ROLE OF DISTRIBUTION CHANNEL IN FMCG
•Distribution channel (marketing channel)
Distribution (or placement) is one of the four aspects of marketing. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured, it may be warehoused or hipped to the next echelon in the supply chain, typically either a distributor, retailer or consumer. The other three parts of the marketing mix are product management, pricing, and promotion. Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user. Channels A number of alternate 'channels' of distribution may be Selling direct, such as via mail order, Internet and telephone sales Agent, who typically sells direct on behalf of the producer Distributor, who sells to retailers. Retailer who sells to end customers Advertisement typically used for consumption goods Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels
Distribution channels can thus have a number of levels. Kot ler defined the simplest level,that of direct contact with no intermediaries involved, as the 'zero-level' channel. The next level, the 'one-level' channel, features just one intermediary; in consumer goods aretailer, for industrial goods a distributor. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels.In large markets (such as larger countries) a second level, a wholesaler for example, mainly used to extend distribution to the large number of small, neighborhood retailers.In Japan the chain of distribution is often complex and further levels are used, even for thesimplest of consumer goods.In Bangladesh Telecom Operators are using different Chains of Distribution, especially'second level'.In IT and Telecom industry levels are named "tiers". A one tier channel means that vendorsIT product manufacturers (or software publishers) work directly with the dealers. A onetier / two tier channel means that vendors work directly with dealers and with distributors who sell to dealers. But the most important is the distributor or wholesaler.
The internal market
Many of the marketing principles and techniques which are applied to the externalcustomers of an organization can be just as effectively applied to each subsidiary's, or eachdepartment's, 'internal' customers.In some parts of certain organizations this may in fact be formalized, as goods aretransferred between separate parts of the organization at a `transfer price'. To all intents and purposes, with the possible exception of the pricing mechanism itself, this process can andshould be viewed as a normal buyer-seller relationship. The fact that this is a captivemarket, resulting in a `monopoly price', should not discourage the participants fromemploying marketing techniques.Less obvious, but just as practical, is the use of `marketing' by service and administrativedepartments; to optimize their contribution to their `customers' (the rest of the organizationin general, and those parts of it which deal directly with them in particular). In all of this, thelessons of the non-profit organizations, in dealing with their clients, offer a very useful parallel. Channel Decisions
Channel strategyProduct (or service)- Cost- Consumer location.
The channel decision is very important. In theory at least, there is a form of trade-off: thecost of using intermediaries to achieve wider distribution is supposedly lower....