Few DSCM Notes Part 2

[sagar sankhe]

Random information which can help you in possible Question 1 of 30 mks: Talks about take a product form Corporate marketing strategy (Product, Price, Promotion) and form Distribution strategy

Writing generic answer (adaptable to product of your choice)

Efficient distribution provides place (wherever i go), time (whenever i want) and possession(buy and leave) flexibility to the consumer

Company can look for one of below distribution network

> Direct company to consumer (e..g Online retail .. flipkart, ebay, rediffshopping)

> C&FA / distribution center to distributors to retailers (e.g. 

> Distributor to wholesaler to retailer 

Choosing a channel member

> Company own sales team

> C&FAs and CSAs (C&FA receive consignments from factories & shipout desired assortments to distributors, work on contract basis, CSAs spread the product but remits proceeds after sale)

> Distributors, dealers, stockists, value-added re-sellers (see at #end)

> Agents and brokers (effective but costly, bring suppliers and buyers together in exchange, mostly seen only in B2B sales)

> Franchisees (uses your trademark and distribute the your goods and pays you a fee, sale income goes in his pocket, royalty comes to your pocket)

> Electronic channels (direct delivery to consumer, time consuming but least risky)

> Wholesalers (deal with many in bulk and sell to other resellers i.e. retailers or other wholesaler, low margin is compensated by high volume deals)

> Retailers (they sell products directly to final consumers, low volume and high margins, high risk)

#end:

Distributor: is a wholesaler nominated by a company to exclusively re-distribute the company products to its customers in a designated territory (not dealing in competitor’s product

Dealers: is a distributor with undefined territory and stocking competitors products as well 

Stockist: does not re-distribute the stocks, sells from his premises

VAR (Value Added Resellers): adds features or services to an existing product, (value addition) then resells it as an integrated product 

Type of membership/distribution intensity:

> Intensive distribution: Large number of resellers stock the 'product' (essential products e.g. pharma to ensure wide availability)

> Selective distribution: Suitable' resellers stock the product (e.g. Tanishq)

> Exclusive distribution: Specially selected resellers or authorized dealers(typically only one per geographical area) are allowed to sell the 'product' (e.g. exclusive Titan watches outlet)

Steps for designing the distribution strategy are:

> Defining customer service levels (customer expectation and competition)

> Distribution objectives and steps (threshold time, place, possession utility freedom to cust)

> Structure of the network required (Budget, cost, which channel member to use?)

> Policy and procedure to be followed (Code of conduct and handling/servicing guidelines)

> Define Key performance indicators (profitability, sales , number of returns, damage to goods in transit)

> State Critical success factors (fine tune for success e.g. clear, transparent and unambiguous policies and procedures)

Few additional actions:

> Periodic Sales forecasts

> Dispatch plans

> Market coverage beat plans

> Journey plans for service engineers

> Collection of sales proceeds

> Carrying out promotional activities

Motivation to channel members includes:

> Capacity building programs

> Training

> Promotions support

> Marketing research support

> Working with company personnel

> Incentives

Example: 

Dabur 

Thanks & Regards,
Sagar Sankhe

Sagar Ramkrishna Sankhe

Ex-Employee: TATA CONSULTANCY SERVICES. (2009-2012)

MMS 2012-14

Consultancy & Entrepreneurship Committees Member at
Sydenham Institute of Management Studies, Research & Entrepreneurship Education (SIMSREE), Mumbai.
Contact No: 9773682257