Course: DISMGT
Descriptive Title: Distribution Management
Course Description: This course covers the concept of supply chain and distribution of goods
and services which covers the concentration of its market and the consumers. To learn about
the methods used in distribution not only to maximize revenue but also put emphasis on
customer satisfaction and meet the demands of the market.
Coverage: Week 1 (Prelim)
Topic: Introduction to Distribution Management
Learning Objectives:
Learn the basics of Distribution management
Know the importance of distribution management
Learn about the distribution channels and their strategies.
Lecture Discussion
Introduction
It is important to note that any form of business cannot survive in the harsh competitiveness
without securing a proper supply chain, that would lead products from the manufacturers to
the target intended audience and customers. According to Still, [Link] in 2017, successful
business is all about creating, communicating, and delivering superior value to the customers.
Distribution Management – refers to the process of overseeing the movement of goods from
supplier or manufacturer to point of sale. It is an overarching term that refers to numerous
activities and processes such as packaging, inventory, warehousing, supply chain, and logistics.
Why is distribution management important?
For the distributors and wholesalers
This is to ensure maximum profitability by delivery of goods as fast and efficient as
possible to the clients.
For the manufacturers
It helps facilitate the transfer of goods towards the desired target market.
For the consumers and customers
Fast transaction, outright want or need satisfaction.
In distribution management, there are what we call “channel”, and these channels are the
elements that interconnect the end consumers and the manufacturers.
What is a distribution channel?
is a chain of businesses or intermediaries through which a good or service passes until it
reaches the final buyer or the end consumer.
Example: wholesalers, retailers, distributors, and even the internet is considered a
distribution channel.
It is simply a path by which goods and services must travel in order to reach the target
customer.
Two kinds of channels:
Direct channels
Indirect channels
Direct channel allows the consumer to make purchases from the manufacturer.
Example: Ordering 25 boxes of Purefoods Corned Beef directly from San Miguel Foods Corp (the
manufacturer of the product).
Indirect channel allows the consumer to buy the goods from a wholesaler or retailer and the
typical goods are sold in traditional brick-and-mortar stores.
Example: Buying 1 can of Purefoods Corned beef in a sari-sari store.
Marketing Channels in the Supply Chain
There are 4 basic types of Marketing Channels:
Direct Distribution Channels
Intermediaries
Dual Distribution
Reverse Distribution
Direct Distribution – selling directly to the intended customer without necessarily going
through complex supply chain. When a company manufactures a product and sells directly to
the intended market.
Example: Avon, Natasha
Intermediaries – the utilization of wholesalers, agents, retailers, and other elements which may
get hold of the product before the actual and intended customers.
Example: SM Retail, Super Metro Retail Stores Group, PureGold, 7/11
Dual Distribution – describes a wide variety of marketing arrangements by which the
manufacturer or wholesalers uses more than one channel simultaneously to reach the end user.
They may sell directly to the end users as well as sell to other companies for resale.
Effect: It can attract the same target market, but it may sometimes lead to channel conflict.
Reverse Channel – it is a distribution channel where goods that are either damaged or at some
point have served their purpose well will return back to the original manufacturer for recycling
or refurbishing.
Example: soft drinks bottles
What to consider in selecting a channel?
Consumer preferences – the main consideration for channel selection for
business distribution is the behavior and buying habits of the intended
customers.
Brand - the selection of the distributor may also be affected by the brand of the
channel partner. The brand image of the channel partner will be the same as the
manufacturer in the eyes of the customers.
Example: When you are a manufacturer, don’t select a distributor that sells low-
cost goods to sell your product so that your branding strategy will not be
damaged.
Cost – How much does it cost to utilize the channels for the purpose of delivering
the goods and services to the intended customer?
Take note: You can use different marketing channels for your product and select the right
channel partner that will effectively send out your goods and services towards your intended
customers.
References:
Still, R.R, Cundiff, E. W., and Govoni, N.A (2017), Sales and Distribution Management, Prentice-
Hall International. Pp.495