We have mentioned the three distribution alternatives in the preceding sections, namely intensive , selective and exclusive .We shall now discuss them in a greater detail here.
This alternative involves all the possible outlets that can be used to distribute the product .This particularly useful in products like soft drinks where distribution is a key success factor. Here, the soft drink firms distribute their brands through multiple outlets to ensure their availability at an armís length to the customer. Hence, , on the one hand these brands are available through countless soft drink stalls, kiosks, sweet marts, tea shops, etc. Any possible outlet where the customer is expected to visit is also an outlet for the soft drink.
This alternative is the middle path approach to distribution .Here, the firm selects some outlets to distribute its products .This alternative helps focus the selling effort of the manufacturing firms on a few outlets rather than dissipating it over countless marginal ones .It also enables the firm to establish good working relationship with the channel members Selective distribution can help the manufacturer gain optimum market coverage and more control but at a lesser cost than intensive distribution .Both the existing and new firms are known to use this alternative.
When the firm distributes its brand through just one or two major outlets in the market who exclusively deal in it and not competing brands, we say that the firm is using an exclusive distribution strategy. This is a common form of distribution in products and brands that seek high prestigious image .Typical examples are of designer wares, major domestic appliances and even automobiles .By granting exclusive distribution rights, the manufacturer hopes to have control over the intermediaries price, promotion, credit inventory and service policies. the firm also hopes to get the benefit of aggressive selling by such outlets.
TERMS AND RESPONSIBILITIES OF INTERMEDIARIES
The commercial policy of the manufacturer often lays down the terms and conditions for intermediaries and their responsibilities .Generally these include price policies , mode or terms of payment , returns policy , territorial rights, etc.
1. Price Policy: This out the price at which middlemen will get the product from the manufactures and the discount schedule. It also mentions the price at which middlemen may sell the product. Generally, the company is required by law to stipulate the maximum retail price. The middlemen have to ensure that every one involved gets fair and equitable deal.
2. Payments Terms: The manufacturing firm stipulates mode or payment terms. For example, some firms ask middlemen to put a deposit with them from which the former adjusts the price of the goods sent to the latter.The middlemen has to then replenish the deposit by the required amount immediately , failing which he loses the interest on deposit .Some other firms insist payment to reach them on the day the intermediary takes physical possession of the goods. Others may accept a letter of credit as a payment mode .Credit policy of the manufacturer stipulates the period in which it must get paid.
3. Returns Policy: This indicates the warranty that the manufacturer extends to the intermediary .Some firms offer spot replacement for any of its products returned by the customer .Others take time to settle these claims .A distribution policy should lay down the clauses related to returns and refunds precisely outlining the responsibility of each party-manufacturer and intermediary .Failure to do so can lead to a perpetual conflict between the manufacturer and the intermediary.
4. Territorial Rights: The manufacturer should spell out the territorial jurisdiction of each of the distributor to avoid any territory jumping. This will also help in the distributorís evaluation .
5. Mutual Services and Responsibilities : These should be spelt out clearly, particularly in the case of franchised and exclusive agency channels. For example, Parle (Exports) have laid down the role of each of its quality control, distribution , promotion and selling. Parle gives to these franchises promotional inputs and support, training and other administration support. Such kind of a manual helps in avoiding conflicts.
, New Delhi
Dear all, Can you please help in finding out role and responsibilities of operations manager. Regards Ranu Jain
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