Distribution connotes a ‘route’ or ‘pathway’ taken by

products as they flow from the point of production to

the point of ultimate consumption.
It includes both the producer and consumer as well as
intermediaries engaged in the transfer of title of goods
and services.

Producer Intermediaries consumers

• Route or Pathway
• Flow of goods
• Composition
• Functions
• Remuneration
• Merchantile Agents
1. Contact between producer and consumers.
2. Satisfaction to the consumers.
3. Transferring the title.
4. Fixing prices.
5. Performing promotional activities.
6. Function of financing.
7. Function of distribution.
8. Function of communication information.
9. Help in production functions.
10. Creating time and place utilities.
 Types of Distribution Channels

Conventional Non-Conventional

Direct Indirect Horizontal Vertical

Multi-
One-level Two-level Administered Contractual corporate
level
In this channel it is assumed that each enterprise
working in the channel is separately owned an operated
concern.
These are the channels in which the participants
operate on the basis of self interest, concerned only
with the organisation from where they buy and to whom
they sell.
1
Manufacturer Consumer
The distribution channel called to be In-Direct
when manufacturer includes ‘intermediaries’ to
sell the product to consumer.
This channel is looks like a chain.
 Manufacturer Retailers consumers

In this distribution channel manufacturer allows the retailers to have direct

access to him.
Suitability:- When the products are of perishable nature.

Manufacturer wholesalers consumers

In this distribution channel manufacturer use only wholesalers to sell their

product.
Suitablity:- Industrial products.
Manufacturer Wholesalers Retailers Consumers

• Traditional distribution channel for the sale of consumer goods.

• Two middlemen:- Wholesaler, Retailer.
• Firstly manufacturer sell large quantities to the wholesaler then
wholesaler further sell small quantities of product to retailers
according to their requirement and then retailer finally sell
product to consumer.
• Examples:- groceries items, drugs, food, other shopping product.
Manufacturer Selling agents Wholesalers Retailers Consumers

• Longest channel of distribution.

• Here manufactyrer uses the services of selling agents and pass on
its risk of marketting the products to agents so that he can
concentrate only on production.
• Adopted by small scale companies.
• Adopted by companies with diversified product mix.
Non-conventional or Integrated channels of distribution
are the networks in which channel component
participate in a full co-ordination and cohesion manner
rather than working in loose manner.
1
Vertical marketing systems (VMS) provide
channel leadership and consist of producers,
wholesalers, and retailers acting as a unified
system and consist of:
• Corporate marketing systems
• Contractual marketing systems
• Administered marketing systems
Corporate vertical marketing system integrates
successive stages of production and distribution
under single ownership
Contractual vertical marketing system consists
of independent firms at different levels of
production and distribution who join together
through contracts to obtain more economies or
sales impact than each could achieve alone.
The most common form is the franchise
organization.
Administered vertical marketing system has a
few dominant channel members without common
ownership. Leadership comes from size and
power.
Horizontal marketing systems include two or
more companies at one level that join together to
follow a new marketing opportunity. Companies
combine financial, production, or marketing
resources to accomplish more than any one
company could alone.
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