Factors affecting choice of a Distribution Channel; Retailer and Wholesaler; Physical Distribution of Goods; Transportation Warehousing; Inventory control; Order processing

Distribution channels play a crucial role in the marketing mix of a company. They help in creating a link between the manufacturer and the final consumer, ensuring that the product reaches the intended target audience in the most efficient manner. However, the choice of a distribution channel is not a simple task and requires careful consideration of various factors that can affect the success of the marketing strategy. This article discusses the factors that affect the choice of a distribution channel, including the role of retailers and wholesalers, physical distribution of goods, transportation, warehousing, inventory control, and order processing.

Factors affecting choice of a Distribution Channel:

• Product characteristics: The nature of the product, including its perishability, fragility, and unit value, can have a significant impact on the choice of a distribution channel. For example, highly perishable goods such as fresh produce require a distribution channel that is fast and efficient, while fragile goods like glassware require careful handling and special packaging.
• Consumer characteristics: The needs and preferences of the target consumers can also influence the choice of a distribution channel. For example, if the product is aimed at high-end customers, a distribution channel that provides a premium shopping experience may be preferred, while a product aimed at budget-conscious consumers may require a more cost-effective distribution channel.
• Company characteristics: The size, financial resources, and marketing capabilities of the company can also affect the choice of a distribution channel. A large company with strong financial resources and marketing capabilities may choose to establish its own distribution network, while a smaller company may opt for a distribution channel that is already established and proven to be effective.
• Middlemen characteristics: The characteristics of intermediaries, such as wholesalers and retailers, can also influence the choice of a distribution channel. For example, if the intermediaries are highly specialized in a particular product category, it may be more effective to use their distribution network rather than establishing a new one.
• General considerations: Other factors such as legal and regulatory requirements, cultural differences, and economic conditions may also play a role in the choice of a distribution channel. For example, some countries have strict regulations governing the sale of certain products, which may require the use of specific distribution channels.

Role of Retailers and Wholesalers:

Retailers and wholesalers play a critical role in the distribution channel as they are responsible for getting the product from the manufacturer to the end consumer. Retailers are the final link in the distribution chain and are responsible for selling the product directly to the end consumer. They provide a range of services including product display, customer service, and after-sales support.

Wholesalers, on the other hand, are responsible for buying large quantities of the product from the manufacturer and then selling it in smaller quantities to retailers. They provide a range of services including inventory management, credit facilities, and logistics support.

Physical distribution of goods:

Physical distribution of goods refers to the process of getting the product from the manufacturer to the end consumer. It involves a range of activities including transportation, warehousing, inventory control, and order processing. The physical distribution of goods can have a significant impact on the success of the distribution channel as it affects the cost, speed, and reliability of the delivery process.

Transportation:

Transportation is a critical aspect of the physical distribution of goods as it involves getting the product from the manufacturer to the end consumer. The choice of transportation method will depend on factors such as the nature of the product, the distance to be covered, and the cost of transportation. Common transportation methods include road, rail, air, and sea transport.

Warehousing:

Warehousing refers to the process of storing goods before they are sold to the end consumer. It is an essential component of the physical distribution of goods as it ensures that the product is available when needed. Warehousing can be done in-house or outsourced.

Inventory control

Inventory control refers to the process of managing the flow of goods and materials in and out of the business. It is a critical aspect of physical distribution as it affects the availability of goods for sale and the cost of holding inventory. Inventory control involves various activities such as forecasting demand, setting inventory levels, and managing stockouts.

• Forecasting Demand: Forecasting demand is a crucial aspect of inventory control as it enables businesses to anticipate future demand and plan their inventory levels accordingly. Accurate demand forecasting requires an understanding of consumer behavior, market trends, and the competitive landscape.
• Setting Inventory Levels: Setting inventory levels is another critical aspect of inventory control. Inventory levels should be set at a level that meets customer demands while minimizing the cost of holding inventory. The costs of holding inventory include the cost of storage, insurance, and the opportunity cost of tying up capital in inventory.
• Managing Stockouts: Stockouts occur when the demand for a product exceeds the available inventory. Managing stockouts is critical in maintaining customer satisfaction and avoiding lost sales. It involves monitoring inventory levels and replenishing inventory when necessary.

Order Processing:

Order processing refers to the activities involved in receiving, recording, and filling customer orders. It is a crucial aspect of physical distribution as it determines the efficiency and effectiveness of the distribution system. Some of the factors that affect order processing include order entry, order picking, packing, and shipping.

• Order Entry: The process of receiving and recording customer orders is known as order entry. The order entry process begins when the customer places an order, and it ends when the order is recorded in the system. The speed and accuracy of order entry are critical factors in determining the efficiency of the order processing system. The use of electronic order entry systems has greatly improved the speed and accuracy of order entry.
• Order Picking: Order picking refers to the process of selecting the items ordered by the customer from the inventory. The speed and accuracy of order picking are crucial in meeting customer demands and minimizing the cost of order fulfillment. Various technologies, such as barcode scanning and automated picking systems, are used to improve the speed and accuracy of order picking.
• Packing: Packing refers to the process of preparing the ordered items for shipment. The goal of packing is to protect the items from damage during transportation. The packaging material used, the size of the package, and the method of packing all affect the efficiency and cost of packing.
• Shipping: Shipping refers to the process of delivering the packaged items to the customer. The speed and reliability of shipping are critical factors in meeting customer demands. The choice of carrier, mode of transportation, and the location of the customer all affect the cost and efficiency of shipping.