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Physical Distribution

Physical distribution is a crucial aspect of the marketing mix, focusing on delivering goods and services to consumers efficiently. It involves the movement of products from production to consumption, encompassing order processing, transportation, warehousing, and inventory control. Effective physical distribution ensures that consumer demand is met promptly while balancing costs and customer satisfaction.

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2 views2 pages

Physical Distribution

Physical distribution is a crucial aspect of the marketing mix, focusing on delivering goods and services to consumers efficiently. It involves the movement of products from production to consumption, encompassing order processing, transportation, warehousing, and inventory control. Effective physical distribution ensures that consumer demand is met promptly while balancing costs and customer satisfaction.

Uploaded by

recor535
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Physical Distribution

Physical distribution is an important element of the marketing mix. It is


concerned with the availability of goods and services to the right people at the
right place and at the right time. This is thus concerned with two factors.

The movement of goods from the production place to the consumption place.
The channel through which the product will reach the manufacturer to the consumer.
The physical movement of goods
When a product is produced and manufactured then it is branded, labelled, packed,
priced and promoted. The consumer will thus get to know about the product and they
would want to buy the product for this, the product should be available in the
right quantity at the right place. Thus the physical movement of goods from the
production place to the place where the consumers demand it is known as physical
distribution. There are various important activities which are required to be done
so that the physical distribution can take place.

Components of Physical Distribution


The components or elements of physical distribution are as under:

Components-of-physical-distribution

Order processing under Physical Distribution Class 12


As per Physical Distribution Class 12, A good physical distribution channel is an
efficient one which will inform the manufacturer as soon as possible about the
demand for the product or service and it will be quickly fulfilled by the
manufacturer or provider. The order flows from the consumer to the producer while
the product will flow from the producer to the consumer and this flow should be
really quick so that the consumers can be gained and retained.

Transportation
Transportation means the physical movement of goods from one place to another i.e.
from the place of production to the place of consumption. It is very important
because unless there is proper transportation of goods the sale will not take place
and the demand and need for the product will remain unfulfilled.

Warehousing
Warehousing means storing the goods in one place so that they can be transported
when necessary. This creates time utility. Not always the production and
consumption time will be the same, sometimes, there is a huge gap between the two
activities and this can be fulfilled by pacing the goods at a safe place. Here, the
sorting and assorting are done.

Warehouses should be placed at such a location that it is easy to transport the


products from warehouses to the place where they are demanded. The location is also
important for the kind of product the company is dealing in. When the products are
perishable or very heavy, then the location should be as close as possible to the
market. For example machinery, food products etc.

The number of warehouses also affects the fulfilment of demand. The more warehouses
the company has, the less will be time taken to transport products to the place of
consumption. Another aspect of warehousing is its cost. When the firm has more
warehouses and prime locations then the cost will rise up. Keeping all these
factors in mind, proper consideration should be taken and then the number, place
and size of the warehouse should be decided by the firm.

Inventory control under Physical Distribution Class 12


According to Physical Distribution Class 12, Inventory control is an important
decision regarding the physical distribution of goods. This means that the level of
inventory needs to be decided. The level of inventory decision is closely linked to
the warehousing decision. This decision is very important for the products that
have a high cost for each unit. The cost will increase if we keep a large stock.
The firm will produce in accordance with the demand for the product. But sometimes,
to meet the demand as soon as possible, producing a higher number of goods becomes
important. This high level of inventory can lead to higher costs. While, with the
improvement in technology, the requirement for high inventory has reduced to a
certain extent and now Just – in – the time inventory method is on the rise.

Inventory should be maintained based on the demand for the product. Thus,
prediction needs to be done for the same. While there are other factors also to be
kept in mind while taking an inventory control decision. These factors are as
follows:

The policy and procedures of the firm are also important to be considered regarding
the satisfaction of the customer. When the high level of inventory is maintained
then the customer can be satisfied in less time as the products will be available
easily. If the firm wants to satisfy the customers and is ready to compromise lower
costs, then the high level of inventory should be maintained. Otherwise, a balance
should be stricken between customer satisfaction and the cost of the product.
The demand forecasts are done to know the demand for the product and thus help in
maintaining the inventory/stock. When the forecasts are more accurate then the need
for maintaining a very high level of inventory can be reduced to a large extent.
The distribution channel which the company chooses is also an important factor to
be considered. When the response of the distribution channel is quick then the
level of inventory can be maintained at low levels but when the channel is slow
then the time taken to respond to the demand will be slow. Thus, a channel which is
quick and is able to meet the demand in less time will be helpful in maintaining
lower levels of inventory.
The cost is also as important as other factors because keeping the cost low is very
useful in keeping the prices low and it will ultimately affect the profits. The
cost of warehousing and the capital that gets tied up should be kept low.
Physical Distribution Class 12 concludes that without a proper physical
distribution system the firm will not be able to fulfil the demand of all and earn
revenue.

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