14-15 dist alt
-
Upload
saurabhanand -
Category
Documents
-
view
212 -
download
0
Transcript of 14-15 dist alt
-
8/9/2019 14-15 dist alt
1/59
Session 14-15 Various Distribution Alternatives
-
8/9/2019 14-15 dist alt
2/59
-
8/9/2019 14-15 dist alt
3/59
Distribution-Scope StrategiesIntensive distribution
Distribute from as many outlets aspossible to provide locationconvenience
Selective distribution Appoint several but not all retailers
Exclusive DistributionLimiting the distribution to only oneintermediary in the territory
-
8/9/2019 14-15 dist alt
4/59
Approaches to Channel BasedDistribution
Intensive --essential tolow involvement goods
Selective --desire tomaintain imageExclusive --very highprestige needed orvery high servicerequirements
Admission By
INVITATIONONLY
-
8/9/2019 14-15 dist alt
5/59
M ass/ Intensive distribution
D istribute from as many outletsas possible to provide locationconvenience
-
8/9/2019 14-15 dist alt
6/59
Intensive Distribution
CharacteristicsLow value, repeat purchase itemsLow involvement products, least effortby customersBiggest imbalance between theproduction levels and consumptionlevelsLow shelf life in many casesMaximum no. of intermediate players
-
8/9/2019 14-15 dist alt
7/59
Example of Intensive
DistributionCommodities, Food & grocery,
stationery, mobile prepaid cards etc.Cigarettes, M atches, Tobacco productsCold drinks
Pharmaceuticals
-
8/9/2019 14-15 dist alt
8/59
Advantages:Increased sales, wider customerrecognition, and impulse buying
D isadvantages:Characteristically low price and low-marginproducts that require a fast turnoverD ifficult to control large number of retailersAverage retailer order size very small (shopsize & money constraints)
Intensive Distribution
-
8/9/2019 14-15 dist alt
9/59
W hich are the largest selling
FM CG brands in India?Gold Flake 3500 crore plusW ills 2000 crore plus
Pepsi 2000 croreThums UpBritanniaParleColgateCoca-ColaW heelNirma
Source: Brand Equity research
-
8/9/2019 14-15 dist alt
10/59
-
8/9/2019 14-15 dist alt
11/59
Typical F M CG distribution
( Intensive distribution)
Distributor 2
Factory
Depot / C&F
Distributor W holesalers Retailers
Consumers
Distributor 3
Factory
Depot / C&F
Distributor W holesalers Retailers
Consumers
Distributor 3
-
8/9/2019 14-15 dist alt
12/59
H ost of IntermediariesBetween D istributor to Consumer,there can be wholesalers, sub-wholesalers, commission agents,store based retailers, patri-wallas,mobile retailers (push carts and
pheri-wallas) etc.
-
8/9/2019 14-15 dist alt
13/59
Life is not so simple
Potential conflict areasFactory
Depot / C&F
Distributor W holesalers Retailers
Consumers
Distributor 3
Distributor 2
-
8/9/2019 14-15 dist alt
14/59
Another Conflict Factory
Depot / C&F
Distributor W holesalers Retailers
Consumers
Distributor 3
Distributor 2
-
8/9/2019 14-15 dist alt
15/59
M ore ConfusionFactory
Depot / C&F
Distributor W holesalers Retailers
Consumers
Distributor 3
Distributor 2
-
8/9/2019 14-15 dist alt
16/59
-
8/9/2019 14-15 dist alt
17/59
Collapsing outbound supply chainEarlier Carpet bombing technique
M anufacturer M other godown CFA
Retailer W holesaler Distributor
Consumer
-
8/9/2019 14-15 dist alt
18/59
Collapsing outbound supply chainNew trend P recision bombingtechnique
M anufacturer Retailers w/h or DCs
Consumer Retail stores
-
8/9/2019 14-15 dist alt
19/59
Intensive Distribution a specific
caseQ . Which is the most perishablecommodity today?
-
8/9/2019 14-15 dist alt
20/59
-
8/9/2019 14-15 dist alt
21/59
Typical newspaper distribution
The printed newspaper is dispatched tovarious distributors across the countrythrough transportation.Transportation is normally throughprivate contract carriers within local
area, public transport in case of longerdistances and through couriers in othercases.
-
8/9/2019 14-15 dist alt
22/59
Contd..The newspaper distributor has solerights to distribute the newspaperin his area. His revenue is based ona commission on the sale of everynewspaper.
He achieves circulation throughsalesmen appointed and salariedby him, who in turn pass it on to
hawkers.
-
8/9/2019 14-15 dist alt
23/59
ContdHawkers, vendors and book stallowners are the last link of thesupply chain before newspaperreaches readers.The hawkers remuneration isbased on a commission system andis the highest in the entire supplychain.
-
8/9/2019 14-15 dist alt
24/59
O ptimization model
The entire distribution network can besegregated into various hawker points and anoptimized route proposed for each of them,
based on the vehicle capacity constraints.
Starting at the first hawker, newspaperrequirements are accumulated until the vehiclelimit is reached. At this hawker, another
vehicle route is begun. The procedure iscontinued until all the hawkers are included insome route.
-
8/9/2019 14-15 dist alt
25/59
-
8/9/2019 14-15 dist alt
26/59
Production scheduleThe production schedule can be deduced byarranging the routes in a sequence that willensure delivery of all the newspapers by the
prescribed time.This sequence is developed by arranging theroutes in descending order of the total routelength distance from the production facility tothe last hawker.
Usually, newspapers for the farthest locationsare produced and shipped first since the totaldelivery time is greater.D ark zone -> City edition -> Metro edition ->local supplements
-
8/9/2019 14-15 dist alt
27/59
H ULA distribution giant
-
8/9/2019 14-15 dist alt
28/59
-
8/9/2019 14-15 dist alt
29/59
-
8/9/2019 14-15 dist alt
30/59
-
8/9/2019 14-15 dist alt
31/59
-
8/9/2019 14-15 dist alt
32/59
-
8/9/2019 14-15 dist alt
33/59
Selective distribution
Appoint several but not all retailers
-
8/9/2019 14-15 dist alt
34/59
Selective DistributionCharacteristics
Somewhat expensive, infrequent purchase
items (life usually more than 6 months)Relatively high involvement products, moreeffort by customers (can go 3-5 kms)Less of impulse purchaseM ore impact of store image & atmosphericsLower level of distribution
-
8/9/2019 14-15 dist alt
35/59
Products Distributed through
Selective DistributionConsumer Durables, M obiles, Apparels,W atches, Footwear, Sport goods, Toys,Kitchenware, Jewelry, etc.
-
8/9/2019 14-15 dist alt
36/59
Selective Distribution
Advantages:M ore control and less cost than intensive
distributionConcentrate effort on few productive outletsSelected firms capable of carrying full product line and provide the required service
-
8/9/2019 14-15 dist alt
37/59
Selective Distribution (cont d)Disadvantages:
M ay not cover the market adequatelyDifficult to select dealers (retailers) that can match your requirement and goals
-
8/9/2019 14-15 dist alt
38/59
Typical Consumer Durables
distribution
Sub dealer
Factory
Distribution Center
Dealer1 Customer
Dealer 2
Distributor 1 Dealers insmall towns Customer
-
8/9/2019 14-15 dist alt
39/59
-
8/9/2019 14-15 dist alt
40/59
The biggest selective
distribution model in IndiaLGT/O 14000 crore+43 branches, 150 area offices, 10000+channel partnersNo. 1 or 2 in most of its product categories:
AC 30%, CTV 27%, W ashing m/c 35%, Refrigerators 30%, M icrowaves
40%
-
8/9/2019 14-15 dist alt
41/59
New distribution networkFactory
Distribution Center
Dealer1 Customer
Dealer 2
Distributor 1 Dealers insmall towns Customer
Sub dealer
Exclusiveoutlet
-
8/9/2019 14-15 dist alt
42/59
New developments: jumping
on the retailing bandwagonTo have better control on their brandand customer interaction,manufacturers started retailing activitiesRaymonds shop, Bata StoresExclusive Brand outlets; either owned
or franchisedEBOs are in addition to the regularM BOs
-
8/9/2019 14-15 dist alt
43/59
A special case of selective
distribution Film distributionThe production house (like Yash Raj Banner)sells the territorial rights to film distributors
(like Shringar Films).The price is decided by the cost of the project and the trade potential of the movie.Retailers are the exhibitors (theatres)
The spectrum has organized chains like PVR& Imax at one end to single screen theatresat the other.
-
8/9/2019 14-15 dist alt
44/59
W hy selective distribution?Not feasible to release a movie on all thescreens of a market
Neither it is desirableM ultiplexes have clearly sliced the market intoclasses & masses.Films are now produced with this
segmentation in mind right at the onset.Only universally potential movies findacceptance by all kind of exhibitors.
-
8/9/2019 14-15 dist alt
45/59
-
8/9/2019 14-15 dist alt
46/59
Exclusive Distribution
Limiting the distribution to only oneintermediary in the territory.
Depending on the market strength,the territory can be one entire state,town or a major region of a city.
-
8/9/2019 14-15 dist alt
47/59
-
8/9/2019 14-15 dist alt
48/59
Examples of Exclusive
DistributionTwo-wheelers, cars, Luxury goods,home furnishings & carpets, etc.
-
8/9/2019 14-15 dist alt
49/59
Exclusive Distribution Advantages
M aximize control over service level/output Enhance product s image & allow highermarkupsPromotes dealers loyalty, better
forecasting, better inventory andmerchandising controlRestricts resellers from carryingcompeting brands
-
8/9/2019 14-15 dist alt
50/59
-
8/9/2019 14-15 dist alt
51/59
Typical Auto Industry
distribution
Customer
M anufacturing
Location
Dealer1
Dealer 3
Dealer 2
-
8/9/2019 14-15 dist alt
52/59
DealersPop & potential: the basic criteria forselectionSpaced out within a big cityOnly 1 in a small cityExclusive Brand Outlets OnlyH ave to give lot of customer education
Product presentation, demonstration is criticalCustomer handling by sales person is key After sales service is a must
-
8/9/2019 14-15 dist alt
53/59
After Sales Service network in
auto industryService network has to be moredistributed than sales networkM ostly through Authorized ServiceStationsRecently, Companies started realizing
service as a key differentiatorM aruti itself opened service stations -M SM
W hy should service be more
-
8/9/2019 14-15 dist alt
54/59
W hy should service be moredistributed than sales for auto
industry ?Sales one time purchase activity by thecustomer
H igh involvement product; more effort by thecustomerService more frequent and routineEmergency repairs, accidents
Bigger earning potential for the companyCustomer would like service station to be asclose to him as possible.
-
8/9/2019 14-15 dist alt
55/59
Does Auto Industry require
M ass Distribution? Yes For its spare parts.Spare Parts are relatively low value, repeat purchase products.They are sold through car spare parts dealersin specific markets apart from the authorizedservice stations.Small repair garages, workshops andmechanics purchase them from these outlets.
-
8/9/2019 14-15 dist alt
56/59
Taking exclusivity to a new levelW orld leader in luxury, LV MH (Louis VuittonM ot H ennessy)Louis Vuitton possesses a unique portfolio of over 60 prestigious brands . The Group isactive in five different sectors:
W ines & SpiritsFashion & Leather Goods
Perfumes & CosmeticsW atches & JewelrySelective retailing
-
8/9/2019 14-15 dist alt
57/59
LVMH The BrandsLouis VuittonKenzoGivenchyFendi
Thomas PinkDonna KaranM ont Blanc etc.
-
8/9/2019 14-15 dist alt
58/59
-
8/9/2019 14-15 dist alt
59/59
The emerging scenario A few of the existing malls in India fulfilltheir requirements Select Citywalk.Some super-luxury malls have beendeveloped DLF EmporioLVMH has signed-up for their stores inthese.H as also a store at UB W orld, Bangalore