Goods are produced in order to use. A proper arrangement should be made to sell and distribute the products to satisfy the wants and needs of the consumers. Hundreds of thousand consumers living in villages, cities and nook and crannies of the country use the goods produced at one place. Some products need to be sold and distributed to different countries of the world simultaneously.
The way or medium used to transfer any product from the producer to the hands of ultimate users or industrial users is called distribution channel. Under physical distribution system includes the process of physical flow of goods or services. Transportation, warehousing, inventory control, order processing etc. include in it. There are two major factors under distribution. They are 1. distribution channel and 2. physical distribution function.
The way or medium used to transfer any product from the producer to the hands of ultimate users or industrial users is called distribution channel. Under physical distribution system includes the process of physical flow of goods or services. Transportation, warehousing, inventory control, order processing etc. include in it. There are two major factors under distribution. They are 1. distribution channel and 2. physical distribution function.
Distribution channel sometimes also called 'trade channel' in which include producer, users of the products and middlemen. All the persons, firms, or institutions involved in carrying the products from producers to the hands of ultimate consumers or industrial users are called channels of distribution.
The main function of the channels of distribution is to make effective flow of goods or services. different persons, business firms or business institutions, such as suppliers , producers, industrial users, business intermediaries and agents, brokers, wholesalers, industrial distributors, retailers , and consumers involve in the channel of distribution. They involve in transferring right and ownership of goods or services from one to another. But banks, insurance companies, warehouses, transport companies including other non-intermediary organizations are not included in the channel of distribution. Although they transfer goods from one place to another or to market, yet they do not play the main role in buying and selling contract.
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Suppliers supply raw materials, machines and machinery parts, equipment, manpower, finance etc. to producers and industrial users. The producers transform the materials into the form to be used by consumers. Wholesalers, industrial distributors, business middlemen, brokers, agents, retailers etc. are the intermediaries of marketing. They help producers to transfer products to markets.
Producers may use different channels to carry their products to the hands of ultimate consumers. Selection of proper channel is challenging task for producers in distribution of their products. While selecting distribution channel, cost and benefit is considered as the basic element. Similarly, products, market, middlemen, organization, competition, environmental factors of marketing also should be considered to select distribution channel.
