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Saturday, 6 October 2018

Distribution and Essence of Channels of Distribution



Manufacturers or producers of product and services make them reach their customers through various avenues known as channel of distribution or marketing channels. According to Zikmund et al (1986:312), channel oriented from a French word called Canal, which refers to a parr through which something moves. Distribution has been variously defined by many authors, among these definition of distribution channel found in business and marketing literature include;

1) Channel of distribution are the routes or path through which goods and services pass as they move from their producers or manufacturers to their buyers or consumers.

2) It can be defined as a conduit pipe through which goods or services reach the customers or users.

3) A path way taken by goods as they flow from the point of production to their point of consumption.

4) The medium through which goods or services pass from the initial production point to the point where they are required or needed, which is mainly through marketing intermediaries.

 The channels of distribution or marketing channel refers to the system of marketing institutions through which goods or services are moved from the producer to the consumer. This movement at times involves physical product transfer or intermediate marketing institution taking tittle with the goods without handling them. Both the producer and consumer or buyer of the goods or services as the case may be, are as well members of the channels of distributions. The producer consumer and other channel intermediaries constitute the channel members through which product tittle flow from producer to consumers. A combination of aforementioned channel members constitute channel structure.
Although the task of tittle transfer and exchange of physical possession (transportation) generally from the same channel of distribution, they do not necessarily need to follow the same path. Example; where a distributor or merchant wholesaler gets an order to supply 100 cartons of star lager beer and decides to buy directly from the brewery (manufacturers factory). Under this arrangement,the whole sales or the distributor takes tittle to the goods automatically at the very point the goods (merchandize) was paid for and loaded into the lorry,but the goods its self followed directly from the brewery or the manufacturers warehouse directly to the consumer at  a drop shipment, without necessarily going first to the warehouse of the wholesaler who have previously taken tittle to the goods. This is a clear explanation where the route of tittle transfer is different from the route of physical flow of goods. Additional example could be where an agent under a principal instruction or arrangement, will not physically handle his principal's goods but succeeds in effecting the transfer of tittle of goofs to the wholesaler, retailer or even the consumer. To effect this the goods are shipped directly from his principal which could be a manufacturer to any of the channel members (the wholesaler, retailer or consumer) without first passing through the agent. The individuals,group of individuals or organisations existing between the producer and the final consumer, who have no speciality in the production of goods and services, but in the task of taking tittle, or assist in transferring tittle to the particular goods or services as the goods move from the producer to the ultimate consumer or last owner are called or known by any of these names; middlemen, channel members of channel intermediaries. As earlier stated, both the producers and consumers of goods and services are among the channel members. This is because they form the starting point and the end point of a channel respectively, when it comes to channel tasks or functions. Distribution function creates form,time,place as well as possession utilities to products and services. The issue of engaging a number of channel intermediaries is dependent on manufacturer's discretion. A manufacturer's quest to engage channel intermediaries is to achieve its distribution objectives. However,where he feels he can achieve that action alone, the manufacturer can go ahead performing the task of transferring the tittle to the goods or ensuring movement of goods from the point of production (producer) to the final users (consumers).
[10/3, 5:18 AM] Onyi Sis Official: SELECTION AND WORKING WITH INDIVIDUAL MIDDLEMEN

When all is said and done, middle men can often make or break a manufacturer. In most cases middle men are the ones who personally contact the final consumers the ultimate consumers or industrial users. Thus the success of manufacturers distribution effort depend alternately upon how well 1) manufacturer select their individual middlemen and 2) work with these distributors and dealers. When selecting a middleman, the key factor to consider is whether the middle man sells to the market that the consumer wants to reach. Then the manufacturer should determine whether the middleman product mix, promotional activities, and customer service are all compatible with the manufacturers needs. There is a community of interest in what each organisation manufacturer and middle man expect from the other in terms of supporting of an effective total marketing program. A series of rewards and penalties may be instituted by either party to encourage the order to perform as expected. The major reward for either party is increased profit. Probably the most powerful penalty a manufacturer can impose is to terminate a sales agreement with a dealer. A middleman, in turn can penalize a manufacturer by not promoting products adequately, by pushing a competitor's product, or ultimately by dropping the manufacturers line entirely. To improve the coordination of their intra channel activities, manufacturers and their middlemen should develop a communication system. The system provides an information exchange on inventory stock, market conditions, and other marketing data important in day-to-day working relationships.