MODULE 1

DISTRIBUTION DECISION
MEANING

Distribution means to spread the product throughout the marketplace such that a large
number of people can buy it.
Distribution decisions concern distribution channels available for marketing
organizations to bring their products/services to the customers.
A channel of distribution is an organized network of agencies and institutions, which in
combination perform all the activities, required to link producers with users in the
accomplishment of marketing task.
DISTRIBUTION INVOLVES DOING THE FOLLOWING THINGS:

1. A good transport system to take the goods into different geographical areas.
2. A good tracking system so that the right goods reach at the right time in the right
quantity.
3. A good packaging, which takes the wear and tear of transport.
4. Tracking the places where the product can be placed such that there is a maximum
opportunity to buy it.
5. It also involves a system to take back goods from the trade.
FORMS/TYPES OF DISTRIBUTION CHANNELS

In marketing, goods can be distributed using two main types of channels:

1. Direct distribution channels

2. Indirect distribution channels.
3. Distribution channel for consumer products
4. Distribution channel for industrial products

DIRECT DISTRIBUTION

A distribution system is said to be direct when the product or service leaves the
producer and goes directly to the customer with no middlemen involved
EXAMPLE :Both the car wash and the barber utilize direct distribution because the customer
receives the service directly from the producer

INDIRECT DISTRIBUTION
Indirect distribution occurs when there are middlemen or intermediaries within the distribution
channel. The larger the number of intermediaries within the channel, the higher the price is
likely to be for the final customer.

EXAMPLE; In the wood example, the intermediaries would be the lumber manufacturer, the
furniture maker, and the retailer..

DISTRIBUTION CHANNEL FOR CONSUMER PRODUCTS

Manufacturers may reach out to consumers either directly, i.e., without using distribution
channels, or by using one or more distribution channel members

DISTRIBUTION CHANNEL FOR INDUSTRIAL PRODUCT

Industrial channels are usually shorter than consumer channels. Direct selling is possible due to
closer relationship between the manufacturer and the customer, as well as due to the nature of
the product sold.

PHYSICAL DISTRIBUTION
MEANING: Physical distribution is concerned with the physical movement of the goods from
the producer to the consumer.
DEFINITION

Philip Kotler “Physical distribution involves planning, implementing and controlling the physical
flow of materials and final goods from the point of origin of use to meet consumer needs at a
profit.”

OBJECTIVES

1. To make available the right goods in right quantity at right time and right place at least
cost.
2. To achieve minimum inventory level and speedier transportation.
3. To establish price of products by effective management of physical distribution
activities.
4. To gain competitive advantage over rivals by performing customer service more
effectively.
ACTIVITIES INVOLVED IN PHYSICAL DISTRIBUTION

 Customer service
 Order processing
 Inventory control
 Transportation and logistics
 Packaging and materials
CHANNEL INTERMEDIARIES

Middle man involvement in the distribution process

AGENTS AND BROKERS

Agents serve as an intermediary on a permanent basis between buyers and sellers, while
brokers do this on a temporary basis only. Both are paid in commission for each sale and do not
take ownership of the goods being sold.

MERCHANT WHOLESALERS AND RESELLERS

Are simply called wholesalers, buy products from manufacturers in bulk and then resell them,
usually to retailers or other businesses. They may operate cash-and-carry outlets, warehouses,
mail order businesses or online sales, or they may simply keep their inventories in trucks, and
travel to their customers.

DISTRIBUTORS AND FUNCTIONAL WHOLESALERS

Also called functional wholesalers, distributors do not buy products from the producers.
Instead, they expedite sales between the manufacturer and retailers or other businesses. They
can be paid by commission, or they can be paid in fees from the manufacturer.

TRADITIONAL AND ONLINE RETAILERS

Whenever a consumer buys a product from anyone other than the company that makes it, the
consumer is dealing with a retailer. This includes corner stores, shopping malls and e-commerce
website
 BASIC CONCEPTS OF E- COMMERCE

e- commerce/ Electronic commerce

e-commerce is just the process of buying and selling product by electronic means such
as by mobile applications and the Internet. E-commerce refers to both online retail as well as
electronic transactions. It also pertains to “any form of business transaction in which the
parties interact electronically rather than by physical exchanges or direct physical contact.”

Examples: Online shopping for example, retail giant Amazon, you are online shopping.
Internet Banking ,Electronic payments Pay Pal, for example, is a global online payments system
that supports online money transfers.,Purchasing tickets online

Types of e- commerce
Business-to-Business (B2B)
Transactions that take place between two organizations come under Business to
business. Also. it greatly improves the efficiency of companies.
Business-to-Consumer (B2C)
When a consumer buys products from a seller then it is business to consumer
transaction. People shopping from Flip kart, Amazon, etc is an example of business to consumer
transaction.
Consumer-to-Consumer (C2C)
A consumer selling product or service to another consumer is a consumer to consumer
transaction. For example, people put up ads on OLX of the products that they want to sell. C2C
type of transactions generally occurs for second-hand products.
Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of exchanging goods. A large
number of individuals make their services or products available for purchase for companies
seeking precisely these types of services or products.

e- Business
Electronic business (e-business) refers to the use of the Web, Internet, intranets, extranets or
some combination thereof to conduct business. E-business is similar to e-commerce. E-business
includes a much wider range of businesses processes, such as supply chain management,
electronic order processing and customer relationship management.
Activities using e-Business tools include:
 Trading of goods or services online, such as e-Procurement, primarily through the web-
sites;
 Electronic retailing (e-Tailing);
 Use of the internet, intranets or extranets to conduct research and manage business
activities;
 Web-site marketing;
 Online communications, such as e-mail; and
 Online training for staff (e-Learning).

e- Marketing
E-Marketing (Electronic Marketing) are also known as Internet Marketing, Web
Marketing, Digital Marketing, or Online Marketing. E-marketing is the process of marketing a
product or service using the Internet. E-marketing not only includes marketing on the Internet,
but also includes marketing done via e-mail and wireless media.
Advantages of e-marketing
1. Much better return on investment from than that of traditional marketing
2. E-marketing means reduced marketing campaign cost as the marketing is done through
the internet
3. Fast result of the campaign
4. Easy monitoring through the web tracking capabilities help make e-marketing highly
efficient
5. Using e-marketing, viral content can be made, which helps in viral marketing.

M-Commerce
M-Commerce also called as Mobile Commerce involves the online transactions through
the wireless handheld devices such as mobile phone, laptop, palmtop, tablet, or any other
personal digital assistant.
Advantages of M-Commerce
 Through M-commerce, the companies can be in regular touch with the users through
the Push Notifications. Any discount, scheme, pay back benefits .
E.g. Season Sale.
 M-Commerce enables local business to grow by tracking the location of the potential
customer.E.g. The educational institutes track down the local students and give
information about the courses offered by them.
Disadvantages of M-Commerce

 The Screen of mobile phones is generally small as compared to the computer screen .
E.g. Through Flip kart Mobile Application a customer can see several products, but the
 user may not decide on the purchase because of the smaller image of the product
.computers for the better view to make a purchase decision.
 M-Commerce software is costly as compared to the E-commerce, many retailers may
not go for it, and hence the mobile users may have fewer options.

m- Marketing
Mobile marketing is the interactive multichannel promotion of products or services for
mobile phones and devices, smart phones and networks. Mobile marketing channels are
diverse and include technology, trade shows or billboards. Mobile marketing is similar to
electronic advertising and uses text, graphics and voice messages.
Advantages
 Smartphone's and tablets are cheaper, smaller, and more portable than traditional PC’s
and laptops.
 Instantaneous results
 We always carry our mobile phones., most of the time, our mobile phone is ON, which
means, we receive the message at the very moment it is sent.

e-Networking.
E-Networking combines the principle of traditional networking (making profitable
contacts by physically reaching out to those in your business community), with the benefit of
doing it all electronically from a computer or mobile phone. E--Networking is becoming
increasingly important as more people are incorporating digital trends into their daily lives.
Benefits.
 E-Networking Expands Outreach
 E-Networking Enhances Time Management
 E-Networking Eliminates Intimidation
 The convenience of E-Networking can give businesses a bigger reach in less time, and
without some of the challenges of meeting face-to-face.
Conclusion
Widespread adoption of the Internet for business and personal use has generated many new
channels for advertising and marketing engagement, including those mentioned above. There
are also many benefits and challenges inherent with online marketing, which uses primarily
digital mediums to attract, engage, and convert virtual visitors to customers.