Discuss the importance of distribution strategy in the marketing mix.

1. They provide the following forms of utility to the customers
• TIME...when the customers want to purchase the product.
• PLACE...where the customers want to purchase the product.
• POSSESSION...facilitates customer ownership of the product.
• FORM...sometimes, if changes have been made to the product in the distribution channel, i.e. Pepsi/Coke, concentrate to bottlers.
2. Improve exchange efficiency. There are certain costs associated with an exchange, therefore need to try to reduce the number of transactions (exchanges). The intermediary increases contact efficiency and reduces the cost of individual transactions. Without an intermediary, each buyer has to negotiate and exchange with each seller. With one intermediary, each buyer negotiates with one intermediary (as opposed to 5 sellers), and each seller negotiates with one intermediary (as opposed to 5 buyers)
3. Intermediaries are specialists in the exchange process providing access to and control over important resources for the proper functioning of the marketing channel.
4. Middlemen perform the assortment of products produced by producers in the assortments desired by consumers. Producers make narrow assortments in large quantities, consumers want broad assortments in small quantities, discrepancy in quantity and assortment.
5. Selling-: Intermediaries recruit and train own sales force to resell products.
6. Buying: products for resale to their intermediaries or final users or for their own use i.e. all like purchasing managers for their customers
7. Risk taking (Title Transfer)- channel members take the risk inherent in the ownership of inventory/stock such as obsolescence and deterioration or tear and wear or damage
8. Promotion- includes using various promotional mix elements used by channel members (sellers) to reach prospective customers such as direct sales/personal selling, advertising, publicity, sales promotion, or electronic marketing. This may involve cooperation with manufacturer or suppliers in promotional efforts
9. Information exchange/market information-part of marketing intelligence system for the supplier or manufacturer/producer. The channel members or intermediaries gather information on market developments or conditions for the producer or suppliers of industrial goods thus providing feedback on need definition, pinpointing decision makers and influencers, discussion of product features, competitive structure etc
10. Negotiation –process of submitting quotations or customer proposals that detail product specifications, prices, product warranties, and terms and conditions
• Channel members are also involved in consultative selling and performance application studies for users
• Channel members are involved in contract negotiations with buyers of their products
11. Physical distribution/transportation i.e. physical flow of goods through the intermediaries to the final users. They provide inventory availability and transportation as the product moves from the supplier/producer to the final customers.
12. Ancillary services- such as after sale services including installation of products, providing spare parts, repairs and maintenance of industrial goods.
13. Leasing of industrial goods instead of selling them
14. Accumulation and storage of industrial products at locations convenient to customers e.g. warehouses, showrooms etc. Saves the manufacturer hassle of having to transport small quantities by (accumulation and transportation of large amounts). Effective inventory mgt requires proper balance among buying, selling and production, hence the need for storage at convenient locations for timely deliveries and protection against deterioration and loss
15. Financing- Intermediaries offer valuable financing benefits through acceptable credit terms/Facilities better credit controls then the manufacturer/supplier that inflows his cash flow. The fact that intermediaries take title to goods enables them to resale them at liberal/attractive terms such as cash and trade discounts, Financing
16. Sorting and grading-grouping different products into more uniform or homogeneous groups (based on product class or category) on the basis of size, colour shape, quality packages, or grades (standards)
17. Bulk breaking-dividing large quantities into smaller units which can be sold at a profit to customers i.e. allows buying large quantities of discounts and then selling them in smaller units at profits
18. Assortment-collection of different types of products from different suppliers/manufacturers to meet customers needs on the basis of wider choice of items. Allows customers too benefit from single sourcing of their multiple needs.

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Lellah answered the question on November 8, 2021 at 05:10