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Product Distribution

This document provides an overview of product distribution and marketing channels. It discusses wholesaling and retailing functions, levels of distribution channels, and distribution strategies used by companies. The key points covered are: defining product distribution; differentiating wholesaling and retailing; identifying distribution strategies like intensive, selective, and exclusive distribution; and illustrating the zero-level, one-level, two-level, and three-level channels.

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Jan Carl Abdon
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109 views5 pages

Product Distribution

This document provides an overview of product distribution and marketing channels. It discusses wholesaling and retailing functions, levels of distribution channels, and distribution strategies used by companies. The key points covered are: defining product distribution; differentiating wholesaling and retailing; identifying distribution strategies like intensive, selective, and exclusive distribution; and illustrating the zero-level, one-level, two-level, and three-level channels.

Uploaded by

Jan Carl Abdon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Republic of the Philippines

President Ramon Magsaysay State University


College of Tourism and Hospitality Management
(Formerly Ramon Magsaysay Technological University)
Iba, Zambales, Philippines
Tel/Fax No.: (047) 811-1683

College/Department College of Tourism and Hospitality Management


Course Code BMEC 2
Course Title BUSINESS MARKETING
Place of the Course in the Program Major or Minor Subject
Semester & Academic Year Second Semester AY 2022 - 2023

MODULE 9

PRODUCT DISTRIBUTION

INTRODUCTION
One of the important decisions that management faces is determining
which marketing channel to use. Product distribution is a critical factor in the
efficient distribution of products from the manufacturer to the final users of the
products. The objective of any product distribution is to get the right quantity of
goods at the right place and right time with the least possible cost.
Physical distribution of products and logistics deals with the same
activities. These consist of materials handling, order processing, warehousing,
transportation, and inventory. Logistics is concerned with materials
management and physical distribution. Physical distribution links
manufacturing and customers, while material management focuses on the link
between the supplier and the manufacturing.

INTENDED LEARNING OUTCOMES


At the end of this module, students are expected to:

1. define product distribution;


2. differentiate wholesaling from retailing and identify their functions;
3. identify the distribution strategies used by companies; and
4. illustrate the levels of distribution.

DISCUSSION
DISTRIBUTION CHANNELS

Marketing intermediaries compose the distribution channel. They are people


who serve as the link between the firm or manufacturer and the market. Some
examples of intermediaries are sales agent, advertising agencies, wholesalers,
and retailers. They perform tasks such as purchasing, storing, selling, and
transporting products.

Wholesaling intermediaries are those that purchase products from


manufacturers and sell these products to retailers and other industrial users.
Retailers, on the other hand, are those that purchase products and resell them to
final users or market for their own use. Retailing is the final stage in the channel
of distribution.
Physical distribution of products starts when there is order from customers.
How to handle such order in terms of quantity, date of delivery, speed, price,
and mode of transportation to use are the concerns of the distributors.

LEVELS OF CHANNEL DISTRIBUTION

1. Zero-level Channel. From the manufacturer, products reach the market


directly. This is also known as direct marketing. No marketing
intermediaries or distributors are
2. One-level Channel. Before products reach the market, products pass
through marketing intermediaries either through the wholesalers or
retailers.
3. Two-level Channel. This consists of two channels of distribution where
products pass through before reaching the end users. These channels are
the wholesalers and retailers, respectively.
4. Three-level Channel. Products from the manufacturer pass through three
middlemen or channels—the manufacturer's selling agent, to wholesaler,
and to retailer before the products reach the market.

DISTRIBUTION STRATEGY USED BY COMPANIES

1. Intensive Distribution. Firms place products in as many outlets as


possible, be it in supermarkets, department stores, convenience stores,
hotels, and hospitals, among others. This makes the products accessible
and available to all consumers anytime, anywhere.
2. Selective Distribution. Products are distributed in a limited number of
outlets. Companies develop close business relationship with selected
channels.
3. Exclusive Distribution. In this type of distribution, an outlet is given
exclusive rights to carry the manufacturer's products within a specific
territory. This set-up is not convenient to the customers because they have
to go to that particular outlet where products are distributed or being sold.
Although in exclusive distribution, competition is less.

WHOLESALING AND RETAILING

Wholesaling involves transaction where products are sold for resale.


The person involved in wholesaling is called the wholesaler.

Other functions of wholesalers are:


1. They buy in large quantities and break these into smaller numbers for
resale to retailers.
2. They provide product knowledge to the retailers as they promote and sell
the products.
3. They provide the manufacturer the necessary feedback or market
information about his product.

Retailing is the process of selling products to the end users. Retailing is the last
stage in the channel of distribution.

Retailing is an important industry because:


1. It helps the economy by creating jobs or providing employment.
2. Majority of the market patronizes retail purchases.
3. It serves as links between the wholesalers' products and the customers.
4. It sells products that end users can afford.
5. Retail stores are commonly accessible to the market.
Classification of Retailers

a. Self-service is the type used by sellers in convenience stores.


b. Full-service stores offer more choices of specialty products providing
more services to customers; thus, operating expenses are high which
result in higher product price.
c. Limited-service retailers carry more shopping goods; therefore,
providing more sales assistance for customers who need information
about a product.
d. Personal-service retailers provide personalized service to consumers.
Personal services and facilities given to the customer build up goodwill
and increase the volume of sales, as well as profit.
SUGGESTED READINGS

Go, Josiah and ChiquiEscareal-Go. 2010. Fundamentals of Marketing in the


Philippine Setting 2nd Edition. Josiah and Carolina Go Foundation, Inc.

Keegan, Warren J. and Mark C. Green. 2003. Global Marketing 3rd Edition.
Pearson Education, Inc.

Kotler, Philip and Gary Armstrong. 2001. Principles of Marketing 9th Edition.
Prentice Hall, Inc.

Kotler, et al. 2009. Principles of Marketing: A Global Perspective. Singapore:


Pearson Education South Asia Pte Ltd.

Pagoso, Cristobal and Manuel Dela Cruz. 2000. Principles of Marketing in the
Philippine Setting. Manila: Nelson Publication.

Pride, William and O.C. Ferell. 2009. Foundations of Marketing 3rd Edition.
Houghton Mifflin Co. Boston, New York.

RESOURCE AND ADDITIONAL RESOURCES

Balasan, M., 2014. Marketing Basics: A Modular Approach. 1st ed. 856 Nicanor
Reyes Sr. St., Sampaloc Manila: Rex Book Store, Inc.

Prepared by:

ROLANDO M. SOLANO JR.


Instructor I

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