Q) What do you understand by term distribution strategy?

what are the factors we will

consider in designing strategy distribution system. Suppose you have to market any seasonal
products what distribution strategy will you follow
Ans)
A plan created by the management of a manufacturing business that specifies how the firm intends to
transfer its products to intermediaries, retailers and end consumers. Larger companies involved in
making products will usually also put together a detailed production distribution strategy to guide its
entry into its intended market.
The factors we will consider in designing strategy distribution system are as follows-:

1) Centralization v s. RegionalizationIn distribution network planning, there is a well-established

relationship between the number of distribution points, transportation costs and customer service
targets.
In a graphical sense, the point at which these three entities merge is the optimum balance of
facility and transportation costs to develop a low-cost, high service distribution network. Norm ally, as
distribution networks become more centralized, so do the internal support structures such as faci lity
management, order entry, customer service and data processing. Depending on the degree of
centralization achieved in support staffs, it is n ot uncommon to see cost savings of 50 percent or higher
over decentralized networks. However, service levels, limitations on total facility size, risk mitigation and
throughput peaks must be factored into the decision matrix.

2)EnergyAny significant shift i n the cost of energyelectricity, fuel, etc.could have an impact on
operating costs and, therefore, on distribution. Many distribution projects that are otherwise viable fail
once the cost of energy becomes a factor.
3) FlexibilityIn today's unpredictable business climate, flexibility is a key to continued success for
some and survival for others. When designing a distribution facility, specifying versatile equipment is a
critical requirement. The latest technology may look nice at start up, but if it can't keep pace with
unpredictable events, it is simply a waste of money
.
4) Global MarketplaceIn the ever-changing supply chain, global impact must always be considered.
This could be as minor as a domestic customer wanting direct shipments to an international location, or
as major as an acquisition by a global company or addition of a key global account. Successful
distribution operations are ready for this type of change. Facilities may need to accommodate inbound
or outbound airfreight or ocean freight containers. Customer service functions may need to operate in
24-hour mode to assist customers in all time zones.

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5) Government InvolvementJust as government involvement has an impact on distribution,

distribution leadership has an obligation to be involved and aware of legislation that involves their
industry. Many decisions are made daily at a local, state, and federal level that impact distribution
operations. Taxes, labor regulations, transportation restrictions and infrastructure decisions are
continually up for review and discussion at every level of government. Without proper input,
uninformed decisions often have a dramatic effect on the distribution community.

6) Information SystemsIn today's e-enabled world, timely and accurate information is a requirement.
The days of keypunching in daily distribution activity and nightly updates to host financial systems are
becoming a distant memory for successful distribution operations. Today's reality is that distribution
execution systems must be in Real-time., Paperless and Standardized:
7) PeopleSuccess demands a team-based, participatory organizational culture and a total
dedication to customer satisfaction. There are many ways to achieve this, ranging from simple solutions
such as employee celebration days, employee suggestion programs, and other simple programs to more
structured approaches such as revised organizational designs, compensation/incentive/bonus plans, and
other processes that directly tie the distribution associates on the floor to satisfied customers.

8) PriceWhile service and quality are key factors in selecting a distribution partner, for many
companies, decisions still comes down to price. Successful past relationships are no longer a good
indicator of the future.
9) AccountabilityA successful distribution operation must have accountability. Accountability is
made possible by effective leadership, clear communications and efficient systems and equipment to
enable productive operations and a fulfilling work environment. Accountability requires that leadership
make difficult decisions while maintaining the commitment of the organization.
10) Reverse LogisticsHow to handle the products that are coming back into the operation as well as
any returnable packaging that must be accounted for on a regular basis is a challenge. The decision on
whether to accept the product, whether a refused shipment, an authorized customer return, or an
unexpected return must be planned for and communicated with the distribution operation as well as
the receiving and handling process for the product or chaos will likely ensue.

11) Third Party Logistics (3PL)A growing number of companies are turning to 3PL organizations to
handle the customer fulfillment portion of their supply chain. Companies that are accustomed to true
partnering with customers and suppliers have less trouble migrating to the 3PL world and achieving the
potential cost savings. The key steps are to conduct a comprehensive search for the ri ght 3PL vendor,
thoroughly review cost proposals and contracts to ensure there is financial benefit, and work with the
3PL to make their operation is a seamless extension of your company. This may involve shared
management, integrated execution systems and a unified appearance to partners and customers

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The best way to Market Your Seasonal Business is During the Off-Season and hit the market at the peak
season. so it would be advisable to perform you your work as much as you can during off seasons so
that would be in loss of time but make sure that for that you would not have to pay any extra amount.
If I have to market any seasonal products the following distribution strategy we will consider Strategies
for distributing the products or services should have the following options:
1.

Dealing directly with your customers which includes

retailing,
selling through the internet,
mail order

2.

Using a specialist intermediary which will include

agent,
specialist outlet,
catalogue company,
retailer

3. Use a wholesaler in order to reduce administration so that the proper product would be
distributed and also the cost would be in our budget

Q) If you are an area sales manager and you have to market FMCG products what factors will
you consider in selecting the channel members for the distribution of FMCG products. Also
discuss the factors on the basis of which you will compensating the channel members hired by
you.
The SCPCA method can be used to evaluate channel members of FMCG products
Sales (S):

How much sales each channel member can give within a cetain time frame

Cost(C):

How much cost would be incurred for each channel?

Profitability(P):

Which channel can give better profitability to the company?

Control(C):

Whether company can have better control over its channel members or not.

Adaptability (A):

Whether the channel alternatives are flexible enough to any changes or not. The
channel meeting the objectives of the company is selected.

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The following factors are to be consider for the compensation on employees hired by me

Qualifications (education, experience, unique skills)

Job content and individual performance contribution
The position of the employees pay in the market pay range
Employees pay relative to similar jobs
Employees pay relative to average market salary for similar jobs
Pay history
Length of total State and University service
Differential Pay Adjustments

Apart from the above mentioned criteria a combination of external and internal factors can influence,
directly or indirectly, the rates at which employees are paid. Through their interaction these factors
constitute the wage mix, as shown below.
1. External Factors
The major external factors that influence wage rates include labor market conditions, area wage rates,
cost of living, legal requirements, and collective bargaining if the employer is unionized.
A. Labor Market Conditions
The labor market reflects the forces of supply and demand for qualified labor within an area. These
forces help to influence the wage rates required to recruit or retain competent employees.
B. Area Wage Rates
A formal wage structure should provide rates that are in line with those being paid by other employers
for comparable jobs within the area. Data pertaining to area wage rates may be obtained from local
wage surveys. Wage-survey data may be obtained from a variety of sources, often available on the
Internet, including the American Management Association, Administrative Management Society., etc
C. Cost of Living
Because of inflation, compensation rates have had to be adjusted upward periodically to help
employees maintain their purchasing power. This can be achieved through escalator clauses found in
various labor agreements. These clauses provide for quarterly cost-of-living adjustments (COLA) in
wages based on changes in the consumer price index (CPI). The CPI is a measure of the average change
in prices over time in a fixed market basket of goods and services.
D. Collective Bargaining
One of the primary functions of a labor union is to bargain collectively over conditions of employment,
the most important of which is compensation. The unions goal in each new agreement is to achieve
increases in real wages--wage increases larger than the increase in the CPI--thereby improving the

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purchasing power and standard of living of its members. This goal includes gaining wage settlements
that equal if not exceed the pattern established by other unions within the area.

2. Internal Factors
The internal factors that influence wage rates are the employer's compensation policy, the worth of a
job, an employee's relative worth in meeting job requirements, and an employer's ability to pay.
A. Employers Compensation Policy
The compensation objectives of two organizations can be quite different. One might strive to be an
industry pay leader, while another seeks to be wage-competitive by paying employees at the seventyfifth percentile of their competitors wages. Both employers strive to promote a compensation policy
that is fair and competitive.
All employers will establish numerous compensation objectives that affect the pay employees receive.
As a minimum, both large and small employers should set pay policies reflecting:

the internal wage relationship among jobs and skill levels.

the external competition or an employers pay position relative to what competitors are paying.
a policy of rewarding employee performance.
administration decisions concerning elements of the pay system such as overtime premiums,
payment periods, short-term or long-term incentives.

B. Worth of a Job
Organizations without a formal compensation program generally base the worth of jobs on the
subjective opinions of people familiar with the jobs. In such instances, pay rates may be influenced
heavily by the labor market or, in the case of unionized employers, by collective bargaining.
Organizations with formal compensation programs, however, are more likely to rely on a system of job
eva1uation to aid in rate determination. Even when rates are subject to collective bargaining, job
evaluation can assist the organization in maintaining some degree of control over its wage structure.
C. Employees Relative Worth
It is common practice in some industries, notably construction, for unions to negotiate a single rate for
jobs in a particular occupation. This egalitarian practice is based on the argument that employees who
possess the same qualifications should receive the same rate of pay. Furthermore, the itinerant nature
of work in the construction industry usually prevents the accumulation of employment seniority on
which pay differentials might be based. Even so, it is not uncommon for employers in the trades to seek
to retain their most competent employees by paying them more than the union scale.

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D. Employers Ability to Pay

In the public sector, the amount of pay and benefits employees can receive is limited by the funds
budgeted for this purpose and by the willingness of taxpayers to provide them. In the private sector, pay
levels are limited by profits and other financial resources available to employers. Thus an organization's
ability to pay is determined in part by the productivity of its employees.

Q) write short note on

A) Legal issues under marketing channel
Ans
Legal issues under marketing channel will includes the following points
A .Dual Distribution
Some companies may use dual distribution by utilizing two or more marketing channels to
distribute the same products to the same target market.
Courts do not consider this practice illegal when it promotes competition, but they view as a
threat to competition a manufacturer that uses company-owned outlets to dominate or drive
out of business independent retailers or distributors that handle its products.
B .Restricted Sales Territories
To tighten control over distribution of its products, a manufacturer may try to prohibit
intermediaries from selling its products outside designated sales territories.
Although courts have deemed restrictive sales territories a restraint of trade among
intermediaries handling the same brands, they have also determined that exclusive territories
can promote competition among dealers handling different brands.
C. Tying Agreements
A tying agreement exists when a supplier furnishes a product to a channel member with the
stipulation the channel member must purchase other products as well. A related practice is
full-line forcing, in which a supplier requires channel members to purchase the suppliers
entire line to obtain any of the suppliers products.
The courts accept tying agreements when the supplier alone can provide products of a certain
quality, when the intermediary is free to carry competing products as well, and when a company
has just entered the market. Most other tying agreements are considered illegal.
D. Exclusive Dealing

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 Exclusive dealing occurs when a manufacturer forbids an intermediary to carry products of

competing manufacturers.
The legality of an exclusive dealing contract is generally determined by applying three tests.
1) If the exclusive dealing blocks competitors from 10 percent of the market; if the sales
revenue involved is sizable; and if the manufacturer is much larger than the dealer, the
arrangement is considered anticompetitive.
2) If dealers and customers in a given market have access to similar products or if the exclusive
dealing contract strengthens an otherwise weak competitor, the arrangement is allowed.
E .Refusal to Deal
For nearly 100 years, the courts have held that producers have the right to choose channel
members with which they will do business.
Within existing distribution channels, however, suppliers may not legally refuse to deal with
wholesalers or dealers just because these wholesalers or dealers resist policies that are
anticompetitive or in restraint of trade.
General Norms
Marketers must do no harm. This means doing work for which they are appropriately trained or
experienced so that they can actively add value to their organizations and customers. It also
means adhering to all applicable laws and regulations and embodying high ethical standards in
the choices they make.
Marketers must foster trust in the marketing system. This means that products are appropriate
for their intended and promoted uses. It requires that marketing communications about goods
and services are not intentionally deceptive or misleading. It suggests building relationships that
provide for the equitable adjustment and/or redress of customer grievances. It implies striving
for good faith and fair dealing so as to contribute toward the efficacy of the exchange process.
Marketers must embrace, communicate, and practice the fundamental ethical values that will
improve consumer confidence in the integrity of the marketing exchange system. These basic
values are intentionally aspirational and include honesty, responsibility, fairness, respect,
openness and citizenship.

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B) Sales quotas and sales territory

Sales quotas
A sales quota is something used in many environments where goods or services are sold. It is essentially
a target amount of sales that could be assessed on a daily, weekly, or monthly level. Whole selling units
(like stores) may have a quota they must try to meet each month, as are individual salespeople. One
means of assessing a salesperson's performance is by looking at his or her ability to hit the target on a
regular basis or to exceed it.
When people talk of the high-pressure atmosphere of employment in sales, it is often due to this sales
quota. The salesperson may know or feel that a job is constantly on the line if he or she doesnt sell a
certain amount of product or a specific dollar amount each month. Some also work on commission only,
which means they dont get paid if they dont sell, while others work on a draw versus commission basis,
where their salary increases if they meet certain quotas. It is certainly true that quotas are used to
motivate salespeople, and actually a whole selling unit, since a store of any kind may have to meet
monthly quotas. Failure of one or more people to meet quotas could threaten the jobs of managers in
addition to increasing likelihood that sales staff would lose their jobs.
Sales territory
A sales territory is a demographic a salesperson or team is responsible for handling. It is often
geographic; a salesperson might be in charge of the western half of a country, for example. It can also
include specific types of customers such as all the wholesalers who work with the company, or specific
types of businesses that order from the company. A pharmaceutical company might have sales
territories covering large animal veterinary practices, human medical clinics, small animal clinics, and so
forth. The division of territories places the best salesperson in each territory to maximize sales
numbers and customer satisfaction.
The personnel responsible for a specific sales territory may have an exclusive agreement. This means
that no other representatives of the company can make sales in their area. In other cases, the company
does not offer this protection, and salespeople may compete in the same territory. Competition can
potentially be damaging, and companies consider their options carefully when they assign territory and
decide what kinds of rights to grant to salespeople

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