What does ‘channels of distribution’ refer to? What functions does it perform?
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Name the element of marketing mix in which a set of firms create possession, place and time utility? Also explain any five important functions performed by this element.
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How do channels of distribution help the marketing process?
Physical distribution :
- Order Processing
A good physical distribution system should provide for an accurate and speedy processing of orders. In the absence of this, goods would reach the customers in wrong quality or quantity, resulting in dissatisfaction of customers. - Transportation
It means carrying raw materials and finished goods from one place to another. It helps in creating ‘place utility’, by making available the goods where they are required. - Warehousing
It refers to the act of storing and assorting products in order to create ‘time utility’. It helps in proper placement of goods and providing facilities to store them, so that they can be made available as and when demanded by the market.
Channels of distribution :
Channels of distribution are set of individuals and firms that take title or assist in transferring tide, of particular goods and services as they move from producers to consumers. It refers to a team of merchants, agents and business institutions that combine physical movement and title movement of products.
A large number of middlemen not only result in economy of effort, but also helps to cover a large geographical area and bring efficiency in distribution, including transportation, storage and negotiation.
Functions of channels of distribution :
1 Sorting
It refers to the process of sorting the product into homogeneous groups on the basis of size,*-quality, features and price.
2 Accumulation
It refers to the process of accumulation of goods into larger homogeneous stocks. This helps to maintain a continuous flow of supply.
3 Allocation
It involves breaking homogeneous stocks into smaller, marketable lots. This helps in making sales easily according to different requirements of different buyers.
4 Assorting
It refers to the process of combining various goods of the same line of product, for sale to customers. Desired combinations of products are made to fulfil varied needs of customers, such as a cricket kit containing a bat, a ball, gloves, wickets, stumps, helmet and leg guards .
5 Product Promotion
Middlemen helps in the promotion of product by organising demonstrations, displays, contest, promotional events, etc. This helps in increasing the sale of products.
6 Negotiation
Intermediaries usually discuss and decide the terms and conditions of sale, by negotiating the price, quality, guarantee, terms and conditions of delivery and payment, etc.
7 Risk-taking
Middlemen usually bear risks on account of price and demand fluctuations, spoilage, destruction, etc, during the process of exchange.