Management Notes

Management Notes

Reference Notes for Management
Functions of Distribution Channel

Functions of Distribution Channel – Logistic, Transactional and Facilitating Functions | Principles of Marketing

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Functions of Distribution Channel

The main functions of distribution channels can be divided into the following categories:

1. Logistic Functions:

A distribution channel’s logistic function is concerned with the physical movement and storage of goods, which ensures efficient transportation between points of production and consumption. It involves a wide range of activities, such as:

• Transportation:

The process of selecting the most appropriate mode of transportation (e.g., trucks, ships, planes) to move products from one location to another. It involves managing logistics networks and coordinating the movement of products.

• Warehousing:

The process of storing and managing inventory in warehouses and distribution centers. This includes receiving, inspecting, storing, and retrieving items.

• Inventory management:

Managing inventory involves forecasting demand, monitoring stock levels, and implementing efficient replenishment processes in order to meet customer demand while minimizing storage costs.

• Order fulfillment:

Processing and fulfilling customer orders accurately and efficiently, including order picking, packing, labeling, and shipping.

2. Transactional Functions

A transactional function facilitates the buying and selling of products or services within a distribution channel. Transactional functions include:

• Order Placement:

Placement of orders involves receiving and processing orders from customers. This may involve using an electronic order system, phone calls, or other communication methods.

• Pricing:

The process of determining prices for products or services based on factors such as production costs, market demand, and competition.

• Negotiation:

Discussing and negotiating terms and conditions of the sale with customers, suppliers, and intermediaries, such as pricing, quantity, and delivery schedules.

• Payment Processing:

Handling financial transactions, including collecting payments from customers and coordinating payments to suppliers or intermediaries. Payment methods may include cash, credit cards, or electronic transfer.

3. Facilitating Functions

Distribution channels perform facilitating functions to support and improve the overall distribution process. They add value and improve efficiency for both producers and customers. Some facilitating functions include:

• Market Research:

A market researcher collects and analyzes information regarding customer needs, preferences, and market trends in order to serve producers and intermediaries with accurate product development and pricing decisions.

• Marketing Communication:

The process of creating and delivering messages in order to promote products or services to target customers. This includes advertising, public relations, sales promotions, and other marketing activities.

• Product promotion:

Promotions of products are conducted to stimulate customer interest and encourage purchases. They may include advertisement campaigns, sales promotions, demonstrations, and other marketing techniques.

• After sale services:

Provides customer support and assistance after a product has been purchased. This includes activities such as product installation, training, warranty services, repairs, and handling customer inquiries.

• Customer support:

Providing assistance and information to customers throughout the purchase process, such as pre-sales support, order tracking, and product information.

The purpose of these functions is to ensure the smooth flow of products from producers to end users, to deliver value and to meet the needs of customers as efficiently as possible.

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