Module 4 : PHYSICAL DISTRIBUTION MIX

Syllabus : Logistic and supply chain management – Elements – Channels of distribution – Types – Factors affecting
the choices of a distribution channel – Functions of various intermediaries – retailing – types of retailing – direct
marketing – merits and demerits.

Physical Distribution
Physical distribution is concerned with the physical movement of the goods from the producer to the
consumer. It is an important part of marketing activity and a major component of marketing mix.
It includes all those activities which help in efficient movement of goods from producer to consumer. It
includes
 Transportation
 Warehousing
 Material Handling
 Inventory control
 Order processing….
Philip Kotler has defined physical distribution as, "Physical distribution involves planning,
implementing and controlling the physical flow of materials and final goods from the place of production to
the place of use to satisfy consumers’ needs at a profit."
IMPORTANCE OF PHYSICAL DISTRIBUTION
1. The physical distribution system creates place and time utilities.
2. It executes physical flow of product from the place of production to the place of customers.
3. Physical distribution builds customer for the product.
4. It actively participates in the creation and establishment of market for a new product.
5. It minimizes the cost of distribution of products and services to consumers.
6. It gives satisfaction to customers by delivering them goods as and when needed.

PHYSICAL DISTRIBUTION AND LOGISTICS

Physical distribution is an umbrella term which involves logistics and supply chain management. An
important aspect of difference between physical distribution and logistics is that physical distribution
focuses on the physical movement of goods from one place to another whereas logistics encompasses
extensive planning and information flow.
LOGISTICS
According to the Council of Logistics Management
“Logistics is the process of planning, implementing and controlling the efficient and effective transportation(flow)
and storage of goods including services and related information from the point of origin to the point of
consumption for the purpose of conforming to customer requirement.”
According to Philip Kotler “Market logistics involves "planning, implementing, and controlling the physical flows of
material and finished goods from point of origin to point of use to meet the customer's need at a profit.
FEATURES
 Logistics is concerned with the planning, implementing, managing and controlling the flow of goods from the
source of their origin to the place of consumption.
 It is the physical distribution of goods from the source of origin to the place of use.
 It also deals with the flow of information which is reverse (from the customer to the supplier).
 Logistics management links the manufacturing process, the distribution network and the market place to
give maximum services to the customers at lower cost.
 The scope of logistics extends from the management of raw materials to the final delivery of finished
product to the consumers.
 It offers time and place utilities to the consumers.

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 ELEMENTS OF LOGISTICS /LOGISTICS MIX
1. Information Flow/Information Logistics
It is an element of logistics which deals with the flow of information within supply chain network.
2. Inventory Logistics
This element is concerned with the acquisition of raw materials, its control and handling for the production of
goods.
3. Warehousing Logistics
It deals with storage of finished products .

4. Packaging Logistics
It deals with the wrapping of goods for protecting it from damages during transit
5. Transportation
It deals with the planning of the route and mode of transportation (air, road and water transports).
PROCESS OF LOGISTICS/PHASES IN LOGISTICS/TYPES OF LOGISTICS
1. Inbound Logistics
In this phase, raw materials and components are moved from the place of the suppliers to the place of the
producers for processing.
2. Process Logistics
This phase is concerned with the processing of raw materials received from the supplier and the
conversion of raw materials into finished products
3. Outbound Logistics
It deals with the flow of goods from production to consumption. It is the flow of finished product from
producer to consumer.
4. Reverse Logistics
It deals with the reverse flow of goods when customers send back (return) damaged or defective products to
the company.
SUPPLY CHAIN
A supply chain is a network of customers, retailers, distributors, transporters, storage facilities, and suppliers
who take part in the production, delivery, and sale of a product that convert and move the goods from raw
materials to finished goods
SUPPLY CHAIN MANAGEMENT
It is a system of organizations, people, technology, activities, information and resources involved in moving a
product or service from supplier to consumer. The process of SCM spans from acquisition of raw materials for
production to retailing.
Definition:
According to [Link], "supply chain management is the management of a network of interconnected
businesses involved in the ultimate provision of product and service packages required by end customers
FEATURES
1. It is the management of the whole system of supply chain network.
2. It is the planning and management of all supply chain activities including logistics.
[Link] the management of relationships among the various elements in a supply chain network
4. The objective of supply chain management is improving the overall effectiveness of the supply chain system.
BENEFITS OF SUPPLY CHAIN MANAGEMENT
(1) Create efficiencies
(2) Increase profit
(3) Reduce cost
(4) Boost collaboration.
(5) Better management of demand.
(6) Maintain optimum level of inventory.
(7) Effectively meet customer deman

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DIFFERENCE BETWEEN LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Importance of SCM
 It co-ordinates the different organizations, processes, information, people and resources.
 It ensures better information sharing among the supply chain members.
 Supply chain planning and decisions are made by way of mutual consultation rather than in isolation.
 It designs and implements suitable logistics process.
 It selects competent suppliers to deliver the raw materials.
 It ensures a systematic inventory control and management.
 It ensures a proper delivery of products to the consumers
 It creates an atmosphere of mutual trust and understanding among the channel partners.
 It attempts to offer better customer services.

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CHANNELS OF DISTRIBUTION
Product distribution or place is key ingredient of the marketing mix. The process of marketing is not
complete after the production of goods. There is a wide gap between production and marketing. It is the
distribution or place function of marketing bridges this gap..
DEFINITION
According to Stanton, "a distribution channel consists of the set of people and firms involved in the transfer
of title to a product as the product moves from producer to ultimate consumer or business user".
According to Louis [Link], "marketing channels are set of interdependent organizations involved in the
process of making a product or service available for use or consumption".

TYPES OF CHANNELS
A channel of distribution consists of a set of interdependent organizations such as wholesalers, retailers, and
sales agents involved in making a product or service available for use or consumption.
 Producer→ Consumer (Direct distribu on/ Zero level channel)
This is the simplest and shortest channel in which there is no intermediaries act in between the producer
and consumers. This channel is known as direct channel where producers, directly sell goods to the consumers.
It is the fast and low cost channel of distribution.
 Producer → Retailer → Customer (Retail distribu on)
There is only one intermediary act in between the producer and consumer in this channel. The intermediary
is known as retailer'. In this channel, the producer sells his product to big retailers or retailers who buy goods in
large quantities who in turn sell them to the ultimate consumers
 Producer → Wholesaler → Retailer → Customer (Wholesale distribu on)
This is the widely seen conventional channel of distribution. In this channel, there are two intermediaries act
in between the producers and consumers. They are known as 'wholesaler' and retailer'. This channel is suitable
for large markets where consumers are highly scattered.
 Producer Agent → Wholesaler → Retailer → Customer
There are three intermediaries involved in this channel. They are 'agent', 'wholesaler' and 'retailer'. This is
the longest channel of distribution in a marketing process. This channel is adopted when the producer wants to
be fully free from the burden of distribution.
FUNCTIONS OF VARIOUS INTERMEDIARIES IN THE DISTRIBUTION CHANNELS/ROLE OF MIDDLEMEN
 To provide a link between production and consumption.
 Identifying and contacting buyers for making the sale.
 Making the delivery of goods as per the requirements of market.
 Delivery of goods in suitable packages to the dealers and customers.
 Encouraging and influencing the prospective buyers to purchase products.
 Formulating pricing policies in accordance with the market conditions.
 Providing product and market related information to the producers.
 Managing the overall process of distribution
 Supporting in the creation and development of market for a new product.
 Extending pre sales and after sales services to consumers.
 Educating the customers about the usage of a product.
 Giving credit facilities to retailers and consumers.
 Accepting risk associated with the storage, handling and transportation of products.

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 DISTRIBUTION CHANNEL STRATEGY
A distribution channel strategy describes the method that controls the flow of goods and services from the
manufacturer to the end-user. A distribution channel strategy is influenced by the following factors;
1. Distribution intensity
2. Channel configuration
3. Channel arrangement
1. Distribution Intensity
The first strategic decision is concerned with the intensity of distribution in a target market. Distribution
intensity decides the level of availability of a product and its market coverage. There are three variants
(strategies) of distribution intensities. They are;
a) Intensive Distribution
The manufacturer aims to give maximum possible coverage
for his products by supplying them to all outlets. For example, distribution of chocolates, pen etc.
b) Selective Distribution
In this type of distribution, a manufacturer supplies his products to a limited number of outlets in a target
market.. For example, certain premium brands in Shirts like 'Louis Philippe', 'Van Heusen' etc. are available only
in selected retail outlets.
c) Exclusive Distribution
This is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is
appointed in a specific geographical area. For example, Car manufacturing companies
follow this type of distribution.
2. Channel Configuration
The next stage of strategic decision is the configuration or design of the distribution channel. It is the number of
levels or intermediaries within a channel such as agents, distributors, wholesalers, retailers…
3. Channel Arrangement
The arrangement of channel is very important in a distribution process.
Mutual trust and understanding between the members increase the efficiency of a distribution channel.
Different types of channel arrangement strategies are as follows;

a)Independent Channel Arrangement

In this kind of arrangement the channel members prioritize their own objectives and are not concerned about
the chain as a whole. It is a more conventional form of arrangement where the members are free to take
decisions which are in their own interest.
b) Dependent Channel Arrangement/Vertical Marketing
Systems (VMS)
In this kind of arrangement the channel members feel united and working together towards a similar goal.
Members maintain close contact with each other. In this system a single member cannot make changes in the
way the product is distributed in the channel.
c)Horizontal Marketing System (HMS)
It occurs where organizations operating on the same channel level (e.g. two suppliers or two retailers) co-
operate. They share their distribution expertise and resources. This helps them to effectively cover the target
market.

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FACTORS AFFECTING THE CHOICE OF CHANNEL OF DISTRIBUTION
1. Market factors
2. Product factors
3. Environmental factors
4. Company factors
5. Middlemen factors
1. Market Factors
The nature of the market is a key factor influencing the choice of channels of distribution. The
following are the major market factors influencing the selection of a distribution channel;
a) Number of Buyers
When the number of buyers is large, a long channel is needed to reach the buyers.
b) Geographical Distribution
If the customers are highly scattered throughout the geographical area of the target market, a long
distribution channel is essential.
c) Size of Order
Direct selling is suitable, when customers place bulk quantity order. If the orders are placed regularly for
small quantities more middlemen must be deployed in a channel.
d) Buyer of Products
If the buyers want direct dealings with the manufacturers, then no middlemen are required in marketing.
2. Product Factors
A company should understand the features of its product before selecting a distribution channels. A
distribution channel best suited for a particular product may not be suitable for the other. The following are
some of the important product related factors affecting selection of a distribution channel;
a) Perishability
If a product is highly perishable, then a shortest channel would be ideal for that product. Fruits, milk,
vegetables etc. must reach the consumer immediately after production.
b) Unit Value
Products of low unit value and common use are generally sold through middlemen. On the other hand,
expensive consumer goods and industrial products are sold directly by the producers.
c) Weight
Products having heavy weight are usually sold directly or through a short channel to the consumers because
of difficulty in transportation. For example, bricks, stones etc.
d) New Products
They are usually marketed through short channels or directly because of low demand.
3. Environmental Factors
Another important aspect in the channel decision is the characteristics of the total environment of the
market. Environment includes both micro and macro environment.
4. Company Factors
a) Financial Resources
The financial position of a company is a very important factor affecting channel selection. A financially weak
company appoints financially strong intermediaries to support the distribution process. If the company is in a
good financial position can reducing the number of intermediaries.
b) Size of the Company
The increase in the size of the company requires strong distribution channel to deliver its products.
c) Policy of Distribution
The policies of a company in distribution such as the speed of delivery, safety and efficiency are the major
factors affecting the choice of a distribution channel.

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5. Middlemen Factors
The choice of a channel is influenced by the availability, attitude, efficiency and cost of the middlemen
involved in the process. These factors are as follows;
a) Attitude of Middlemen
The attitude of the middlemen towards the distribution of a company's product is a major affecting the
selection of a channel. Most of middlemen are high profit makers who demand more commission from the
manufacturers and take high profit margins from the sale of the products.
b) Availability of Middlemen
If the right type of middlemen required is not available, then the company has to establish its own
distribution network.
c) Services
A distribution channel becomes effective when the middlemen involved are able to provide all the
essential services in connection with the distribution of products.
d) Sale potential
Usually companies appoint middlemen on the basis of their ability to sell goods. They prefer middlemen who
enjoy high sale potential.
CHANNEL CONFLICT
Channel conflict occurs when the intermediaries or middlemen in a distribution channel compete each other
by breaking the mutually agreed (usual) channel route for selling the products. For example, a manufacturer sells
products directly to the consumers through internet or other media or a wholesaler sells products directly to the
consumers. In these situations channel partners violate the accepted channel of distribution. Channel conflict is
also known as 'disintermediation'. Conflicts damage the relationships between the channel members.
TYPES OF CHANNEL CONFLICTS
1. Vertical channel conflict
2. Horizontal channel conflict
3. Multi channel conflict
1. Vertical Channel Conflict
If a conflict occurs between members in higher and lower levels of a channel, it is known as vertical conflict.
For example, conflict between manufacturer and wholesaler.
2. Horizontal Conflict
If a conflict occurs between members in the same level of a channel, it is known as horizontal conflict. For
example, conflicts between retailers in a distribution channel.
[Link] Channel Conflict
When a conflict occurs between two or more channels established by a manufacturer, it is known as multi
channel conflict.
CONFLICT RESOLUTION STRATEGIES/CONFLICT MANAGEMENT
1. Communication
This is the best way to resolve conflict. Lack of communication is the major source of conflict. In this strategy,
companies maintain regular communication with its channel members to understand their problems and settle
their complaints.
[Link] Councils
In this strategy, a committee or body of the channel members are formed .The council acts as forum to resolve
disputes between the channel members and between the company and the channel members
3. Prioritizing Customer Satisfaction
This is a strategy which convinces the channel members about the necessity of placing customer satisfaction
above all personal interests of the channel members.
[Link] and Mediation
In this strategy, a conflict is resolved by seeking the mediation and arbitration of a third party. Sometimes, the
Court or government departments take part in the arbitration process.
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RETAILING
The term 'retail' was originated from the old French word 'retailler'-cut off, trim, clip and divide
The prefix 're' in the word retailer means again and the verb tailor means 'to cut'.
Retailer is 'to cut again'.
Obviously, retail trade is cutting off smaller portions/pieces from large quantities of goods and selling them
to the ultimate consumers.
DEFINITIONS
1. William [Link] defines a retailer or retail store as "a business enterprise which sells primarily to the
ultimate consumers for non-business use."
2. According to Philip Kotler, "retailing consists of all the activities related to the sale of goods and services to
the ultimate consumers for personal and non-business use."
3. According to Cundiff and Still, "retailing consists of those activities involved in selling directly to ultimate
consumers."
RETAIL, RETAILER AND RETAILING
RETAIL
The meaning of retail is sale of commodities in small quantities to the ultimate consumers. Specifically, it
indicates, the quantity of goods dealt by the trader. Goods in small quantities are offered for sale in a retail
trade.
RETAILER
The term retailer is used to denote the party, trader or enterprise engaged in the sale of commodities to the
end users. A retailer performs the role of an agent of the consumers who buys finished goods from the
manufacturers or wholesale dealers for the use of the consumers.
RETAILING
Retailing refers to all the activities related to the sale of goods and services the ultimate consumers. The
term encompasses the whole process of retail trade.
Thus, retail refers to selling of goods in small quantities to the end users, retailer is the dealer or firm engaged
in such selling goods and retailing is the whole process of retail sale.
CHARACTERISTICS OF RETAILING
1. Retailing is the last phase of the marketing process.
2. In retailing, the retailer buys goods in large quantities from the manufacturer or the wholesaler and sells
them in small quantities to the ultimate consumers for their personal or household use.
3. Generally, retailing deals with a wide variety of goods for the use of the consumers.
4. The mechanism of retailing functions on the direct contact with the retailer and the consumers.
5. Retailing is a medium of marketing communication .
SCOPE AND IMPORTANCE OF RETAILING
1. Wide Range of Goods
Retailers offer wide range of goods to the consumers for their choice. This gives consumers an opportunity
to select goods from different brands, sizes and prices at one location.
[Link]-of-Bulk (Breaking Bulk)
Breaking bulk is an important service offered by retailers to the consumers and the manufacturers. In the
distribution channel, manufacturers and wholesalers sell goods in large quantities or bulk to the retailers. The
retailers then break down the merchandise into smaller quantities as per the individual consumer needs.
3. Merchandising
Merchandising is an important aspect of retailing. It refers to the various activities which contribute to the
sale of products the consumers. The various tools of merchandising include store layout, packing, arrangement
of the products in the store, display and presentation.

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4. Dissemination of Information
Retailer gives valuable information to both the manufacturers and the consumers. Retailers have direct
relation with the consumers which helps them to understand the buying behavior and market conditions. The
manufacturers can collect all the relevant information they need from the retailers for making changes in their
products and marketing strategies.

5. Holding Inventory
Retailers hold stock of goods for ensuring ready availability for the consumers. Thus, consumers need no
hold goods in large quantities at home. They can purchase goods from the retailers as and when needed. This
saves the money and space of the consumers.
6. Prominent Role in the Value Chain
When consumers purchase goods, retailers order more goods to refill their stock. As a result, companies
have to manufacture the goods for the retailers. For production, companies have to purchase more raw
materials from the suppliers. So the retailer plays a crucial role in value chain.
7. Economic Development
Retailing is one of the most important industries in the world and plays a predominant role in economic
development of the country. It helps in the growth in GDP rate also.
[Link] of Employment Opportunities
Retail sector is the largest employment provider across the world. It provides wide range of career
opportunities to the poorest and unskilled along with the educated and skilled people.
SERVICES OF RETAILERS
1. Services of Retailers to Consumers
1) Offer wide variety of Goods (Provide choice)
2) Shopping Experience (Provide relaxation and enjoyment to the consumers)
3) Credit Facility (Facility to make payment on future date)
4) Home Delivery (Home delivery of goods saves the cost and time of consumers).
5) After Sales Service (After sales services of retailers include feedback calls, replacement of the defective goods,
exchange and repair services)
6) Information and Guidance (Retailers provide valuable product related information to consumers)
2. Services of Retailers to Manufacturers and Wholesalers
1) Means of Sustainable Production (Ensure continuous production of goods).
2) Intermediation Service (Retailers act as an intermediary or connecting link between the
manufacturer/wholesaler and the consumers).
3) Information Sharing Service (Retailer provide valuable and reliable information to wholesalers and
manufacturers about the consumer needs and preferences)
4) Product Promotion Service (Advertisement and sales promotion)
5) Product Launching Service( Helps in commercialization of new products in the market).
TYPES OF RETAILING
1. Types of Retailing on the basis of Ownership.
2. Types of Retailing on the basis of Product Line.
3. Types of Retailing on the basis of Place/Location.
4. Types of Retailing on the basis of Sales Volume.
5. Types of Retailing on the basis of Store.
Types of Retailing on the basis of Ownership
1) Independent Stores
An independent store is a retail shops owned by a single person. Independent stores are sole trading
concerns owned, operated, directed and controlled by an individual. The owner of an independent store is
usually assisted by local staff or family members.

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2) Chain stores/Multiple shops
Two or more retail outlets under a common ownership constitute a retail chain. In chain store retailing,
stores are opened at different places under the management and control of a company's central office.
3) Franchise
It is a contractual agreement between two parties, the franchisor and the franchisee in which the
former gives license to the latter to start and operate a business under an established name.
4) Consumer Co-operative Stores
Consumer Co-operative Stores are retail enterprises owned by the consumers who are the members of the
co-operative society. They are also known as consumer co-operative societies. Cooperative stores eliminate
middlemen and offer goods to consumers at reasonable prices.

2. Types of Retailing on the basis of Product Line

1)Mom and Pop Stores/ Kirana Stores
Mom and Pop stores are small neighborhood retail stores which occupy a small space in a single location to
cater to daily needs of the consumers in the area. They offer selected few products and carry out low volume of
sales.
2) General Stores
General stores deal in all the necessary goods required by the consumers. Goods handled by general
stores include food items, clothes, medicines and household goods
3) Department Stores
A department store is a set-up which offers wide range of consumer products in different categories known
as departments. It is a large shop constituted by different departments each of which deals in different goods.
Consumers get different categories of products under one roof in a department store. Department stores have
different sections or departments to sell garments, furniture, home appliances, toys, cosmetics, toiletries, food,
books, jewelry, electronics and stationery.
4)Supermarkets
Supermarkets are large self service retail stores which generally sell food products, stationery and household
items. They. In a supermarket, consumers choose the products themselves from the racks and at the end, the
cashier collects the cash.
5)Shopping Malls
A Shopping mall is a big retail center containing large number of stores in nearby buildings or inside a big
building. A mall consists of different retail outlets each selling their own products at a common platform.
6)Convenience Stores
Convenience stores are small retail stores which stock a range of items for daily use such as food items,
bakeries, soft drinks and toiletries. Convenience stores are usually located beside busy roads or in urban areas
for easy access to consumers.
7) Specialty Stores
Specialty stores are small retail outlets that deal with a particular product line and related items. Example:
Garment shops, home appliance shops, hardware shops.
Specialty stores can be further classified into;
a) Single Line Stores: Single line stores deal in items belong to a particular product line. A store that offers dress
wears is a single line store
b) Limited Line Stores: Shop that are specialised in offering a particular category of goods in a product line are
limited line stores.
Example: Men's wear shops, Cosmetic shops for Ladies
c) Super Specialty Stores: Retail outlets that are more concentrated and specialised in dealing with particular
brands in a product line are super specialty stores.
Example, a paint shop dealing only in 'Asian Paints’

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3. Types of Retailing on the basis of Place/Location
1) Itinerant Retailers
Itinerant retailers do not have fixed location for trade. They move from one place to another for selling
goods. They are usually found in road sides, streets, bus terminals, stands and railway stations. Itinerant retailers
carry small quantity of stocks which can be conveniently sold during the day

The important types of itinerant retailers are as follows;

a) Hawkers and Peddlers: These are small retailers who carry goods on their heads or on wheeled vehicles from
door to door. They usually sell goods like fruits, vegetables, fish eatables and kitchen utensils. They have no fixed
place of sale and travel from place to place to sell goods by calling out (screaming/shouting).
b) Cheap Jacks: A cheap jack is a travelling vendor who sells inferior and low priced goods. They set up
temporary shops in towns and exhibit their goods for sale. Cheap jacks do business for a short period in one
locality and keep moving from one locality to another.
c) Market Traders: These are periodical traders who sell products at periodical markets on market days. The
markets may be weekly or fortnightly.
d) Street Traders: These traders sell goods on busy streets or footpath. Street traders are also known as
pavement traders. Street traders usually deal in vegetables, fish, toys and bangles.
2)Fixed Shops
Under this category, retailing is carried out in permanent stores in a locality. Fixed shop retailers own a fixed
store for selling goods and do not move from place to place
4. Types of Retailing on the basis of Volume of Sales
1) Small Scale Retailing
In small scale retailing, retailers buy and sell small quantity of goods. Small scale retailers keep small stock of
goods and usually operate as sole trading concerns.
2) Large Scale Retailing
Large scale retailers buy and store large quantity of goods for selling to consumers. They invest more
amount of money in the business to overcome competition in the market.
5. Types of Retailing on the basis of Store
1) In-store Retailing
Selling of goods through a store or shop is termed as in-store retailing. In this mode of retailing, consumers
buy goods from a retail shop.
2)Non-store Retailing
Retailing without establishing any store is known as non-store retailing. It describes retailing activities
outside shops and stores. Non-store retailing is also known as 'home shopping‘..
Non-store retailing can be of the following types;
a) Direct Selling: It is the personal presentation, demonstration and selling of goods to consumers in their homes
or in any other location away from permanent retail premises. Direct selling is performed by means of face-to
face contact with a consumers.
b) Mail Order: It is a type of retail trade where orders for the goods are received from customers through mail
and goods are dispatched through mail. The goods are supplied either by registered Parcel or Value Payable Post
(V.P.P.). In this trade, there is no direct personal contact between the seller and the buyer.
c) Electronic Retailing (E-tailing): It is the sale of goods through internet. The services of e-tailing begin from
browsing products to placing orders to paying for purchases on the Internet. There are thousands of virtual
stores or e-commerce sites on the internet..
d) Automatic Vending Machine: It is a method of selling goods through a vending machine. The vending
machine gives out snacks, candies, beverages, newspapers, magazines and other goods to consumers
automatically on inserting currency into the machine.

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FUNCTIONS OF RETAILING/RETAILERS
1. Primary Functions and
2. Secondary Functions
1. Primary Functions
Primary functions refer to the basic and core functional areas of retailing. The following are the important
primary functions of retailing;
1)Searching
A retailer deals in different variety of goods which he purchases from different manufacturers and
wholesalers. He has to search and identify the manufacturers and wholesalers of goods required by the
consumers.
2) Buying
Placing of orders and buying of the required goods is an important function of retailing. For this, retailer has
to study the market taste and preference of the consumers, market conditions and competition.
3) Transporting
The retailer transports goods from the place of manufacturer or wholesaler to his store for selling them to
the consumers. Retailing facilitates the sale of goods to consumers which are manufactured in different places.
4) Storing
Goods bought from the manufacturers or wholesalers have to be stored by the retailers for ensuring
uninterrupted supply to the consumers.
5) Sorting
Retailers buy and collect different goods from various sources in large quantities for offering a wide variety
of choices for the final consumers. Goods are usually sorted on the basis of properties such as quality, grade,
quantity, shape, size, color and price.
6) Breaking Bulk
Retailers break down the merchandise bought from the wholesalers into smaller quantities as per the
individual consumer needs.
7) Packing
Selling in small quantities necessitates the retailers to pack the goods in small boxes, covers and containers
for the convenience of the customers.
8) Pricing
Retail price refers to the price at which a commodity is sold to the end user. Price is the decisive factor of the
profit earned of the retailer.
9) Selling
Selling is the final phase of retailing where the ownership and possession of the goods are transferred from
the retailer to the consumer.
2. Secondary Functions
Secondary functions include the supplementary activities in connection with the selling of goods to the
consumers.
1)Advertising
Advertising helps to inform the consumers about the product, price, discounts and offers given by
the retail stores. It leads to increased sales and wider publicity to various brands dealt by retailers.
2) Merchandising
Merchandising in a retail store comprises various activities which contribute to the sale of products to the
consumers. The various tools of merchandising include store layout, packing, arrangement of the products in the
store, display and presentation.
3)Financing
Retailers offer credit facilities to consumers to increase sales. Selling of goods on credit enables consumers
to buy goods without ready/spot payment of cash.

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4) Risk Bearing
A retailer has to face many kinds of risks in connection with the selling of goods to consumers. In credit sales,
he has to bear the risk of bad debts on account of non-payment of amount by the consumers. Goods dealt by
the retailers are subject to various risks like deterioration in quality, spoilage, perishability and obsolescence and
loss due to natural calamities
5) Collecting Tax
Retailers act as an intermediary between the government and the consumers in the collection and payment
of tax. The retail price of a commodity comprises indirect taxes levied .
DIRECT MARKETING
Direct marketing is a channel free distribution of products. There are no middlemen functioning in between
the manufacturers and the consumers. In this type of marketing, companies deal directly with its customers.
According to Drayton Bird, "direct marketing is any advertising activity which creates and exploits a direct
relationship between the company and the customer as an individual".
Features
 One-to-one (direct) communication
 Open dialogue
 Personal relationships
 Repeated dealings.
MERITS
1. Clear Targeting
2. Personalization
3. Immediate Action
4. Invisible Strategies
5. Measurability
DEMERITS
1. People see advertisement mails by companies as 'junk mails' or 'spam' which are nuisance and an invasion of
their privacy.
2. By concentrating on directing marketing, companies are unable to get the numerous benefits of mass
marketing .
3. The success of direct marketing highly depends on the accuracy of the customer database kept by the
company. If it is not properly updated, the marketing communication reaches the wrong customers.
TYPES/TOOLS OF DIRECT MARKETING
1. Direct Mail Marketing
It refers to sending product communications and advertisement materials to the home and business
addresses of the consumers.
2. E-mail Direct Marketing
This form of direct marketing contacts consumers through their Email accounts. Product communications
and advertisements will be sent to the
E-mail of the consumers.
3. Telemarketing
It is a type of direct marketing that involves contacting people over telephone for the purpose of marketing
products.
4. Catalogues
A catalogue is a multi-page direct marketing booklet published by a company and issued to a prospective
customer to give complete information regarding the products offered.

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DIFFERENCE BETWEEN DIRECT MARKETING AND INDIRECT MARKETING

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