Basic Distribution Channel Structure
A manufacturing company manufactures products. It then needs to deliver the manufactured products to the consumers. Many times, the place of manufacturing and the place where the consumers require the products is very far away from each other.
For example: Tata Motors has a "Indica car" manufacturing plant in Pune but its customers are all over India. So, Tata Motors needs to set up an efficient distribution system so that the products reach its consumers.
In case of some perishable food products, physical distribution is a very important part of the whole business. The transportation of "Amul Butter" to the stores that sell "Amul Butter" is a big challenge. While transportation, the butter has to be stored properly, so that it does not get contaminated.
To completely understand physical distribution, consider the case of "Amul Butter". Amul is made in "Kaira District" somewhere in Gujarat. From there it is distributed all over India and it is available at the local store near to us. The destitution guys have to make sure that, every little "Banya shop" on every little street of our extremely large country gets “Amul Butter”. To add to this enormous challenge, “Amul butter” is a perishable milk based product. It has to be stored and transported properly so that it does not get spoilt on the way. And while the distribution guys do all this, company has to make sure that they keep the costs under control.
The above example gives the idea of what the distribution guys do. However, in practice what they do is, set up distribution channels.
Distribution channels:
Distribution channels are all the sub-marketers or intermediate marketers of the company. For example: selling agents, wholesalers, retailers, authorized representatives, and showrooms etc; are basically distribution channels.
The distribution channel for a particular product may be:
Manufacturer - Wholesaler - Retailer - User Manufacturer - Distributor - Wholesaler - Retailer
For example: Tata Motors has a "Indica car" manufacturing plant in Pune but its customers are all over India. So, Tata Motors needs to set up an efficient distribution system so that the products reach its consumers.
In case of some perishable food products, physical distribution is a very important part of the whole business. The transportation of "Amul Butter" to the stores that sell "Amul Butter" is a big challenge. While transportation, the butter has to be stored properly, so that it does not get contaminated.
To completely understand physical distribution, consider the case of "Amul Butter". Amul is made in "Kaira District" somewhere in Gujarat. From there it is distributed all over India and it is available at the local store near to us. The destitution guys have to make sure that, every little "Banya shop" on every little street of our extremely large country gets “Amul Butter”. To add to this enormous challenge, “Amul butter” is a perishable milk based product. It has to be stored and transported properly so that it does not get spoilt on the way. And while the distribution guys do all this, company has to make sure that they keep the costs under control.
The above example gives the idea of what the distribution guys do. However, in practice what they do is, set up distribution channels.
Distribution channels:
Distribution channels are all the sub-marketers or intermediate marketers of the company. For example: selling agents, wholesalers, retailers, authorized representatives, and showrooms etc; are basically distribution channels.
The distribution channel for a particular product may be:
Manufacturer - Wholesaler - Retailer - User Manufacturer - Distributor - Wholesaler - Retailer