Distribution involves making products available to consumers through direct or indirect means using intermediaries. It has two main components - marketing channels and physical distribution. Marketing channels include merchants, agents, and facilitators who help move products through the supply chain. Physical distribution involves activities like order processing, warehousing, transportation to get products into customers' hands. The objectives of an effective distribution system are to ensure smooth flow of goods, constant availability and accessibility of products to satisfy customers.

1. By Arun pandey

2. Distribution is the process of making a
product or service available for use or
consumption by a consumer or business
user, using direct means or using indirect
means with intermediaries.
According to Philip Kotler”Distribution
includes the various activities the
company undertakes to make the product
accessible and available to target
customers.”

3. The components of distribution are:
1. Marketing channels
2. Physical Distribution

4. Channels make the product available to customers. Various intermediaries
makeup a marketing channel. They make the flow of products smooth. The
middleman can be:
Merchants
They buy, take title to, and resell products. Wholesalers and retailers
are merchant middleman.
Agents
They search for customers and make negotiations but donot take to the
product. Sales agents, brokers and sales representatives are agent
middleman.
Facilitators
They assist in the distribution process. They neither take title to
products nor make negotiations.Transporters,insurance companies,
warehouses are facilitators.

5. It makes the product accessible
to customers. It physically
moves the products from
producer to customers. The
major activities performed are:
order
processing,warehousing,materi
al handling, inventory
management and
transportation.

6. Objectives of
Distribution
Flow of goods
Availability of goods
Accessibility of goods
Efficiency
Customer Satisfaction

7. Flow of goods
Distribution makes smooth flow of products from manufacturer to
channel members and customers.
Availability of Goods
Distribution channels make the goods available to
custmers.Channels such as wholesalers and retailers ensure availability
of goods at all the time.
Accessibility of goods
Distribution makes goods accessible to customers through physical
distribution. Goods are delivered at right place in right time and in
right quantity.
Efficiency
Distribution achieves marketing efficiency.

8. Distribution plays very important role in marketing in the areas of
delivering satisfaction to the society, value addition on the product,
providing production means and channels of communication and
employment to large number of people involved in distribution of
products. The following points indicate the importance of
distribution::
 Efficiency
Communication
Financing
Value addition
Employment
Competition

9.  Efficiency
Manufacturers produce limited variety of products in large quantity.
Customers desire large variety of products in limited quantity.
Distribution facilitates assortment of products. Customers can get all the
products to match their needs. This promotes marketing efficiency.
 Communication
Distribution facilitates communication. It links the
manufacturer and the customer. Manufacturers can transfer
messages to customers through channel members about product,
price and promotion.
 Financing
Middleman themselves finance their operations. They store
and finance inventories. Manufacture donot need to establish
their own distribution channel.

10.  Value addition
Distribution adds value to the product through
delivery at right place in right time and in right
quantity. Value is essential to satisfy customers needs.
 Employment
Distribution creates employment opportunities.
Market intermediaries are important source of direct
and indirect employment at retail and wholesale level.

11. CHANNEL LEVEL FOR
CONSUMER AND INDUSTRIAL GOODS

12. INTRODUCTION
Channel level:
 refers to the intermediary in marketing distribution channel between
the producer/manufacturer and the end consumer. Every channel
level plays a role in making the good available to the end consumer.
 The number of channel levels between the producer and consumer
could be 0,1,2,3 or more.
A zero level channel
 Is a direct marketing channel where there is no intermediary and the
producer sells directly to the consumer. For example – direct mails,
telemarketing etc.
A one level channel
 Has one intermediary, typically a retailer between a manufacturer and
consumer. Similarly a 2 level channel and a 3 level channel have 2 and 3
intermediaries respectively.
 An example of various channel levels is illustrated as below:

13. Channel level for consumer goods
 The goods that the consumers buy for the purpose of
consumption or use are called consumer goods.
 On the basis of buying behavior, consumer goods can
be divided into three classes as convenience goods,
shopping goods and specialty goods.
 The alternatives available for channel structure of
consumer products are;

14. Zero-level Channel
(Producer Consumers)
 This channel is also called direct channel.
 In this, the producers sell their goods or services directly to the consumers.
 There is absence of intermediary or middlemen between the producers and consumers.
 This is the most common, easy and short channel for sales or distribution of goods.
 The small producers of perishable products also sell their products directly to the local
consumers. Big firms, which want to minimize distribution cost and eliminate
middlemen, use direct level distribution channel to sell their products.
 Eg: Door to Door, mail order, telemarketing, online marketing, TV marketing, own
stores

15. One Level Channel:
(Producer........Retailer......Consumers)
 In one level channel of distribution, only retailers remain as
middlemen between producers and consumers.
 In this channel producers sell their products to retailers and the
retailers sell them to final consumers. The producers do not seek help
of wholesalers or agents to sell their products.
 Big retailing shops such as departmental stores, super markets,
discount houses etc. have begun to appear in markets. They have made
easy to sell any goods or services without the presence of wholesalers in
the distribution channel.

16. Two-level Channel:
(Producer.........Wholesaler.........Retailer............Co
nsumers)
 In this channel of distribution, the producers sell their
products to final consumers through wholesalers and
retailers. In other words, the producers sell their
products to wholesalers, then wholesalers sell them to
retailers and the retailers sell to final consumers.
 This channel is used to sell or distribute foodstuffs,
medicines, including many other consumer goods.
This channel is suitable for the products, which need
to be supplied to scattered markets and consumers.

17. Third Level Channel:
(Producer....Agent....Wholesalers....Retailers....Co
nsumers)
 This is the longest channel of distribution of consumers goods. In this
channel three middlemen are used to supply goods to the final
consumers. In other words, the producers sell their products to final
consumers through agents, then agents sell them to wholesalers and
wholesalers sell them to retailers and finally the retailers sell the goods
to consumers.
 This channel is useful to those producers who cannot contact many
wholesalers, cannot pay attention to international markets and want to
avoid several distribution problems.

19. Channel level for industrial goods
 The products, which are used by industrial firms to
produce other finished goods, are called industrial
products. Raw materials, machines, equipment,
management materials and production supplies etc.
include in industrial products. The channel for sale and
distribution of such goods depends on type and nature of
industrial goods, necessity, number of users, geographical
distance etc.
 The structure of distribution channel for industrial
products can be mentioned as follows:

20. Zero Level Channel:
(Producer.......Industrial User)
 In this channel the producers directly sell their products to industrial
users without the help of intermediaries.
 Large quantity of industrial goods, big installations machines, costly
equipment's, raw materials and important machine parts re directly
sold to the industrial users.
 E.g. Manufacturers of planes, big generators, ships, buses etc. produce
the goods according to the order of the customers and contact directly
to them. This channel is less costly and more effective in distribution of
industrial goods.

21. . One Level Channel
( Producer.......Industrial distributor........Industrial consumer)
 Less costly office materials, equipment, operational
supplies, construction materials, spares and parts etc.
are sold through industrial distributors.
 In this channel, only one level intermediary remains
between producers and users. The producers sell their
products to industrial distributors and the industrial
distributors sell them to industrial users.

22. Two Level Channel
(Producer......Agent.....Industrial distributor.....Industrial user)
 This is the longest channel for distribution of
industrial goods. Two intermediaries i.e. agent and
industrial distributor remain between producer and
users. Producer's agent contact industrial distributors
and industrial distributors sell the goods to industrial
users.
 This two level channel becomes useful to sell
operating supplies, small spares and parts and other
industrial goods that need massive distribution.

24. Channel power, role and conflict
Channel role:
Channel role refers to the activities that channel
members are expected to perform. The role can be
leader or the followers. This can lead to cooperation or
conflict.

25. Channel power:
Power is the ability to influence and control. Channel
power is the ability of control channel members. It results
out of the control exercised by the channel participants
and the leadership position of a participant in the channel
system.

26. Sources of power
i. Reward power:
It is an ability to provide financial and other benefits to
channel members.
ii. Coercion power:
It is an ability to give punishment to the channel
members. For eg: Retailers may refuse to carry a brand.
iii. Referent power:
It refers to the ability of a leader to influence a follower
because of the follower’s loyalty, respect, friendship,
admiration, affection, or a desire to gain approval.

27. iCv.o Enxtp…e…rt. .power:
It refers to the knowledge and expertise of a
channel member. Experience and expertise to
distribute products is expertise power. It results in
more efficient distribution system.
v. Legitimate power:
It is an authority to influence and control through
ownership of brand. It is based on leader-follower
relationships in the channel system.

28. Channel conflict
Definition:
“Conflict can be defined as disagreement through
which the parties involved perceive a threat to their
needs, interests or concern. ”
 It can also be defined as all kinds of opposition or
antagonistic interaction.
 It is a kind of misunderstanding or misperception
on a certain interaction.
 It is inevitible so it needs to be manage.

29. Types of conflict:
1.Vertical :
It is the conflict between different levels within the
same channel. For eg. Manufacturer and retailers.
2.Horizontal:
It is the conflict between members at the same level
within the channel. For eg. Retailer and retailer.
3. Multi-channel:
It is the conflict when two or more channels
compete in selling to the same market.

30. Causes of conflict
i. Goal incompactibility:
Conflict may arise due to the differences in individual
members’s goals. For eg. Manufacturer wants high sales. Retailer
wants high profit margin.
ii. Unclear roles:
Conflict often arises from role of deviance or malfunction of a
channel member. If a member doesnot perform his/her expected
role, other channel members feel bitter, which may lead to a
channel conflict.
iii. Perceptual differences:
When a channel member percieves that another
channel member is harming individual or common
interests, conflict arises.

31. Cont……
iv. Over - dependence:
Over dependence on channels or manufacturer
causes conflict. Exclusive dealers feel over-dependence
on manufacturers.
v. Ideological differences:
Most of the channel conflicts results due to the
differences in business ideology among the members.
vi. Poor communication:
Communication gap between the members
also causes conflict.

32. Methods of Conflict Resolution
 Whenever conflicts arises in an organization , it
needs to be resolved as soon as possible. Personal
issues should be reduced, it causes an disfunctional
conflict.
 Functional conflict based on channel related issues
can be constructive. It leads to co-operation if
resolution properly.
 Conflict cannot be eliminated but it can be
managed. For managing such conflicts we can
followed four methods of resolution. They are:

33. Cont…….
1.Conciliation:
Diplomacy, mediation, and arbitration are used to
resolve conflict.
2. Channel restructuring:
Channel structure is modified to manage conflict.
3. Goal modification:
Channel members agree on new goals to face outside
threats.

34. Cont……..
4. Politics:
Trade associations are formed to gain channel
power. Retailers may form retailer associations.
5.Expansion of resources:
Financial resources are expanded to manage
conflict. Commission to retailers may be increased.
6. Improved communication:
Better communication is promoted for conflict
management.