Chapter one

Marketing and Distribution

 Marketing activities
• Help bridge the gap that separate
producers from customers.
• This gap appeared because of historical
factors associated with the industrial
revolution.
• These include:
• Specialization and division of labor.
• Factory mode of production.
• The process of urbaniztion.
In so doing marketing provides:
• An effective distribution system than links
producers with consumers and ensures a
constant flow of products and services
from their production sites to their
consumption places.
• This distribution system is made up largely
of middlemen.
Thus the work of the middleman
• Provides products to customers in the right
place, at the right time and form.
• These are referred to as the creation of
economic utilities.
• Place,
• Time
• And possession utilites.
 Gaps are many:
• Spatial.
• Time.
• Information.
• Objectives.
• Ownership.
• Quantity.
• And assortment discrepancies.
 Quantity & Assortment
Discrepancies
• Quantity discrepancy occurs because
producers prefer to produce in large
quantities while customers prefer to buy in
small quantities.
• Assortment discrepancy occurs because
producers tend to specialize while
customers need a variety of products (a
wider assortment).
 Through marketing functions the
gap is bridged:
• Selling and buying.
• Bulk-breaking.
• Assortment building.
• Storing.
• Transportation.
• Risk bearing.
• Financing.
• Standardization and grading.
 Marketing channel:
• The route a product takes to its final
destination.
• Making a good product is only part of the
story.
• The product must be made available to
customers.
• Making products available is the work of
the marketing channel (the middleman).
 A marketing channel defined:
• Sets of interdependent organizations that
work to make products and services
available for use or consumption.
• This is a process not an event.
• These organization are interdependent.
• Making products available is the end result
of the work of the marketing channels.
 Why companies need
intermediaries.
• Lack of financial resources.
• Breaking-bulk.
• Sorting and assorting functions.
• Information.
• Promotion of merchandise.
• Provision of place, time and possession
utilities.
• Contactual efficiency.
Manufacturer
Retailer

Final
Wholesaler
Consumer
Middlemen performing the sorting
process
Contactual efficiency