is one of the
marketing mix elements that consists in the means and operations that
provide the users or the consumers with the products of a company.
This offers the place, time, size and amount utilities bringing the
product closer to the customer and offering the desired quantity,
usually smaller than what the manufacturer is selling.
Distribution implies two main
- Commercial distribution – transferring the ownership of
the product from the producer to the consumer. It usually involves
- Physical distribution – actually transporting the goods
from the producer to the customer using transportation and storage.
- Minimizing the contacts between producers and
- Bringing the product as close as possible to the customers
- Allows the producers to focus on manufacturing
The contacts between producers and
consumers decrease when using an intermediary that focuses on the
offer of several producers and presents it to more users or
consumers, each of them interacting only with one intermediary.
A distribution channel includes all the
intermediary links between manufacturer and consumer or final user.
The producer and the consumer are the extremities of any distribution
channel, between these being inserted one, more or no intermediary
link. Therefore, the distribution channels can be :
Distribution channel functions
- Direct channels – no intermediary link
- Indirect channels – distribution through
Distribution channel functions are
specific functions of manufacturer – consumer relation. In this
type of relationship there is not the problem of not fulfilling the
functions, but of which member of the distribution channel will
fulfill them. These can be carried through by the producer or the
intermediaries from the distribution network.
The main functions are:
Distribution channel features
- Information – gathering information from the market
carrying out marketing researches
- Promotion – creating and broadcasting persuasive messages
to attract customers
- Contact – discovering and contacting potential clients
- Adjusting the offer to the market requirements – assures
the conformity of the offer to the customers' requirements regarding
size, amount, package.
- Negotiation – creating accords over prices and other trade
- Physical distribution – transporting and storing the
products so that they are available as close as possible to the
- Financing – assuring the funds necessary for purchasing
and storage in the situation when the products are not sold immediately
to the final consumer
- Risk assumption – physical and technological depreciation,
the risk of not cashing the claims.
The distribution channel can be defined
by its dimensions:
- Length – the number of intermediary links involved
in the distribution process
- Width – the total number of units composing a
certain intermediary link
- Depth – how close to the final consumption location
does an intermediary deliver the products.
Depending of the company's objectives,
it can adopt different distribution strategies. The strategy
objectives can be controlling the distribution and assuring the best
delivery of the products, closer to the customers through a higher
number of intermediaries.
The main distribution strategies:
- Exclusive distribution – a drastic limitation of
intermediary number when:
- The producer wants to hold the control over its products'
- The producer doesn't want the intermediaries to deliver any
other products, for example, competitors' products
- Selective distribution – the company collaborates with a
limited number of intermediaries that leads to:
- Reduction of merchandise efforts
- Efficient control over distribution
- Good market coverage
- Intensive distribution – delivering the products through a
high number of intermediaries, distribution channels with great length,
width and depth.
Physical distribution or logistics is
the movement and handling of the products from the place where they
are manufactured to the place of consumption.
From a managerial point of view, the
physical distribution is the planning, implementation and control of
the products flux from the origin point to the consumption point in
order to satisfy customers' needs and gain profit.
Physical distribution is a part of the
logistic chain, the market logistics
of the producer. Besides
market logistics, the producer manages also the procurement
that consists in transporting the goods from the
supplier to the producer. So, the procurement logistics of the
manufacturer is the market logistics of its supplier.
The main activities involved in market
- Receiving and processing customer orders – and deciding
if the products should be delivered from the supply or should be
- Storage – preserving the goods for certain periods of time
- Stockage – creating stocks at different distribution
levels to assure immediate delivery of the product
- Transportation – the shipment of the goods from
manufacturer to consumer
- Reception – the transfer of ownership rights between the
distribution channel members.