Physical Distribution mix- channels of distribution and components

MAY 9, 2020

DAY 5

4th period in 12 A and 7th period in 12 B

THANK YOU FOR LOGGING IN. GOOD MORNING BOYS!

TODAY WE WILL COMPLETE PHYSICAL DISTRIBUTION MIX. THERE ARE TWO COMPONENTS OF PHYSICAL DISTRIBUTION WHICH ARE CHANNELS OF DISTRIBUTION AND PHYSICAL DISTRIBUTION ITSELF.

LEARNING OUTCOMES: At the end of the lesson, students will be able to:
1) Explain the components of physical distribution mix.
2) Discuss the types of channels of distribution.

WATCH A SMALL VIDEO FIRST TO UNDERSTAND THE TOPIC BETTER:

NOW, TAKE DOWN THE NOTES:

Q.15 Explain the components of physical distribution.(4)
Ans- 1.Order processing-
a) A good physical distribution system should provide for an accurate and speedy processing of the orders to ensure that goods reach the customers in time, in the right quantity and specifications.
b) This would also result in customer satisfaction and goodwill of the business.
2. Transportation-
a) It is the means of carrying the goods and raw materials from the point of production to the point of sale.
b) It is important because unless the goods are physically made available, the sale cannot be
completed. Thus, it creates place utility.
3. Warehousing-
a) It refers to the art of storing and assorting the products in order to create time utility in them.
b)The firm has to strike a balance between the cost of warehousing and the level of customer
service.
4. Inventory Control-
a) A very important decision in respect of inventory is deciding the level of inventory. Higher the level of inventory, higher will be the level of service to the customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock.
b) Thus, a balance is to be maintained in respect of the cost and customer satisfaction.

Q.16 What are the major factors determining inventory levels ? (4)
Ans- 1.Firm's policy regarding the level of customer service to be offered .
2. Cost of inventory which includes holding cost such as cost of warehousing ,tied up capital, etc and the manufacturing cost.
3.Degree of accuracy of the sales forecasts- In case more accurate sales estimates are available, the need for keeping very high level of inventory can be minimised.
4. Responsiveness of the distribution system- In case the lead time is high, there is a need to
maintain high inventory.

Q.17 What are channels of distribution? Explain the various channels of distribution. (5)
Ans- Channels of distribution means the path through which the ownership as well as possession of goods passes from the producer to the consumer.
The various channels of distribution are as follows-

1. Direct channels of distribution or Zero Level Channel-
a) It means making goods available to consumers directly by the manufacturers.
b) For example- Selling goods through own retail outlets like Bata, door to door selling , mail order selling, internet selling, etc.
2. Indirect channels of distribution- It means making the goods available to the consumers by
employing one or more intermediaries. They are of three types :
i) One level channel-
Manufacturer- Retailer -Customer
a) Only one intermediary that is retailers is used. It covers a wide area of market while retaining control of the channels.
b) For example -Maruti Udyog sells its cars and vans through company approved retailers .
ii) Two level channel-
Manufacturer- Wholesaler- Retailer- Customer.
a) It is used for most consumer goods like soaps, oils, clothes, rice, sugar and pulses.
b) It covers a larger market area and mostly convenience goods of daily use.
iii) Three level channels-
Manufacturer- Agent- Wholesaler- Retailer- Customer
a) It is used when the manufacturer carries a limited product line and has to cover a wide market.
b) An agent in each major area is appointed, who in turn contact the wholesalers.

GOD BLESS YOU ALL!