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Functions Of Distribution Channels - Marketing Channels

   Posted On :  19.06.2018 12:02 am
Functions Of Distribution Channels - Marketing Channels

Some of the major functions performed by the intermediaries are mainly physical distribution, communication and facilitating functions.

Functions Of Distribution Channels
Some of the major functions performed by the intermediaries are mainly physical distribution, communication and facilitating functions. When we talk about physical functions, they include braking bulk, accumulating bulk, creating assortments, reducing transactions and transporting and storing.

Breaking bulk

One of the important role intermediaries perform is bulk-breaking function. Here these organizations buy in large quantities and break them into smaller quantities and pass them to the retailers, wholesalers or even to the customers. By doing so, the intermediaries reduce the cost of distribution for the manufacturers as well as the consumers. This particular function is also termed as ‘resolution of economic discrepancies’. Exhibit 4.2 gives a pictorial description of bulk breaking

Accumulating Bulk

At times the intermediaries also do the task of accumulating the bulk. The intermediaries may buy bulk from different small producers accumulate them and offer to those buyers who prefer large quantities. The intermediaries in accumulating the bulk are mostly found in the agricultural businesses, whereby the intermediary will procure vegetables from local farmers and assemble them and sell it to the wholesalers. Exhibit 4.3 gives a clear picture on accumulating bulk. Once the marketers accumulate bulk they start to sort the products identifying differences in the quality, grades and classify them into different categories

Creating Assortments

The third important function of the intermediaries is creating assortment. When we take the case of magazines, on an average there are around thousands of magazines being published in a month and it is impossible for a particular newsstand to get it going, here big distributors and agents work in creating assortments and enable a speedy process. This needs a lot of teamwork and timing. Certain magazines become outdated within certain period of time.

Reducing Transactions

One of the biggest reasons that keep the economy moving and the customer smiling is the presence of intermediaries, they reduce the number of transactions necessary to accomplish the exchange of goods. Exhibit 4.4 shows the complicated nature of the transaction if an intermediary does not come in place
                     4.4 Transaction without an intermediary


In the above exhibit, we find that it becomes a complicated process for the manufacturers to work on with different retailers, when a intermediary comes in the form of a wholesaler we find the whole situation becomes different. Intermediaries do not only reduce the number of transactions but also help in the reduction of the geographical distances that both buyers and sellers have to cover.

Channel intermediaries doing the roles of a buying agent for their customer and selling agents for the manufacturers does simplify the process of transaction considerably From exhibit 4.5, we find the reduction in the number of transactions that happen between the manufacturer and the retailer.

Transporting and Storing

Apart from breaking, accumulating, creating assortments and reducing transactions they also perform two key marketing functions namely transporting and storing. The final product has to be moved from the point of production to the point of consumption. This means it involves storing the product along the way till it is delivered. Most of the big retailers hold enough of the product in order to cater to the consumers

Credit Services

Apart from the function of physical distribution the intermediaries also help in offering credit services. Even though there are firms like Metro, which are predominantly cash and carry kind of intermediaries, most of the intermediaries provide credit facility or even paying in parts. Many intermediaries offer about 30 to 45 days to the retailers for paying back.

Risk Taking

one of the vital functions of the intermediaries is risk taking. Not every product finds favor in the eyes of the customer, much fallout within few months, as a result of which the intermediaries would be at risk. An uncontrollable factor like floods, earthquakes or even contamination or fire could pose a serious threat. The intermediaries have to bear these risks along with the market risks. These are some of the core functions intermediaries perform enabling goods and services to reach consumers at the right time.

Tags : MARKETING MANAGEMENT - Marketing Channels
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