Distribution: Meaning, Channels & Functions

MEANING OF DISTRIBUTION

Distribution can be defined as the transfer of goods and services from the producer to the customer, in the right quantities, in the right place at the right time. It involves the marketing, transporting and selling of any item. It can also be said to mean the movement of products to various markets and warehouse locations, all over the sales areas. In ordinary term, Distribution Means the giving out of something to a number of people.

In commerce, distribution simply refers to the various stages or channels which finished products pass before reaching the final consumers.

THE STAGES/CHANNELS OF DISTRIBUTION

  • Manufacturer/Producer
  • Wholesaler
  • Retailer
  • Final Consumer

FUNCTIONS OF THE MANUFACTURER/PRODUCER, WHOLESALER, RETAILER, & FINAL CONSUMER

(1). Manufacturers/Producers

A Manufacturer is one/person who converts raw materials to partly finished or finished goods.

Functions of the Manufacturer/Producer:

a. He produces goods and services to satisfy consumers needs.

b. He maintains high quality production to ensure that his products are the best in market.

c. He makes sure that goods are available (in high quantity) to prevent scarcity.

d. It is the duty of the producer to stabilize the prices of goods.

(2). Wholesalers

The Wholesaler is the person who buys goods in bulk from the Manufacturer/Producer and sells in small quantities to the retailers. He is often called “the middleman”.

Functions of Wholesalers

a. The wholesaler bridges the gap of product supply between the Manufacturers and the consumers.

b. They are bulk breakers: They ensure that goods that comes in large quantity are reduced and sold in bits to retailers and consumers.

c. They provide market and product information for manufacturers.

d. They finance manufacturers through the purchase of high volumes of products thereby financing continuous production of goods.

(3). Retailers

Retailers are people who buy goods from the wholesalers or producers and sell them in smaller quantities to final consumers.

Retailers are the last point in the channels of products flow to the consumers.

Functions of Wholesalers

a. Retailing and selling of goods in smaller bits to the consumers.

b. They identify with the needs of consumers for different products, by displaying various products in one shop/store.

c. They help wholesalers and manufacturers break bulk by buying quantities from wholesalers, thus helping to finance wholesale business.

d. They organize point of sales promotion to attract publicity and carry out general store and shop decoration. This helps to advertise products and enhance sales.

(4). Consumers

A consumer is the king in the chain oof distribution. The business revolves around him. He fixes price that suits him and dictates the goods that will be produced. He has right to purchase safe products that will not be injurious to his health. He has right to choose products freely without force or intimidation.

In definition, A consumer is he who buys goods and uses services. He is at the end of production.

Functions of the Consumer

a. The consumer detects fake and substandard goods in the market.

b. He complains about the mistake in a product and also those of the retailer, in order to be redressed.

c. He gives full information as regards quality, prices and availability of goods.

d. He Encourages continuous production through consumption of goods.

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