For example, Etsy allows individuals and small businesses to sell their artistic products and services on the Etsy website under their own individual brands. Customers can then visit the site and make purchases directly from the sellers. Nature of the product Customised products require direct marketing as they involve interactions between the buyer and the seller. Whereas, standardised products are sold through a number of efforts. Similarly consumer goods require indirect channels while industrial goods require direct distributions.

Explain any two factors determining the choice of channels of distribution. 6.State the factors determining the choice of channels of distribution. Integration is an attempt at organizing or co-ordinating the marketing processes to increase operational efficiency and acquire greater power over the selling and/or buying process. Like decentralization, integration in the marketing process may have both advantageous and disadvantageous effects.

Distribution Center in E-commerce

The supporters of advertisement, however, argue that we are all rational human beings who make our decisions for the types of utility commonly provided by marketing intermediaries include of products on factors such as price, style, size, etc. They will buy if the advertised product satisfies some of their needs. They may be motivated to work harder to be able to purchase these products.

Physical distribution of goods is concerned with making the goods and services available at the right place, so that people can purchase the same. Financial strength A company which has strong financial base can evolve its own channels. On the other hand, financially weak companies would have to depend upon middlemen. Consumer products are usually standardised, less expensive, less bulky, non technical bought products.

This can be brought about either by reducing physical losses or through change in the technology of the function viz., storage, transportation, handling, and processing. A change in the technique may result either in the reduction of per unit cost or the increase in the output for a given level of cost. The conglomerate is involved in a number of different and frequently unrelated activities.

Online intermediaries

Certain advertisements have appeared in the new life styles which do not find social approval. The cost of reaching a prospect tends to be much less than other forms of communication. Cost of inventory, which includes holding cost such as cost of warehousing, tied up capital, etc and the manufacturing cost. To maximize profits in the long run it would have a lower price per unit in order to capture the market. Government can declare a product as essential product and regulate its price.

• With a traditional store, you can expect that most of your customers either live in your area or have some reason to visit it.
• Transportation contributes to the product’s place utility by transporting desired commodities to the appropriate locations.
• The direct channels adopt the shortest and simplest route to convey goods from the manufacturer to the consumer.
• It is important because unless the goods are physically made available, at various places the sale cannot be completed.
• Company desiring control on distribution of goods and services should use short channels.

These days, the acquisition of most goods are supplemented by different services such as credit facilities, loan facility, free servicing, etc., that ease the tasks of channel members. Manufacturer or producer sells goods to different intermediaries who, in turn, sell them to the end consumers. Note that the movement of goods can incorporate changes in titles from one point to another. You must also be familiar with the key functions that denote how these channels function. Water is supplied through public utility corporations, that are generally run via city and native governments. Water companies are liable for purifying the water to make it safe to eat.

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Business partners are individuals or corporations who work together to conduct business. Direct and indirect are the two major types of distribution used in the execution. Sales operations are carried out to assure the production process, ensuring that items reach customers securely and make the product more accessible. The second form is an indirect distribution method that involves a third party. Typically, manufacturers of products and services will contract their sales to people or affiliates. In the field of exporting products, there are distinct attributes among intermediates.

Consumers may be confident that they are working with legitimate producers and manufacturers. Let’s understand how distribution benefits the company via direct sales. Companies frequently use retailers as one of their key intermediaries. Manufacturers of affordable products commonly employ this distribution method with a massive frequency of consumption. Generally, the two-level channel is appropriate for more cost-effective, long-lasting goods featuring a bigger target market. Standard functions include credit facilities, financing, maintenance, after-sale services, etc.

Understand the Processes to Start an Online Boutique in India

For a particular https://1investing.in/, the expenses of the consumer relationship are more significant. When a firm deploys two or multiple marketing channels to reach single or more customer segments, multi-channel marketing emerges. In this distribution channel strategy, goods transit from the place of production to the site of consumption via a distribution network. Logistical functions include storage, assembling, categorizing, and transportation for a physical undertaking of the goods from one point to another. These functions focus on proper assortment and storing goods in the right place.

• But one question arises–what to do when consumers want to return products to manufacturers?
• For perishable farm products like fruits, vegetables and milk, where the time lag between the commodity entering the marketing system and the time of final consumption is very small.
• Therefore, the cost of marketing is lower, and the farmers’ share in consumer’s rupee is higher in India.
• Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected.
• This function of marketing involves deciding the distribution of goods and services from place of production to place of consumption.

The combination of variables chosen by a firm to prepare its market offering is also called marketing mix. The need for storage arises because of a time lag between production and consumption . Decision regarding physical movement of goods, i.e., deciding the inventory level, storage and transportation of goods.

Subsequently are distributed to urban population and other medium size urban market centres. The wholesale markets of these urban centres work as transit points and thus play an important role in the entire marketing channel for fruits and vegetables. Large wholesale markets for fruits and vegetables are concentrated in 10 major cities viz., Delhi, Kolkata, Bangalore, Chennai, Mumbai, Jaipur, Nagpur, Vijayavada, Lucknow and Varanasi. These cities account for 75 per cent of vegetables marketed in major urban areas in India. Further, the transit trade takes place through the cities with more than 20 lakh population which account for 68 per cent of the fruits and vegetables grown in the respective regions. There are 65 urban wholesale markets for fruits and 81 for vegetables.

Depending on your business practices and targets, you can choose any of the discussed distribution channel types and explore the maximum possible benefit. Analysing the cost-benefit ratio is essential before selecting any distribution channel. In direct sales distribution channel strategy, brands can build honest relationships with end consumers. They can respond to product performance reviews and customer feedback. Moreover, brands get the opportunity to set up customer loyalty and faith by directly dealing with them. For those firms who sell software and tech products, the internet functions as the intermediary in the distribution channel.

It involves deciding the branding strategy, like whether each product will be given a separate brand name or the same brand name will be extended to all products of the company. This concept believes that company should not blindly follow the goal of customer satisfaction. For example, a company should not produce anything just to satisfy a customer.

The product should be made available to the customers at the right place, in right quantity and in right time otherwise the customers would not be able to buy them. Maximizing profits in the short run, it would tend to charge the maximum price for its products. Usually in such a case, the Government does not allow the firms to charge such a high price and intervene to regulate the price of the drug. This can be done by the Government by declaring the drug as essential commodity and regulating its price. The price of a product is affected by the elasticity of demand of the product. Finally, the price elasticity of customer demand must be taken into consideration.

For example, transport cost, labour cost, weighing cost, storage cost and octroi are charged on the basis of weight. Kohls and Uhl have defined market integration as a process which refers to the expansion of firms by consolidating additional marketing functions and activities under a single management. Examples of market integration are the establishment of wholesaling facilities by food retailers and the setting up of another plant by a milk processor. In each case, there is a concentration of decision making in the hands of a single management.

Marketing channels for agricultural products vary from product to product, country to country, lot to lot and time to time. For example, the marketing channels for fruits are different from those for foodgrains. The level of the development of a society or country determines the final form in which consumers demand the product. For example, consumers in developed countries demand more processed foods in a packed form. Most enables have to be cooked and packed properly before they reach the consumers.