Professional Documents
Culture Documents
Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi
Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.
QUADRANT-I
1. Learning Outcome:
After completing this module, the students will be able to:
Understand the concept of distribution and physical distribution
Explain demand-oriented functions of distribution
Identify the major decision areas in physical distribution management
Understand role of physical distribution
2. Introduction
Place (Distribution) decision is of vital importance in marketing management. Marketing
objectives cannot be achieved unless manufactured goods are transferred to ultimate consumers.
It is important to decide how this movement of goods will take place. Place decision involves
determining the right place (transportation), right time (warehousing) and right person (channel
member) to ensure smooth flow of goods.
3. Meaning
Distribution means using external and/or internal sources for effective movement of goods and
services and performing various activities like transport, warehousing, storage, inventory
management, packaging to achieve marketing goals of the firm. Effective distribution creates
time, place and possession utilities in products and delivers high level of customer satisfaction
at less cost.
4. Distribution functions
Distribution functions have twin objectives i.e. extending market base and ensuring smooth
flow of goods. Therefore, these functions can be categorized as demand-oriented functions and
supply oriented functions. Demand-oriented functions refer to primary operations of
distribution channels whereas supply-oriented functions refer to physical product movement
with a view to ensure quick, economic and safe transfer of goods to buyers.
Distribution Functions
4.1.3. Retailing
It refers to selling goods through retailers who buy goods from wholesaler in small
quantity and sell them to customers in much smaller lots. Big retailers buy directly
from manufacturers. Retailer is also an important link in distribution chain. He deals
directly with consumers and collects information about their needs which is helpful to
producers.
The retailers provide valuable services to wholesalers, manufacturers and consumers.
They provide maximum local convenience to consumers. Consumers are not required
to store goods beyond a normal requirement. Retailers provide them these goods as per
their need and sometimes on credit too. Retailer develops better relations with
customers as they are in his direct contact. Retailers inform manufacturers about
customers’ needs.
In the chain of distribution, there are certain other agencies who facilitate exchange
process like banks , insurance companies and advertising agencies. Producers are able
to expand their market through the invaluable services provided by channels of
distribution.
5 Summary
Place (Distribution) decision involves determining the right place (transportation), right
time(warehousing) and right person (channel member)to ensure smooth flow of goods. Hence,
understanding of distribution function is necessary.
Distribution means using external and/or internal sources for effective movement of goods and
services and performing various activities like transport, warehousing, storage, inventory
management, packaging to achieve marketing goals of the firm. Effective distribution creates time,
place and possession utilities in products and delivers high level of customer satisfaction at less
cost.
Distribution functions have twin objectives i.e. extending market base and ensuring smooth flow
of goods. Therefore, these functions can be categorized as demand-oriented functions and supply
oriented functions. Demand-oriented functions refer to primary operations of distribution channels
whereas supply-oriented functions refer to physical product movement with a view to ensure
quick, economic and safe transfer of goods to buyers.
Demand oriented functions are carried out to reach the consumers and fulfil their demand. These
functions aim at transferring the title of ownership of goods through direct selling, wholesaling or
retailing. Supply oriented functions are termed as physical distribution function of marketing
which focuses on supply side of market. Physical distribution means facilitating the physical
movement of goods from producer to user by performing intervening activities like order
processing, inventory management, warehousing, packaging, product handling and transportation.
An effective physical distribution system ensures the smooth flow of goods at minimum
distribution cost.
Physical distribution system varies from company to company or within the company from time to
time. There are numerous factors which influence this system such as liquidity position of
company, size of market , product , distribution channels and availability of facilities.
It is important to remember that physical distribution activities are undertaken by the company
with an aim to serve its customer in most effective manner. But this increases the cost associated
with these tasks. Effective distribution management can assure a competitive edge in terms of
better customer service level and lower distribution cost. It is, therefore, necessary that marketers
should follow the idea of cost trade-offs and avoid sub optimization of costs.