distribution
systems. The various components and elements have been classified as traditional and emerging
elements in the following sub sections;

33
1. Traditional Elements:
i. Supply Chain- A supply chain is defined as the entire process of making and selling
commercial goods, including every stage from the supply of materials and the
manufacture of the goods through to their distribution and final sale. This term was
coined by Keith Oliver in 1982. APICS, the global association for supply chain
management professionals, defines supply chain management as: “the design, planning,
execution, control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand, and measuring performance globally.”

ii. Logistics- It is the business of transporting, supplying and delivering goods. Michigan
State University’s professors (2020) define logistics as activities which include
transportation, warehousing, packaging and more – that move and position inventory and
acknowledge its role in terms of synchronizing the supply chain.

Purchase order and invoicing system -The creation of a purchase order is the first step in
iii.
a business transaction, it is issued by the buyer and authorizes a seller to provide a
product or service at a specified price. The invoice is a bill issued by the seller when that
product has been delivered or the service has been completed.

2. Emerging elements:

i. Block Chain- Block chain can enable more transparent and accurate end-to-end tracking
in the supply chain: Organizations can digitize physical assets and create a decentralized
immutable record of all transactions, making it possible to track assets from production to
delivery or use by end user.

ii. VRM- Vendor relationship management (VRM) is a category of business activity made
possible by software tools that aim to provide customers with both independence from
vendors and better means for engaging with vendors. These same tools can also apply to
individuals' relations with other institutions and organizations.

34
 CRM- CRM stands for Customer Relationship Management. It's a technology tool used
iii.
to manage interactions with customers and potential customers. A CRM system helps
organisations build customer relationships and streamline processes so they can increase
sales, improve customer service, and increase profitability.

iv. IMS- An inventory management system (or inventory system) is the process by which
you track your goods throughout your entire supply chain, from purchasing to production
to end sales. It governs how you approach inventory management for your business.

v. WMS- A warehouse management system (WMS) is a software solution that offers

visibility into a business' entire inventory and manages supply chain fulfilment operations
from the distribution centre to the store shelf.

vi. TMS- A transportation management system (TMS) is a logistics platform that uses
technology to help businesses plan, execute, and optimize the physical movement of
goods, both incoming and outgoing, and making sure the shipment is compliant, proper
documentation is available.

12.13 SUMMARY
Distribution is an important component of the marketing mix. For an effective implementation
of the marketing activities, distribution plays an important role. The channel intermediaries,
namely the wholesalers, retailers, jobbers, C &F agents etc, facilitate the smooth movement of
goods and services from the manufacturers to the ultimate consumers.

As the marketing landscape has changed over the years, the roles and responsibilities of
intermediaries has also changed. Some traditional channels have graduated to modern retail
concepts like hypermarkets, chain stores etc. Internet technology has been a great disrupter as
well as enabler in better distribution.

Supply Chain management has evolved as a fully fledged discipline so also Customer
Relationship Management, Transport Management are the evolving disciplines in these
changing times.
35
12.14 SELF-ASSESSMENT TEST
1. How does distribution add value to the marketing efforts? Take the case of any FMCG
company and explain the distribution network in urban as well as rural areas.

2. Describe the importance of wholesalers in the distribution process. Explain with the help of
suitable examples from the textile industry.

3. “The retailing landscape has changed drastically with the advent of digital age”. Elucidate
citing relevant examples.

4. What are the challenges and opportunities faced by distributors in developing countries? How
is the distribution system in India different from any developed nation like the USA?

5. Describe the concept of channel systems. Different channel systems can exist within the same
company leading to Channel conflict. Explain the causes of channel conflict and suggest ways
of resolution of such conflicts with suitable examples.

6. What kind of distribution channel (direct or indirect) would you recommend for each of these
products and why?

a) Health Drink
b) A new, exclusive, premium priced range of sanitary fittings (such as wash basins, bath
tubs, etc.).

c) Textile machinery
d) Branded spices
e) Industrial lubricant.

wishes
7. A new toy manufacturing company is planning to launch its toys in the market and
selecting
to appoint retail outlets in all the major towns. What should be the criteria for
appropriate outlets? Specify the distinct attributes or features that the
company should look
for in the retail outlets.

36
12.15 FURTHER READINGS

1. Richard R Still, Edward W Cundiff, Norman A P Govoni, Sales and Distribution

Management, 6 th edition, Pearson, 2017.

2. Krishna K Havaldar and Vasant M Cavale, Sales and Distribution Management, Tata
McGraw Hill, 2nd Edition, 2011.
3. Ramendra Singh: sales and distribution management: a practice-based approach, Vikas
Publication, 2016.

37