Distribution Management

Week 11
MWRE
Concept of Distribution Management

The process of planning, implementing and controlling the efficient, effective flow and
storage of goods and services, and related information from point of origin to the point
of consumption for the purpose of conforming to the customer requirement.

Logistics or the distribution is the process of strategically managing the procurement,

movement and storage of materials, parts and finished inventory (and the related
information flows) through the organization and its marketing channels.
Supply chain management, logistics and distribution all overlap in some ways. In general,
they all affect the methods used by a business to acquire, transport and resell goods
within an industry.

A central difference is that logistics encompasses more elements of planning and

information flow, whereas distribution more often describes the physical movement of
goods. Logistics mainly cover planning and information flow whereas distribution
more often describes the physical movement of goods.

From a big picture perspective, distribution encompasses the ways in which a business
makes goods available to its customers. It also involves the actual physical movement of
goods through a distribution channel.
Objective of Distribution Management

1. To provide better customer service

Customer service is the process of ensuring customer satisfaction with a product or
service.
For example:
Implementation of J-I-T (just in time) inventory processes balance goals of meeting
customer demand while avoiding high costs of carrying excess inventory.

2. To increase sales
The major objective of distribution management is to make the product available
through all the channels available to the firm so that the product is available for larger
chunk of the population which ensures the growth in the sales of the product.
3. To reduce cost
Large amount of cost in the organization can be reduced through the intelligent
organization of the physical distribution system and determining the optimum number
and location of warehouse, improving materials handling, increasing stock turnover, and
using sealed containers to ship products

4. To establish differential advantage over rivals

A position of enduring superiority over competitors in terms of customer preference
may be achieved through distribution management as well.

5. Developing communication
Distribution management provide ample space for the channel members of the
distribution channel to provide the feed back and information regarding the product and
its acceptance to the producer and vice versa.
 Distribution Strategy / Coverage

All marketers are well known to the fact that distribution creates costs to the
organization. Some of these expenses can be passed along to customers but others
cannot.

Some of the levels of distribution coverage are:

Intensive Distribution
The mass coverage (also known as intensive
distribution) strategy attempts to distribute
products widely in nearly all locations in
which that type of product is sold.
Selective
Under selective coverage the marketer deliberately seeks to
limit the locations in which this type of product is sold.
Products with selective coverage appeal to smaller, more
focused target markets compared to the size of target
markets for mass marketed products.
Shopping products such as furniture, smart phones can
apply selective coverage.

Exclusive
Exclusive distribution is an extreme form of selective
distribution in which only one wholesaler, retailer or
distributor is used in a specific geographical area. This is a
common form of distribution in products and brands that
seek a high prestigious image.
Aspects of Distribution Management
There are two main aspects of distribution management

Distribution Channel Physical Distribution

•Manufacturers •Transportation
•Marketing intermediaries (Wholesaler, retailer, •Inventory management
agents) •Ware housing
•End users •Material handling
•Order Processing
•Customer service

a. Distribution Channel

i. Manufacturers
They are the producers of the goods and service that seek to transport the goods
from their place of production to the market.
ii. Marketing intermediaries are the middle men
who act as a bridge between producers and the
ultimate consumers. It includes wholesaler who
iii. End users
purchase product in large volume for further
End users are the ultimate
distribution from the producer or their agent.
consumers who wish to satisfy
their needs and desires from
Retailers are the one to buy quantity products
the available product. They
from the whole seller and sell it to the ultimate
prefer a direct relationship with
consumers in small quantity.
the retailers.

Agents are the representative of the

manufacturers incase producer doesn’t wish to be a
part of the negotiation process.
Physical Distribution

Physical distribution has been described by Philip

Kotler as planning, implementing and controlling
the process of physical flow of materials and final
products, from point of origin to point of use, to
meet customer’s needs at a profit.

Transportation
Transportation helps in movement of product from
one place to another. It plays a crucial role in
movement of product in long distance.
Inventory management
Inventory management is the management of
inventory and stock. Inventory management includes
aspects such as controlling and overseeing ordering
inventory, storage of inventory, and controlling the
amount of product for sale.

Warehousing
Warehouses are used by manufacturers, importers,
exporters, wholesalers, transport businesses,
customs, etc. Warehousing is the act of storing
goods that will be sold or distributed later.
Material Handling
Material handling is the movement, protection, storage
and control of materials and products throughout
manufacturing, warehousing, distribution, consumption
and disposal.

Order Processing
Order processing is the process or work-
flow associated with the picking, packing
and delivery of the packed items to a
shipping carrier.
Customer services
Customer service is the process of
ensuring customer satisfaction with a
product or service. Customer service can
take the form of an in-person interaction,
a phone call, self-service systems, or by
other means.
 of Distribution
Management

a) Improving efficiency
b) Delivery of satisfaction and standard of living
c) Value addition to the product
d) Means of production
e) Channel of communication
f) Occupation and employment