Physical distribution in marketing
Physical distribution in marketing. The distribution of goods is distinguished between channels for transferring ownership of goods and channels for physically moving goods.
If the first relates to the channel of distribution, the second is an activity called physical distribution.
Physical distribution in marketing
Physical distribution is all activities to move goods in a certain quantity, to a certain place, and within a certain time.
This physical transfer can be in the form of moving finished goods from the production line to the final consumer and moving raw materials from sources to production lines. Functions in physical distribution include:
- Transportation, namely choosing the right way to move goods to distant places. This is the main function of the physical distribution. Alternative modes of transportation can include rail (rail), water (ship), truck, air (plane), or using special pipelines. The advantages and limitations of each mode of transportation.
- Storage and warehousing, namely storing goods temporarily, waiting to be sold or sent further.
- Inventory central, namely choosing an alternative whether storage should be centralized or distributed.
- Material handling, namely selecting the right tool to move goods to a nearby place, such as to a warehouse, to a vehicle, to a retail store, and so on.
- Border processing, namely activities such as determining delivery terms, preparing documents, and others.
- Protective packaging, namely determining the container of goods to avoid various losses that arise during delivery.
Companies that assist in the physical distribution process are called facilitators or facilitating agencies.
These facilitators can include transportation companies, insurance companies, companies that rent out warehouses (public and private warehouses), finance companies, and so on. It should be noted that the facilitator is not a member of a distribution channel.
Summary of marketing channels
1. 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).
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. Intermediary
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 general, intermediaries are divided into middleman merchants, which consist of wholesalers and retailers (dealers); and agent middlemen.
Intermediaries are needed especially because there are some gaps between producers and consumers. These gaps include geographical gaps, time gaps, quantity gaps, assortment gaps, and communication and information gaps.
To overcome these problems, marketers need intermediaries to make adjustments, which include accumulating, bulk-breaking, sorting, and assorting.
The purpose of intermediaries
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.
Meanwhile, what is meant by distribution channels (marketing channels, trade channels, distribution channels) are routes or series of intermediaries, both managed by marketers and independent, in conveying goods from producers to consumers.
The following are the levels in the distribution channel based on the number of intermediaries in it, namely Zero Level channel indicating 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. 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.
3. Retailing
is all activities of selling goods and services directly to final consumers for personal and household use, not for business purposes.
There are four main functions of retailing, namely: buying and storing goods, transferring ownership of these goods to the final consumer, providing information about the nature and use of these goods, and providing credit to consumers (in certain cases).
Retailing can be classified based on five criteria, namely the type of ownership, products or services sold, non-store retailing, pricing strategy, and location. To support retail business success, it requires the implementation of the 7R strategy which consists of the right product/merchandise, the right price, the right quantity, the right place, the right time, the right services, and the right appeals/promotions.
4. Retailer communication with customers
Retailer communication with customers is not always with the mass media but through visual images, layouts and product displays in the store.
Visual communication is the communication of retail companies or stores with their consumers through physical forms, such as store identity, layout and displays as well as in-store communication. By implementing visual communication as a whole, it will improve or add a better store image in the eyes of consumers.
The following are some elements of store image, namely: merchandise/products, easy-to-reach locations, prioritizing service to certain segments according to the demographic characteristics of prospective buyers, service, sales assistants/staff/cashiers, company or store personality, facilities, store ambience/ atmosphere, and promotion.
Layout is an area mapping that is designed as a place to sell a product to help consumers shop and search for items to buy.
The purpose of the layout
The purpose of the layout is to bring products closer to consumers so that they are available in the right place and quantity, for convenience or ease of obtaining products, and for the efficiency and effectiveness of existing space, namely grouping based on groups and sub groups.
So that with a good layout, the desired objectives can be expected, namely: the benefits of using the place, the benefits of using time, and the benefits of using information. What is meant by display is the layout of goods by taking into account the elements of grouping types and uses of goods, tidiness and beauty so that they appear attractive and direct consumers to see, encourage and decide to buy.
The purpose of the display system
The purpose of the display system is to create a store image, make it easier for buyers to find goods, highlight the types and brands of goods, increase sales, and introduce new items. Visual merchandising is a combination of elements of store environment design, merchandise presentation, and in-store communication.
There are several objectives of visual merchandising, including attracting attention, highlighting one of the features of the product, winning the competition in attracting consumer attention, dramatizing an impression, stimulating consumer interest to read the entire message, and explaining a statement.
5. Wholesaling
All activities of selling products in large quantities to final non-consumer buyers for resale purposes or for business use. Companies that carry out wholesale activities are called wholesalers (distributors, jobbers).
Broadly speaking, wholesalers can be grouped into three categories, namely merchant wholesalers, brokers and agents, as well as producer head offices and branch offices.
Read too The purpose of pricing according to experts
6. Distribution of goods
Physical distribution in marketing. Distinguish between channels to transfer ownership of goods and channels to move goods physically. If the first relates to the channel of distribution, the second is an activity called physical distribution.
Physical distribution is all activities to move goods in a certain quantity, to a certain place, and within a certain period of time. Functions in physical distribution include: transportation, storage and warehousing, inventory central, material handling, border processing, and protective packaging.
Companies that assist in the physical distribution process are called facilitators or facilitating agencies. These facilitators can include transportation companies, insurance companies, companies that rent out warehouses (public and private warehouses), finance companies, and so on. It should be noted that the facilitator is not a member of a distribution channel.
