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.
