DISTRIBUTION

What is distribution?
Distribution is the process of making the products and services available for use
by the producer. It can simply be put as the movement of products from the point
of production to the point of consumption through a particular medium
TYPES OF DISTRIBUTION
There are three types of distribution which are;
Intensive distribution
Selective distribution
Exclusive distribution
INTENSIVE DISTRIBUTION: This is the system of distributing a product through as
many as possible retail outlet. This system of distribution is particularly suitable
for consumables such as soft drinks, candy bars, bread etc, where the major
influencing factor of the purchase decision is convenience.
SELECTIVE DISTRIBUTION: This system involves the use of limited outlets in the
distribution of products. By carefully selecting the distributors of the product,
producers can then concentrate on potential profit generating frameworks and
also develop a solid workable relationship with prospective customers to ensure
that the product is properly merchandised. This system is actually suitable for
products such as electronics, home furnishing, sports equipment etc
EXCLUSIVE DISTRIBUTION: This system involves the use of a single outlet for the
distribution of a product that is, giving exclusive franchise to a single retail outlet
to sell a product in a particular geographical region. Specialty products such as
automobiles and industrial products such as heavy duty machinery are best suited
for this type of distribution.

CHANNEL OF DISTRIBUTION
What is channel of distribution?
A channel of distribution can be defined as the path through which goods move
from the producer to the final consumers. In other words, it is a network through
which the producer gets his products across to the market vis-à-vis the actual
users or final consumers.
TYPES OF DISTRIBUTION CHANNEL
There are basically two types of distribution channel which are as follows;
Direct distribution channel
Indirect distribution channel
DIRECT DISTRIBUTION CHANNEL: This is the type of distribution channel in which
there are no intermediaries or middlemen between the producer and the
consumer. In other words, the producer sells his product directly to the final
consumer. In this type of distribution channel, the producer performs all the
marketing functions that would have been performed by the middlemen since he
is selling directly to the final consumer. Some factors that makes a producer sell
directly to the final consumer includes;
To have full control over the pricing of the product
To maximize profit
The nature of the product etc
Direct distribution channel can be illustrated in a diagram as follows;
Producer -------------- Final consumer
INDIRECT DISTRIBUTION CHANNEL: This is the type of distribution channel in
which the producer gets his product across to the final consumer through
intermediaries or middlemen. In other words, there exist intermediaries or
middlemen between the producer and the final consumer. Indirect channel of
distribution can take any of the following forms;
Producer ------------- Retailer ------------ Final consumer
Producer -------------- Agent ------------- Final consumer
Producer ------------- Wholesaler -------------- Final consumer
Producer --------- Wholesaler ------------ Retailer ------------ Final consumer
Producer ------- Agent -------- Wholesaler --------- Retail -------- Consumer
FUNCTIONS OF CHANNEL OF DISTRIBUTION
It bridges the gap between production and consumption
It enhances good marketing research and marketing plan,
The distribution channel helps to promote the product.
It helps to understand consumer’s needs and how to adjust the company’s
offer accordingly.
It enhances the storage and proper distribution of goods.
It also helps to cater for the financial requirements for the smooth working
of channel.

FACTORS THAT INFLUENCE THE CHOICE OF A DISTRIBUTION CHANNEL

MARKET COVERAGE DESIRED: Market coverage refers to how widely

available a producer wishes the product is to be at retail outlets, this will in
turn suggests the kinds of retail outlets that will be used to carry the
product. Recall that three levels (types) of distribution are identified:
intensive, selective and exclusive. So for instance, if a producer wishes to
have very huge market concentration, his desired choice of distribution will
be indirect through as many as possible retail outlets.
DEGREE OF CHANNEL CONTROL DESIRED: By controlling the channel, the
producer attempts to ensure that his product will receive the necessary
sales push as well as other essential elements needed to present the
product properly and satisfy end consumers. In such scenario, the use of a
direct channel increases the control and as such, the producer assumes all
channel functions by eliminating middlemen and selling directly to
consumers either door-to-door or through company-owned outlets.
PRODUCT CHARACTERISTICS OR NATURE OF THE PRODUCT: Many product
characteristics influence choice of channel. These include (a) unit value
(price) of the product (b) bulkiness (c) perishability (d) technicality (e)
fragility (f) seasonality (g) degree of market acceptance (h) degree of brand
loyalty etc. Descriptions like direct, indirect, intensive, selective and
exclusive may be used to indicate the effects of these characteristics on the
choice of the distribution channel as it is illustrated below;
Product characteristics The distribution channel to be used will
likely be……………..

High priced Direct, selective or exclusive

Bulky Direct

Perishable Direct

Highly technical Direct

Seasonal Direct

New Direct, selective

Low brand loyalty Indirect, intensive

MARKET CHARACTERISTICS: Market characteristics such as (a) types of

buyers, (b) size of the market, (c) geographical concentration and (d)
frequent and/or impulse purchase would suggest the type of distribution
channel to be employed. For instance, a geographically concentrated
market would need a shorter indirect channel to get the product across to
the final consumer.
FINANCIAL CAPACITY: A producer with access to fund can set up direct
channels such as owning personal retail outlets to sell his product whereas
a producer with insufficient fund who could not embark on such project
would favour selling through intermediaries.
REPUTATION OF THE PRODUCER: A producer with a highly successful
product is likely to sought after by distributors and would be in a position to
select the best of them.
COMPANY’S POLICIES: Various policies regarding sales, services, prices and
advertising influence the choice of channel of distribution. For example, a
policy to back up sales with efficient after-sales services would make a
company (producer) to carefully select dealers in a direct channel.