Definition of marketing distribution, Broadly speaking, distribution can be interpreted as a marketing activity that seeks to expedite and facilitate the delivery of goods and services from producers to consumers, so that their use is in accordance with what is needed (type, quantity, price, place, and when needed).
1. Marketing distribution process
In other words, the distribution process is a marketing activity that is capable of:
- Creating value added products through marketing functions that can realize the utility of form, place, time and ownership.
- Streamlining the flow of marketing channels (marketing channel flow) physically and non-physically. What is meant by marketing flow is the flow of activities that occur between marketing agencies involved in the marketing process.
These marketing flows include physical goods flows, ownership flows, information flows, promotion flows, negotiation flows, payment flows, funding flows, risk-bearing flows, and order flows.
In carrying out distribution activities, companies often have to work with various intermediaries (middleman) and distribution channels (distribution channel) to offer their products to the market.
2. The role of intermediaries in marketing
What is meant by an intermediary is a person or company that connects the flow of goods from producers to final consumers and industrial consumers. In this case producers and consumers are connected in the activities of buying and reselling goods produced by producers to consumers.
In general, intermediaries are divided into middleman merchants and middleman agents. The two main forms of a merchant middleman are wholesalers (also called distributors or jobbers) and retailers (dealers). Middleman merchants are intermediaries who own goods (by buying from producers) for later resale.
Meanwhile, what is meant by an agent middleman (broker) is an intermediary who only looks for buyers, negotiates and conducts transactions on behalf of producers. So it does not have its own negotiating goods. Real estate brokers and sales agents are examples of middleman agents.
3. The gap between producers and consumers.
Intermediaries are needed mainly because there are several gaps between producers and consumers. The gap is.
- Geographical gap, namely the gap caused by the concentration of production and the location of consumers who are scattered everywhere.
- Time gap, namely the gap that occurs due to the fact that purchases or consumption are carried out only at certain times while production (to be efficient) continues all the time.
- Quantity gap, namely the gap that occurs because the amount of goods that can be produced economically by producers is different from the normal quantity desired by consumers.
- Assortment gap, namely a situation where producers generally specialize in certain products, while consumers want a variety of products.
- Communication and information gap, namely the gap that arises because consumers do not know where the production sources that produce the products they want or need, while on the other hand producers do not know who and where potential buyers are.
4. Adjustment of the gap between producers and consumers
To overcome these problems marketers need intermediaries to make adjustments. The adjustment action includes 4 main tasks, namely: accumulating, bulk breaking, sorting, and assorting.
- Accumulating is the activity of collecting goods from various manufacturers.
- Bulk-breaking is the activity of dividing the products of various producers into smaller quantities according to what is needed or requested by consumers.
- Sorting is the activity of dividing or grouping each smaller quantity into homogeneous product lines with certain specifications and quality levels.
- Assorting is selling the various product lines together. The product line mix depends on the size of the intermediary’s business. The bigger the intermediary business, the more the number of product lines, the number of product variations or brands in each product line, and the grouping of product lines based on their uses.
The purpose of using intermediaries is to take advantage of their level of contact or relationship, experience, specialization, and scale of operations in disseminating products so that they can reach the target market effectively and efficiently.
5. Distribution Channels
Meanwhile, what is meant by a distribution channel (marketing channel, trade channel, distribution channel) is a route or series of intermediaries, both managed by marketers and those who are independent, in conveying goods from producers to consumers.
The number of intermediaries involved in a distribution channel varies greatly. Kotler, et al., makes levels in the distribution channel based on the number of intermediaries in it.
Zero-level channels indicate that marketers do not use intermediaries in marketing their products (also called direct-marketing channels).
One-level channel indicates the marketer uses one type of intermediary, whereas a two-level channel means using two types of intermediaries, and so on. Various distribution channels for consumer products, industrial products, and services.
Basically, when choosing distribution channels, companies must follow the 3C criteria, namely channel control, market coverage, and cost. Things to consider include market, product, intermediary, and company considerations.
6. Market Considerations
It should also be noted that the market that will receive the distribution of production goods and services, market considerations that must be considered are as follows.
a. Market Type
For example, to reach the industrial market the company will not need retailers.
b. Number of Customers
Definition of marketing distribution. Potential If potential customers are relatively few, then it would be better if the company uses its own sales force to sell directly to individual buyers and industrial buyers. Conversely, companies are better off using intermediaries if there are relatively many potential customers.
Geographical Markets Marketers tend to establish sales branches in densely populated markets and use intermediaries in sparsely populated markets.
d. Order Amount and Size
A manufacturer will sell directly to a large wholesale network, because the large number of orders makes this form of direct marketing more feasible.
Meanwhile, for small wholesale stores with relatively small orders, the company will use wholesalers to carry out direct sales.
7. Product Considerations
Products are part of production that will enter the market, which will be the target of producers to consumers.
a. Unit Value
Definition of marketing distribution. The lower the unit value, the longer the distribution channel. However, if the product with a low unit value is sold in large quantities or combined with other goods so that the total number of orders becomes large, then a short distribution channel is economically more feasible. Meanwhile, products with high unit values are often sold through the company’s sales force.
For products that are physically easily damaged and don’t last long, it is better to distribute them through short distribution channels.
c. Technical Properties
Definition of marketing distribution. Products Industrial products that are highly technical in nature often have to be distributed directly because the producer’s sales force will be better able to provide the necessary services (both before and after purchase) and have more control over all aspects related to the goods.
On the other hand, technical consumer products often make it difficult for producers. Selling directly to the final consumer is not possible, because the number of consumers is so large. Meanwhile, when it is sold directly to retailers, it often creates problems with regard to the provision of services to these products.
8. Considerations regarding Intermediaries
- Services provided by intermediaries. Producers should choose intermediaries who provide marketing services that the company cannot do technically or economically.
- Presence of the desired intermediary. The difficulty faced is that often the intermediaries that the manufacturer wants also distribute competing products and they are not willing to add to their product line.
- The attitude of intermediaries to company policies. Sometimes the manufacturer’s choice of distribution channels is limited because their marketing policies are not acceptable to certain intermediaries.
9. Company Considerations
a. Financial Resources
Companies that are financially strong tend to be more interested in organizing their own sales force so they have relatively less need for intermediaries.
b. Management Capability
Channel selection can also be influenced by the experience and capabilities of marketing and company management. Lack of experience and marketing capabilities will cause companies to prefer to use intermediaries to distribute their goods.
c. Desired Level of Control
Definition of marketing distribution. If it can control the distribution channel, then the company can carry out aggressive promotions and can monitor the condition of inventory and retail prices of its products. For these purposes, producers often choose short distribution channels, even though the costs are high.
d. Services Provided by the Seller
Often companies have to provide marketing services because of requests from intermediaries.
In a sluggish economic situation, producers tend to distribute goods to the market in the most economical way, namely by using short distribution channels.
10. Flow of marketing activities
- Information Collection and dissemination of marketing research information about customers, competitors, and other current or potential market forces or actors in the marketing environment.
- Promotion Development and dissemination of persuasive communications about offers to entice buyers.
- Business Negotiations to reach an agreement on prices or other issues that may result in the transfer of property rights.
- Ordering Backward communication to convey purchasing interest information of members of the distribution channel.
- Financing (Expenditure) Businesses obtain and allocate funds to cover inventory costs at different distribution channel levels.
- Risk Taking Estimating the risks associated with distributing assignments.
- Physical Ownership Organize the sequence of storage and movement of physical products from raw materials to final consumers.
- Payment, Payment of purchase invoices through the bank.
- Title Transfers actual property rights from one party to another.