Distribution

Ø 1) Read the following text and say whether the following statements are true or false. Prove your opinion:

a) Distribution is the process of delivering the product to the customer.

b) Almost every product gets consumed far away from its point of production.

c) Since production point is usually far away from the market, distribution costs remain stable.

d) Physical distribution of products is the process of reaching them to the customers.

e) Very often a product is consumed at the place and time of its production.

The process of delivering the product to the customer is termed as distribution. Distribution management consists of two major tasks: physical distribution and management of distribution channels. Physical distribution can be defined as the process of reaching the product to the consumers. It encompasses all the activities involved in the physical flow of products from producers to consumers.

It is physical distribution that provides place-utility and time-utility to a product. In other words, it is physical distribution that makes the product available at the right place and at the right time, thereby maximizing the company’s chance to sell the product and strengthen its competitive position. If a product could be consumed at the place and time of production, there would be no need for distribution. Such products are rare.

Almost every product gets consumed far away - both in time and space - from its point of manufacture. They have to be carried, stored and distributed. In the case of some products, the location of the production points is totally dictated by production considerations, like proximity to a port or to the source of raw material. In such cases, the production point may be far away from the market.

Distribution aids the process of demand generation. It is distribution that largely determines the customer service level. Through this, distribution serves as an effective tool for building up of client oriented market. And conversely, inefficient distribution leads to loss of customers and markets.

Distribution is a very important area for cost savings. Over the years, in most businesses, distribution costs have grown into a sizeable chunk of the total costs and now rank second among all cost elements, next only to the material costs.

Ø 2) Name the items indicating functions of successful distribution:

a) delivers products to customers,

b) provides place and time utility of the product,

c) is a very important tool for cost savings,

d) explains how small business operates,

e) makes the product available to the customers,

f) maximizes the company’s chance to sell the product,

g) strengthens the company’s competitive position,

h) determines the customer service level,

i) criticizes the general approach to business.