One of the most important decisions made by marketing manager is the dealing with marketing distribution channels. Mostly a little attention is given by business organizations to its distribution channels.
This can be very destructive and business need to be focus on it. Here below this post is all about the importance and functions of distribution channels.
What is meant by Distribution Channel
Marketing distribution channels is a group of interdependent business organizations that are engage in the procedure of making a product or service available for consumption in the market.
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In a simple marketing system, there are manufacturer and consumer that have something to deal with.
In exchange process, these dealings are made along with the creation and availability of products for consumers. By utilizing networks of distribution channels this availability is possible.
Every service or product must be somehow made available to billions of people whether it is watch, an automobile, office furniture or personal computer.
Products must also be made available to millions of businesses, industrial firms, other organizations worldwide and government institutions. Through the creation of distribution channels, business organizations struggle to realize this objective.
Dimensions of Distribution Channels
There are three basic dimensions of channel structure. First one is the length of channel, second one is the intensity at various levels and the third one is the kinds of intermediaries involved.
Channel intensity ranges from exclusive to selective to intensive. Intensive refers that there are several intermediaries. Selective indicates that the intermediaries are of smaller number. Exclusive means only one.
Functions of Distribution Channels
The goods and services are moved from manufacturers to consumers by distribution channel. It minimizes the place, time and possession gaps that divide goods and services from those who would utilize them.
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Following are some basic functions that are performed by members of the marketing channel.
01 – Information: The marketing research and intelligence information is gathered and distributed that is related with the forces and actors in the marketing environment required for planning and supporting exchange.
02 – Promotion: Persuasive information about the product is built and distributed.
03 – Contact: Discovering and communicating with prospective purchasers.
04 – Matching: Activities like producing, assembling, grading and packaging are included to shape and fit the offer to the purchaser’s requirements.
05 – Negotiation: In order to transferred ownership or possession, reaching to understanding of price and other terms of offer. Others assist to satisfy the completed transactions.
06 – Financing: In order to cover the costs of channel work, funds are acquired and used.
07 – Physical Distribution: Carrying & storing goods.
08 – Risk Taking: Presumptuous the risks of accomplishing the channel work.
The question is not important that either these functions should be done or not? In fact they must be done but the important question is who will do them.
Importance of Distribution Channels for Business
Why some of selling job is provided to intermediaries by the manufacturers? By doing so, marketing intermediaries are given some control over to whom and how the products are to be sold.
The business organizations can accomplish more than it can achieve on its own by using intermediaries which have more experience, contacts, scale of operation and specialization.
The function of marketing intermediaries is to transmute the variety of products produced by manufacturer to variety of products desired by consumers, from economic point of view.
Narrow variety of products in large quantity is produced by the manufacturer but wider variety of products in smaller quantities is demanded by the consumers.
Intermediaries purchases large quantities from several manufacturers and divide them into smaller quantities and wider variety desired by consumers, in the distribution channel. In matching supply and demand, intermediaries play a significant role.
The vision of distribution channel is not confined to the distribution of real products. Same problem is faced by manufacturer of services and ideas about the output available to target market.
The hotels, retail stores, banks and other service providers give much attention to make their services handily available to the target consumers, in private sector.
Service organizations and agencies establish “health care delivery systems” and “education distribution systems” for providing sometimes broadly scattered population, in public sector.
Schools should be situated near to the children who are required to be taught and hospitals should be situated to assist different patient populations.
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Polling stations should be situated in the area where people can easily vote and fire stations are situated in the area by the business organizations where they response quickly to the fires.
If the producer does these functions then its costs become increase which results in increase in the prices of its products. If some of these functions are transferred to intermediaries then the costs and prices of products of producer are decrease, at the same time, but more charges are demanded by intermediaries for their functions.
Different functions should be assigned to the channel members by dividing the work of channel that can do them more potentially and effectively to give satisfactory varieties of products to target consumers.
