SALES AND DISTRIBUTION

MANAGEMENT
Chapter-14 Distribution Management- An Introduction
Learning Objectives
L1: Understand the definition of distribution management
L2: Explain the need of distribution channels
L3: Overview of distribution channels
 DEFINITION OF DISTRIBUTION MANAGEMENT
Havaldar and Cavale define it as follows:
• “The management of all activities which facilitates movement and co-ordination
of supply and demand in the creation of time and place utility in goods.
• The art and science of determining requirements, acquiring them, distributing
them and finally maintaining them in an operationally ready condition for their entire
lives.
• Broad range of activities concerned with the efficient movement of finished
products from the end of the production line to the consumer and in some cases, it also
includes the movement of raw materials from the source of supply to the beginning of
the production line”.
NEED FOR DISTRIBUTION CHANNELS
Generally, the following functions are performed by intermediaries or channel members:
• Accumulation, aggregation and sorting of right kind of goods for meeting consumer needs at
the purchase point.
• Believing in routine and simplified transactions and working with huge number of products
for the minimization of distribution costs.
• To help manage the business better by providing information both to buyers and sellers.
• To buy vast variety of goods by comparing prices and costs by making appropriate
recommendations to customers
• To be aware of the environment in which they operate and hence isolate the companies from
direct impact of the local conditions.
• Reduction in number of touch points. The company will not be able to meet demands of
thousands of customers directly and hence needs intermediation.
 Are distribution channels necessary
The right answer to this would be sometimes and not always. This
is for the following reasons:
• With the advent of the Internet, many companies like Dell,
Amazon, Snapdeal and Flipkart have grown in plenty as they deal
with customers directly.
• The example of Bata is another case. Bata sells its branded
footwear directly to customers through its own outlets.
• Eureka Forbes is a well-known company which does not
keep physical stocks of its products. It calls the customers and
sells products directly at their homes.
 OVERVIEW OF DISTRIBUTION
CHANNELS
I. The broad classification of distribution channels is as follows:
II. Sales channel- it has the function of financing the transactions, negotiating fair bargains,
sharing information between company and consumer as well as motivating buyers
III. Delivery channel- it is meant only for physical transactions
IV. Service channel- they perform after sales services like in Maruti service station
 SELLING
1. C&FA
This category is known as facilitators.
Some characteristics of distributors include:
• They are required to invest in the product being bought from the company
• They are on mark-up, margin and commission
2. Distributors, dealers, stockists, agents
Some characteristics of distributors include:
• They are required to invest in the product being bought from the company
• They are on mark-up, margin and commission
3. Wholesalers
• They normally operate out of the main markets.
• They cater to the needs of hundreds of customers as they are the
shopkeepers who set up shops in the marketplace.
Retail Distribution Channel
Various Patterns of Distribution
Selective
Intensive
Exclusive
Summing Up

The management of all activities which facilitates movement and co-ordination of supply and demand in
the creation of time and place utility in goods is part of distribution management. Companies generally
believed that distribution can best be performed by themselves and usually they undertake distribution
related activities. There are various channels of distributions, each having its own unique characteristics.
These include wholesalers, retailers, Carrying and Forwarding Agents, distributors, dealers, stockists, agents.
After the selection of the most suitable channel of distribution, it is important to determine the intensity of
desired distribution. They may be of three kinds: selective, intensive and exclusive. The goods may be
distributions by different modes. There are several modes of transportation in the existing transport system.
These include air, road, rail, shipping.
Key terms
1. Distribution Management: “Distribution management refers to the process of overseeing the
movement of goods from supplier or manufacturer to point of sale.”
2. Distribution Channels: “A distribution channel is a chain of businesses or intermediaries through
which a good or service passes until it reaches the final buyer or the end consumer.”
3. Wholesaler: “A wholesaler is essentially a middleman between a manufacturer and a retail
establishment.”
4. Retailer: “A retailer, or merchant, is an entity that sells goods such as clothing, groceries, or cars
directly to consumers through various distribution channels with the goal of earning a profit.”

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