INTRODUCTION :-

Monster energy drink is a dominant player in the growing market for drinks
enhanced with stimulants to give consumer extra energy.

Channels of distribution indicate the routes through which goods and services
flow or move from producers to consumers. The goods are produced at one place
but consumed at many places. The movement of goods is facilitated by a number of
intermediaries (middlemen) coming between a producer and a consumer. These
intermediaries form channels of distribution for movement of goods and services.

The effort should be to make the product available to customers at a right

time, in right quantity and at right place element is a process by which the goods are
transferred from the place of production to the place of consumption. The transfer
process of goods involves decisions about channels of distribution and physical
distribution of product and services.

Types of Channels of Distribution

Several alternative channels are available for the distribution of different

products. Generally following channels are available for consumer product.

(i) Produce …………. ……………….. Consumer

(ii) Producer …………. Retailer ……………. Consumer ………………

(ii) Producer ………… wholesaler ………….. Retailer ………………

(iv) Producer …………… Agent …………….. Wholesaler ………….

Channel levels

The goods are to pass from the production to the consumer. The intermediary
arrangement between the two ends is not standardized. Different channel levels are
used by produces to reach the consumers.
These channel levels are explained as follows :

(i) Direct channel or zero level channel :-

In this channel the producer sells the products directly to consumers without
using any intermediary. Eureka Forbes sell water purifiers directly to consumers.
Similarly Beat shoes has its own retail stores through the country.

(ii) One level channel :-

In this channel only intermediary i.e. retailer is used to reach the consumers.
The cars and other four wheeler manufacturers generally have their dealers at
different places through whom they sell their products.

(iii) Two level channel :-

This is the most commonly used channel where in addition to retailer,

wholesaler is also brought in. The producer directly deals with the wholesaler and
sells products in large quantities to him. The wholesaler, than sells goods to retailers
in small quantities and retailer then sells to consumers. This channel is generally used
for goods used daily by. Consumer such as soaps, tooth paste, different type of
groceries etc.

(iv) Three level channel :-

In this channel, an agent comes before the wholesaler and retailer. The
producer may not directly deal with the wholesaler but an agent comes between the
two. This channel may be followed when a producer markets goods in a large area
and the agent deals with the wholesales in different geographical areas reliving
producer of the botheration of dealing with many wholesalers.

Factors Determining choice of channel

The selection of a proper channel of distribution is very important. A number

of factors influence their decision. These factors are :-
(1) Product Related Factors :-

The nature and type helps in determining a decision about channel of

distribution.

(i) Price of product - A high product will have less middlemen because the
number of buyers will be limited on the other hand, a low price priced product with
the large number of buyers will required more channels of middlemen to reach the
customers. A manufacture will not be able to deal directly with large number of
buyers will require more channels of middlemen to reach the customers. A
manufacturer will not be able to deal directly with large number of buyers.

(ii) Weight - Heavy and bulky products will have to be sold directly to reduce
handing costs coal, stones, cement, etc. are some of the examples. Light products on
the other hand, will require more middleman.

(iii) Standardization - when a products is standardized it will have universal

clientele and may need more middlemen for reaching for off customer. If a product is
non standardized or is produced as per the specification of the buyer then it cannot
have more middlemen.

(iv) Product nature - A product of perishable nature cannot have more

middlemen because it will have to reach the customers at the earliest. Bread
manufactures normally have a direct contact with retailers.

(v) After sale services - A product may required after sale service. The product
like motor vehicles, fridges, televisions require after sale service. The channel of
distribution will be short for such products.

(2) Company Characteristics

The objective, size and financial position of the manufacture also influences
the channel of distribution.
The following company characteristics may be taken into consideration :-

(i) Financial position :

The financial position of the manufacture helps him is selecting the channel of
distribution. If the manufacturers financially sound then he can give credit to big
consumers by avoiding middlemen. In case he cannot afford to block money for
some time then he may have to rely on wholesalers.

(ii) Volume of production :

A manufacture with large volume may prefer to open his own retail outlets for
sales. A small manufacture on the other hand, will have to depend upon middlemen
for selling his products.

(iii) Control over distribution :

A firm may like to keep fight control over distribution of its goods. Such a
concern will prefer short channel of distribution. If the firm does not intend to
control distribution then it may not bother about the number of middlemen.

The factors discussed above cannot be taken separately rather their collective
impact will influence a decision about the channel of distribution. The distribution
channel should not be selected in haste or carelessly because it has long term effect
on the sales of the product and the reputation of the manufacture.

(3) Competitive factors :

The channel selected by competitor for distribution of goods also influences

the channel decision. A company may not like to selected the same channel of
distribution as used by the competitor. The selection of other channel may prove
beneficial to the company. For example, if the competitor is selling a detergent
powder through big retail stores then the company may appoint salesmen for going
door to door sales.
Market Factors :

The nature and type of market and customers influence a decision for
selecting channels of distribution.

Following factors associated with marketing are important :

(i) Market size :

If the product is to be sold in a large area then it will require long channel of
distribution. A product to e marketed in a limited area will not require more
middleman.

(ii) Nature of customers :

The products required for industrial use are directly brought from
manufactures but products for direct use of customers will require middlemen for
reaching customers.

(iii) Location of buyers :

The location of buyer is also important for selecting the type of middlemen
when buyers are located at thickly populated areas then direct selling will be
convenient, when the buyers are dispersed in large areas then the use of wholesalers
and retailers will be essential.

(5) Environmental Factors

Environmental factors may also influence the choice of a distribution channel.

The trade policy, fiscal policy, economic policy etc. influence a choice of distribute
channel. For example, during boom period a company may be required to appoint
regional distribution channel is order to benefit from the favourable market position.

Physical distribution of goods :

 Marketing process is not complete just by producing a product are creating a
consumer. Delivering the product to the consumer at the right time and plae is an
equally important function of marketing. This important function of marketing is
called physical distribution. Physical distribution involves management of physical
flow of raw materials and finished products from the point of origin to the point of
use/consumption to meet the customer needs. It covers all activities in the flow of
goods between producer to consumer.

Components of physical distribution :

There are four important components in physical distribution of goods. These

major decisions have to be taken by management while providing physical
distribution service.

(1) Order processing :

Other processing means the time and steps involved between taking orders
from the customer and delivering the goods. Order processing generally includes
steps like receiving the orders by salesmen, sending the orders to the firm, credit
chart of the customer, production schedules followed by the firm and delivery of
goods of the orders. There is a relationship between the time taken for order
processing and consumer satisfaction. The consumer will be happy processing takes
less time and it will be taken as better care and service of the customer.

(2) Transportation :

It involves the movement of goods from the plae of production to the place of
use. Transport provides place utilkity in goods by taking them to the places where
these are in more demand. It is an important part of commerce as it helps in
removing the hindrance of distances Transport has become so important that it is
not possible to think of any business without the help of transport. The producers
get raw materials and other supplier with the help of transport and finished goods
are taken to consumers with the help of transport modes.
 Transport provides various modes of transport i.e. road, road, sea, air. The
mode to be used will be decided after evaluating it on the basis of speed. Frequency,
flexibility, cost, availability etc.

(3) Inventory :

Inventory refers to the stock of products a firm has to keep in stock for sale to
consumers. Inventories are required to meet market demands promptly. Sufficient
stocks are also built for controlling cost and also to meet target markets. An
organization has to decide the levels of inventory which have to be maintained.
Minimum inventory level is decided for having atleast sufficient stocks for keeping
the operations going maximum stock level, on the other hand, is set in order to keep
investments in stocks under check. The main objective of inventory control is to
control investments in stocks and also to ensure that work does not suffer at any
point of time.

(4) Warehousing :

A warehouse is a place used for the storage of goods. All the goods produced
at a time may not be sold immediately. There may be a time gap between production
and sale. The unsold goods have to be kept in a warehouse in order to meet the
future demand. Sometimes the demand for goods is seasonal but production has to
be carried out regularly in order to built stocks. For example, woolen clothes are
demanded during winter and air conditioners are demanded during summer. There
are products which are needed throught the year but are available during a
particular period. These products have to be purchased and stored when these are
available and to be sold when demand. For example, agricultural produces like
wheat, rice or available during one time in the year but are needed during the whole
year, these produces have to be kept in warehouses for maintaining the supply. The
cost of maintaining the stocks in warehouses should be kept in mind while preparing
inventory policies since these costs increase the sale price of products.
Conclusion :

In conclusion distribution channel is inseparable from other marketing mix

such as promotion, price and product therefore, decisions regarding physical
distribution of goods to the potential consumers are important flow from point of
production to the ultimate consumers. Therefore, if distribution channel are absent,
the whole process of the marketing is sabotaged as promotion price and product
market mixes alone are not sufficient without effective and efficient distribution
channel. Based on this rationale, therefore distribution should be viewed as one of
the p’s of marketing.