In this lesson about distribution systems we will grasp how the collaboration of various procedures is linked together to aid supply of products and services to meet demand. An ensuing quiz will test your knowledge.
Distribution Systems Defined
Distribution systems can be defined as the sequential flow of procedures, systems, and activities which are designed and linked to facilitate and monitor the movement of goods and services from the source to the consumer. Essentially, distribution is about making products and services available to the end users when and where they need them.
Often times, you might hear the term channel of distribution or a marketing channel in reference to the distribution systems. These two terms relate to a group of organizations or individuals who have an impact on the flow of products and services from the source production and the end consumer.
To reiterate, distribution systems refer to making products and services available to the customer base when they are in need and where they can be used. Below are some of the key attributes associated with distribution systems and the benefits they offer:
Time: when the consumer wants to obtain the product or service.
Place: the place attribute is where the consumer wants to obtain the product or service.
Control: consumer ownership of the product or service.
Method: the specifics to the distribution channel; ex. a private label grocery product being manufactured by different producers.
Critical to the design of the distribution system, each attribute has a role and responsibility in the end-to-end system and shares common goals, such as profit and growth, which are attained with a unified process.
Types of Distribution Systems
Within a distribution system we can find multiple channels to enable distribution. The following list and examples will provide some insight to some of the common channels we see around us.
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Consumer channels for products. This series of channels offers a variety of means for the producer to reach the consumer. In some cases, the channel provides a direct link from the producer of the product or service to the consumer. This can be seen in many service industries as a rise in internet shopping and televised shopping channels have become more useful for physical products as well. A notable characteristic of this type of distribution channel is that the cost to maintain inventory is high. Finally, an agent can be utilized to handle mass distribution of products or services. This method provides efficiency and convenience to both the consumer and the producer.
Business to business channel. The channel involves a distributor that connects the producer to the consumer. The use of this type of channel is prevalent in high cost purchases that need some form of sales support like computers or appliances. In some cases this might also involve agents when a company doesn't have the necessary marketing departments or sales teams. For example, an agent could be the sales representative that interacts with the customer at the store.
Let's review. Distribution systems can be defined as the sequential flow of procedures, systems, and activities which are designed and linked to facilitate and monitor the movement of goods and services from the source to the consumer. Some of the key attributes of distribution systems are time, place, control, and method. There are different channels to enable distribution including consumer channels, which provide a direct link from the producer of the product or service to the consumer, and business to business channels, which involves a distributor that connects the producer to the consumer.
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