Product Distribution – BMS Notes
Distribution ways of dispersing the goods around the market so that a big number of individuals may purchase it.
A company’s distribution may make or ruin it. Simply put, a corporation with an effective distribution system has a better chance of outselling its rivals on its goods. The business that expands its product line more quickly and widely while keeping prices lower than its rivals will profit more. better absorb increases in the price of raw materials and endure longer under challenging market circumstances. For each kind of business or service, distribution is essential. In the event that the product is not offered for sale at the locations where customers may purchase it, the best pricing, advertising, and people are all for nothing.
Particularly in India, the fast-moving consumer goods (FMCG) sector distributes its low-cost, high-volume items to more than one million retail locations. The largest networks, including factories, stock points, distributors or C&F (carrying and forwarding agencies), wholesalers, retailers, and customers, are possessed by the most prosperous FMCG corporations. Even direct marketing is seen as a viable distribution route these days.
Among the tasks involved in distribution are the following:
- a reliable transportation network to deliver the items to various locations.
- a reliable tracking system to ensure that the appropriate items arrive in the correct amount and at the right time.
- a sturdy package that can withstand shipping damage.
- keeping track of the locations where the product may be positioned to maximise sales opportunities.
- A mechanism for recovering products from the exchange is also included.
The Significance of Distribution
One of the key components of the marketing mix is distribution. The primary function and significance of distribution include the provision of satisfaction, level of life, value addition, communication, employment, efficiency, and finances.
The following might be used to explain the function and significance of distribution in marketing and the overall economy: – Satisfaction delivery
The marketing strategy places a strong emphasis on making money via client happiness. In addition to doing market research to design and sell products based on customer needs and desires, distribution channel members assist manufacturers in creating new products.
Level of living
The distribution function contributes to raising the quality of life for society’s consumers. When essential products and services are efficiently provided to customers at the appropriate moment, their living standards are altered in addition to providing them with satisfaction. By creating jobs, raising incomes, and transferring ownership, distribution improves the quality of life for consumers. Thus, it has a good impact on society.
Addition of value
The creation of location, time, and quantity utilities by distribution activities including transportation, storage, inventory management, etc., makes items more valuable. The distribution mix is crucial in boosting the value of products by ensuring that the proper amount of commodities are delivered at the right time and location.
Communication
Distribution functions as a conduit between manufacturers and customers. Through channel members, producers may communicate with customers about their goods, prices, promotions, and other details. In a similar vein, channel members provide them with information on clients, rivals, and environmental changes.
Employment
In society, the distribution function generates job possibilities. Intermediaries in the market provide jobs both directly and indirectly. Various manufacturers must offer customers with their countless items. The process of getting goods to customers involves thousands of distributors, agents, wholesalers, retailers, brokers, and so on. In a similar vein, many members of society may find employment in the transportation and warehousing industries, etc.
Efficiency
Manufacturers create a restricted range of products in large quantities, whereas customers want a variety of products in smaller amounts. Products may be purchased for less money when they are manufactured in large quantities. By offering a variety of goods from various providers, distribution aids in meeting customer wants. This leads to increased production and distribution efficiency.
Financing
The intermediaries themselves organise to maintain inventory and reserves of commodities. Warehouse and distribution centre management and organisation are not required of the manufacturers. The only thing required of the producers is to continue working hard on the project; for the production process to go well, regular payments from middlemen and financial assistance are becoming more crucial. In a similar vein, money plays a crucial role in mobilising additional production means.
The following are some examples of various distribution channels:
Two important market players are manufacturers and customers. It is the responsibility of intermediaries to close the gap in distance between the two. There is no established threshold that certifies the gap between the two has closed.
Depending on the situation, one or more intermediaries may be able to assist; nevertheless, it is also conceivable that none exist. They are described as follows:
(A) Channels that are Direct or Zero Level
Zero Level Channel refers to the situation when the maker sells the items directly to the customer rather than via an intermediary. retail locations, mail order catalogues, online sales, and sales
(B) Through Indirect Means
An indirect distribution channel is one in which a producer uses one or more intermediaries to transfer items from the point of production to the point of consumption. The primary varieties of it are as follows:
Single-Level Channel
An intermediate is employed in this process. Instead of selling the items via agents or wholesalers, the producer in this case sells them directly to the merchant. This process is used on pricey watches and similar items. Selling FMCG may also benefit from this strategy (Fast Moving Consumer Goods).
Dual-Level Channel
Using this approach, a producer sells the product to a wholesaler, who then buys it from a retailer, who sells it to a customer. Here, the wholesaler sells the material to the retailer in tiny quantities after buying it in bulk from the producer.
The items are then made accessible to customers by the shops. The primary products sold via this medium include soap, tea, salt, cigarettes, sugar, ghee, and so on.
Channel with Three Levels
Under this, an agent-level level is added to the Two Level Channel. The distance between the manufacturer and the distributor might be shortened with the help of an agent. Some large corporations use agents to assist them communicate with wholesalers when they are unable to do so directly. These businesses choose representatives in each area and provide the content to them.
The material is then sold by the agents to wholesalers, who in turn sell it to retailers, who ultimately sell it to customers.