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 बसन्त सिग्देल, नेपाल

CLASS 12 MARKETING NOTE NEPAL

MARKETING NOTES

Meaning of Distribution

Distribution of product is the process of providing the goods and services from the

manufacturer to the final consumers. After the development of the product, the

the factory to the potential customers through them. The marketer may choose to

marketing manager has to decide channels or routes. The product will flow from distribute the product directly to customers without using any intermediaries.

efficiently and at minimum possible cost from the company's production

Alternatively, he may use one or more middleman including wholesalers, selling agents, and retailers. But the important point is that the product should move

department to the ultimate customers.

According to Philip Kotler, "Distribution includes various activities the company

undertakes to make the product accessible and available to target customer.”

Distribution is the function of getting goods into the hands of the

consumer. The channel of distribution denotes the middleman engaged in moving

goods from the place of production to place of consumption. It is the channel

the route by which goods move from the place of production to the place of

through which goods move as smoothly as possible to the desired places. It is

consumption.

Channels of Distribution

A channel of distribution is an organized network or a system of agencies and

institutions which in combination perform all the activities required to link

producers to accomplish the marketing task. In another word, it stands for the

path or route traced in the direct or indirect transfer of product, as it moves

consumers composed of intermediaries through their functions and attainment of

from a producer to the ultimate consumer or industrial users. Thus, a channel of distribution is a pathway the flow of goods and services from producers to

the mutual objectives.

According to American Marketing Association, "A channel of

distribution, or marketing channel is the structure of inter-company

organization units and extra - company agents and dealers, wholesale and retail

through which a commodity, product or service is marketed."

Physical Distribution

Physical distribution is a marketing activity that concerns the handling and the

movement of goods. Physical distribution is a major component of the marketing

the efficient movement of goods from the place of production to the place of

mix and cost area of business. It includes all those activities connected with consumption. Physical distribution involves the handling of raw materials,

and storage of materials, parts and finished inventory from the supplier,

fabricated parts, supplies and finished products from producers to consumers via intermediaries. It is the process of strategically managing the movement

between enterprise facilities and to customers.

The physical distribution encompasses the wide range of interrelated activities

such as transportation, warehousing, materials handling, packaging, inventory

forecasting and customer services. Broadly, these activities can be grouped

control, and plant and warehouse location, order processing, marketing into four major functions namely, order processing, marketing forecasting and

functions namely, order processing, inventory management, transportation and

customer services. Broadly, these activities can be grouped into four major material handling. According to W.J.Stanon, Physical distribution consists of

the right time."

all activities concerned with moving the right products to the right place at

Channel of Distribution for Consumer and Industrial Products

Marketing channels are basically for different types of consumer and

industrial product. They consist of different kinds of building blocks,

producer, consumers or industrial users, agents, wholesalers and retailers

depending upon the philosophy of the company, nature of the market, nature of

customers, scale of operations, etc.

Channels of Distribution for Consumer Products

Channel of distribution can be defined as the process of distributing goods and

services to the final consumer. The simplest channel of distribution is zero

and the ultimate consumer or user. The one level marketing channel contains one

level marketing channel. In this, there is direct contact between the producer

sales agent or broker in case of industrial products. The two level marketing

selling intermediary. It may be the retailer in case of consumer products as a

Wholesaler, and retailer.

channels contain two intermediaries, namely, wholesaler and retailer. The three

level marketing channels contain three intermediaries - agent middleman,

Producer-consumer: It is the direct channel of distribution. It is the direct sales of goods and

services by the producer to the consumers. There is no involvement of any

middleman between the producer and the consumers. The producer creates a link

with the consumer directly through his own retail shops. Under this, all the

marketing activities are performed by the producer or the manufacturer himself.

Producer - retailer-consumer: It is the distribution channel in which retailer is involved as the middleman. Under this, the manufacturer sells to the retailers who in turn sell to the ultimate

consumers. This channel of distribution is very popular these days. The

retailers purchase in large quantities from the manufacturer and perform

certain marketing activities in order to sell the product to the ultimate

consumers.

Producer-wholesaler-retailer-consumer:

Under

this channel wholesaler and retailer is considered as the middleman. This is a

traditional channel of distribution for the sale of consumer goods. This

agent middlemen serve as a link between the producers and retailers.

channel is most suitable for the products with a widely scattered market. The

Producer-agent-retailer-consumer:

Under this channel agent& retailer is considered as the middleman.

This channel is used where the wholesalers are scattered throughout the country

and agents undertake marketing on behalf of the producers. It is also possible

Channels of Distribution for Industrial Products

to have a channel of producer, wholesaler, agent, retailer and consumer.

The

channel of distribution for consumer products is generally long, while channels

for industrial products are short as retailers are not needed. Direct marketing

producers have facilities to dispatch the products to industrial users

of industrial products is generally followed in local markets and in cases the directly. Direct channel is very popular for selling of industrial products

products directly.

since industrial users place orders with the manufacturers of industrial

Producer-Industrial user: Under this channel producer, directly provides goods and services to the

industrial user. It is the most commonly used channel in the distribution of

industrial goods. These goods are bulky and highly technical and of high unit

industrial goods. This channel plays a predominant role in the sale of value. Therefore, the industrial goods are not purchased frequently. As a

manufacturer.

result, 75% of industrial users will purchase these goods directly from the

Producer-industrial distributor-industrial user:

Under this channel, fabricating materials and parts, equipments and

operating supplies are sold through a wholesaler to industrial users. On behalf

of the manufacturer, wholesaler makes all sorts of efforts in releasing the

conditioning plant.

goods. This channel is quite common in the case of construction Company and air

Producer-agent-industrial user:

Under this channel, the agent is referred as the middleman. Manufacturer

of operating supplies of small equipment needs a lot of marketing efforts.

Therefore, they sell their goods to the industrial users through agent

interested in investing fund on selling activities. This method is useful to

middlemen instead of merchant middlemen and also for those who are not

those who are interested in introducing new products.

Producer-agent-industrial distributor-industrial user:

Under this method, agent and industrial distributor are used as the middleman. This

method will be adopted by the manufacturer of fabricating materials and parts,

operation supplies etc. because these manufacturers will produce in full

consumers using agent & industrial distributor. It is the combination of

capacity that too on a large scale. The producer sells the goods to the final the above channels adapted to suit varying conditions on the basis of

geographical factors.