Distribution of goods and services

1. Meaning of Distribution

It is the action of sharing something out among a number of recipients. It is the way in which something is shared out among a group or spread over an area. It is the action or process of supplying goods to stores and other businesses that sell to consumers.

Distribution is the process of moving a product that has been produced from the producer to the final consumer. The process of distribution is then called channel of distribution.

1. The Channels of Distribution

The channels of distribution are as follows:

• The producer/ manufacturer
• The wholesalers
• The retailers
• The consumers

1. The Producer/ Manufacturer: A person, company, or country that makes, grows, or supplies goods or commodities for sale. A producer is someone or company that makes goods available for sale.
2. The Wholesaler: The wholesaler is the trader who buys goods in large quantity, he / she buys in bulk from the producer and sell in small quantities to the retailers. The wholesaler is the middleman between the producer and the consumer. The wholesaler can be a company or an individual. They can be referred to as merchants, distributors or dealers. The wholesalers distribute raw materials for the production of consumer goods. The producers’ deals directly with the wholesalers and the wholesalers deal directly with the retailer
3. The Retailer: The retailer is a trader who buys goods from the wholesalers in small quantity and sells to the consumers. The retailer is the last link in the channel of distribution. The retailer stands between the wholesalers and the consumers.
4. The Consumer: The consumer refers to an individual who buys products or services for personal use and not for manufacture or resale as a Consumer. A Consumeris a person who engages in acquiring and using goods and services to satisfy his needs and wants. The consumer is the one who pays to consume the goods and services produced. As such, consumers play a vital role in the economic system of a nation. In the absence of their effective demand, the producers would lack a key motivation to produce.

Functions of the wholesalers to the Manufacturer

The following are the functions of the wholesalers to the manufacturer

• The wholesalers markets and advertises the products for the manufacturers
• The wholesalers moves finished goods from the manufacturer to the warehouse , thereby creating space for the manufacturer to put new finished goods
• The wholesalers sometimes prepare a product for sale by replacing them.
• They finance the manufacturer by paying for goods in advance
• They help to give advice to the manufacturers
• They give information to the manufacturers about the goods produced.

Functions of the wholesalers to the Retailer

The following are the functions of the wholesalers to the retailer

• The wholesalers sell in small quantity to the retailer
• He helps the retailers to transport their goods to their destination
• They also help to finance the retailers by selling to them on credit
• They also help them in the acquisition of their duties
• They help in grading and packaging of goods
• They bear the loss or risk of any bad products
• They make goods available in small quantities

Functions of Retailer to the Wholesalers

• The retailers gather information from the consumer and sends it to the wholesalers
• The retailers help the wholesalers in advertising their products to the final consumer
• The retailer moves the goods from the wholesaler’s warehouse thereby creating space for the wholesalers to stock more goods.
• They finance the wholesalers by buying from them in cash and paying in advance.

Functions of the Retailer to the Consumer

• The retailers make buying of goods easy to the consumer and brings goods nearer to the consumer
• They are everywhere , so therefore the consumer can get to buy whatever they want to buy anywhere
• The retailer opens his shop for business from morning till night and every day.
• He sells on credit to the customer
• He also assist the consumer in making a good choice
• The retailer discovered the needs of the people in their environment.

Functions of the Consumer to the Retailer

• They relate with the retailer as friends
• They give information to the retailer about the product sold to them
• The consumer finance the retailer by paying for products and paying in advance

Test and Exercise

1. The major an important channel of distribution is (a) the consumer (b) the retailer (c) the wholesaler (d) the producer
2. ———— Finances the producer (a) retailer (b) consumer (c) manufacturer (d) wholesalers
3. ———— buys in large quantity and sell in small quantity to the retailer (a) the consumer (b) the producer (c) the wholesalers (d) the retailer
4. All the following are chains of distribution except (a) manufacturer (b) wholesalers (c) traders (d) consumer
5. All the channels of distribution are important. True/ false
6. The channel of distribution is (a) process of distribution (b) location of distribution (c) the idea of the business (d) all of the above
7. The last link in the channel of distribution is (a) manufacturer (b) wholesaler (c) retailer (d) consumer
8. Those who buys goods to satisfy their wants are referred to as (a) producers (b) retailers (c) consumers (d) wholesalers
9. The action of sharing something out among a number of recipients is (a) combination (b) distribution (c) continuation (d) malnutrition

• ———- and ————- is called the middlemen (a) consumer and producers (b) consumer and retailer (c) wholesalers and retailers (d) producers and retailers