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Distribution Channel : 

Distribution Channel A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption. Channel decisions affect other marketing decisions involve long-term commitments

Channel and Marketing Decision : 

Channel and Marketing Decision Pull Strategy The manufacturer uses its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end users. -low brand loyalty -product benefit well understood Push Strategy the manufactured using advertising and sales promotion to induce consumers to ask for the product. -High brand loyalty -High involvement

Designing the Marketing Channel : 

Designing the Marketing Channel

Physical Distribution - Nature and Importance : 

Physical Distribution - Nature and Importance Physical distribution: Moving tangible products through distribution channels Physical distribution (or logistics) consists of all activities involved in moving the right amount of the right products to the right place at the right time.

Tasks in Physical Distribution Management : 

Tasks in Physical Distribution Management Physical distribution refers to the actual physical flow of products In contrast, physical distribution management is the development and operation of processes resulting in the effective and efficient physical flow of products Effective physical distribution management requires careful attention to five interrelated activities: Order processing Inventory control Inventory location and warehousing Materials handling

Order Processing : 

Order Processing The starting point in a physical distribution system is order processing, which is a set of procedures for receiving, handling, and filling orders promptly and accurately Electronic data interchange (EDI): Between customer and supplier orders, invoices, and other business functions are transmitted by computer Originally, EDI required a direct computer link between supplier and customer, now it is being conducted via the Internet EDI can trim the cost of order processing significantly, which in turn may reduce purchase prices

Inventory Control : 

Inventory Control The goal of inventory control is to satisfy the order-fulfillment expectations of customers while minimizing both the investment and fluctuations in inventories Just-in-Time: JIT combines inventory control, purchasing, and production scheduling Applying JIT, a firm buys in small quantities that arrive just in time for production and then it produces in quantities just in time for sale

Inventory Location and Warehousing : 

Management must make critical decisions about the size, location, and transportation of inventories These areas are interrelated, often in complex ways One key consideration in managing inventories is warehousing, which embraces a range of functions, such as assembling, dividing, and storing products and preparing them for reshipping Inventory Location and Warehousing

Materials Handling : 

Materials Handling Selecting the proper equipment to physically handle products, including the warehouse building itself, is the materials handling subsystem of physical distribution management Equipment that is well matched to the task can minimize losses from breakage, spoilage, and theft Efficient equipment can reduce handling costs as well as time required for handling

Channel of DistributionThe Middlemen : 

Channel of DistributionThe Middlemen Intermediaries- (middlemen): People involved in sales transactions that move products from the manufacturer to the final user. Reduces number of contacts required to reach the final user

The Wholesaler : 

The Wholesaler Businesses that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses. Take title to goods they buy for resale. wholesalers who manage inventory and merchandising for retailers by counting stock, filling it in when needed and maintaining store displays. own the goods they sell but do not physically handle the actual products.

The Retailer : 

The Retailer Sell goods to final consumer for personal use. sell goods to the customer from their own physical stores. Buy products from manufacturers or wholesalers. Non-store retailers Takes title for goods. E-tailing-online retailing; selling products over the Internet

Types of channels: : 

Types of channels: Non integrated integrated direct indirect horizontal vertical

Direct channels: : 

Direct channels: Zero level/direct marketing: manufacturer consumer Selling products at the production site Having a sales force call on consumers Using catalogs or ads to generate sales Using telemarketing Using the internet to make online sales

One level/indirect channel : 

One level/indirect channel manufacturer retailer consumer

Two level: : 

Two level: manufacturer wholesaler retailer consumer Most commonly used for staple goods, which are items that are always carried in stock and whose styles do not change frequently

3-level: : 

3-level: manufacturer wholesaler jobber retailer consumer


VERTICAL MARKETING SYSTEM: ALL the channel members act as part of a Unified system in one of them owing the other so have the power to make them all cooperate. Three types of VMS: Corporate, administered, contractual


TYPES OF VMS Corporate vms: stages from production to distribution are combine under single ownership. Administrative vms: coordinates stages of production and distribution through size n power of one member. Contractual vms: consist of independent firms at different level of production and distr.

Horizontal marketing system:symbiotic marketing : 

Horizontal marketing system:symbiotic marketing 2 or more unrelated co’s together their resources or programs to exploit an emerging market opportunity E.G. Supermarkets have arrangements with local banks to offer in store banking Tie-up b/w TVS whirlpool,onida to market washing machines


MULTICHANNEL MARKETING SYSTEMS A system in which a producer uses more than one channel of distribution. Producers use their own retail stores as well as sell through other wholesalers and retailers are known as multichannel retailers. Multichannel retailers are also called Merchandising Conglomerates.

Uses of multichannel marketing system : 

Uses of multichannel marketing system Cutting costs; Developing deeper relationships with customers; Increasing sales; Reducing risks.

Mail order : 

Mail order Mail order is a term which describes the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant using some remote methods such as telephone call or web site. Finally the products are delivered to the customer to their given address.

Transportation : 

Transportation Transport or transportation is the movement of people and goods from one location to another. Transport is performed by modes, such as air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles, and operations.

Warehousing : 

Warehousing A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They usually have loading docks to load and unload goods from trucks. Sometimes warehouses load and unload goods directly from railways, airports, or seaports.

Coca Cola India's Thirst for the Rural Market : 

Coca Cola India's Thirst for the Rural Market "We want to be the Hindustan Lever of the Indian beverage business." - Sanjeev Gupta, Deputy President, Coca-Cola India in May 2002.


WHAT THE CASE IS ALL ABOUT The rural marketing initiatives undertaken by the cola major - Coca Cola in India. The changes brought about by Coca Cola in distribution, pricing and advertising to make inroads into rural India. The concept of rural marketing and its characteristics in a developing country like India.

Rural Market Scenario : 

Rural Market Scenario ‘Rural’ – 75% population engaged in agriculture related activity. According to industry estimates that 70% of population engaged in agricultural activity..

Key to success in Rural India…. : 

Key to success in Rural India…. Physical Distribution Channel Management Promotion and Marketing Communication

'Thanda' Goes Rural : 

'Thanda' Goes Rural In 2002, CCI launched a new advertisement campaign: Featuring Bollywood star Aamir Khan. Tagline – ‘Thanda matlab Coca-Cola’ Targeted at rural, semi urban customers. Idea was to position Coca-Cola as a generic brand for cold drinks. CCI began focusing on the rural market in the early 2000s in order to increase volumes.

The Decision was not surprising… : 

The Decision was not surprising… Flat sales in urban markets. Huge size of untapped rural market. Improvement in income and spending power of rural people. Better physical distribution channel. Aspirations for urban lifestyle. Increased awareness due to television reach.




AVAILABILITYY Focused on strengthening its distribution network Capacity expansion – 25 prod. lines and doubled bottle capacity. Unique and different distribution strategy – hub & spoke distribution. Coverage of 1,58,342 villages by Aug. 2003 (81,383 in 2001). 2,00,000 refrigerators to rural retailers.

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AFFORDABILITY In 2001, a Survey revealed that 300 ml bottles were not popular with rural and semi-urban residents. a) Two persons often shared a 300 ml bottle. b) Price of Rs 10 considered very high. In 2002,CCI launched 200 ml bottles priced at Rs 5, named chota coke. a) So that the product is affordable for rural consumer. b)The price of Rs 5 also made it competitive against local brands.


ACCEPTABILITY To make the product acceptable ,CCI utilized extensive marketing in the mass media as well as through outdoor advertising. MASS MEDIA Launched television commercials targeted at rural consumers. Increased its ad spend on Doordarshan to reach more rural consumers. In 2002, with the launch of chota coke, it bought out commercial featuring Aamir khan ,which was shot in rural settings.


MASS MEDIA (CONTD) In 2003, CCI came up with new commercial featuring Aamir Khan, to further strengthen Coca-Cola’s brand image among rural consumers. Commercial aimed at making Coke a generic name for Thanda. Between March and September 2003,CCI launched three commercials with the tagline thanda matlab coca-cola. The three commercials succeeded in associating coke with thanda as well as connected rural consumers with coke. CCI also launched print advertisements in severel regional newspapers.


OUTDOOR ADVERTISING Hoardings in villages Painted the name coca-cola on the compounds of residences in villages. Participated in weekly mandies, annual haats and fairs which are major source of business in rural India.

Future Prospects of CCI : 

Future Prospects of CCI CCI’s volume from rural market increased to 35% in 2003. Focus on rural penetration. Target of reaching 0.1 million more villages. Biggest challenge is to increase the market share. Diversification – nimbu pani, fruit juice.

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