Types and Functions of Distribution: Retailer, Consumer, Choice of distribution channels

Content

i. Channel of distribution – retailer

ii. Functions of a retailer.

Retailer

A retailer, or merchant, is an entity that sells goods such as clothing, groceries, or cars directly to consumers through various distribution channels with the goal of earning a profit. … In general, retailers don’t manufacture the goods they sell.

Functions of Retailer

The functions of the retailer can be explained as follows:

i. Connecting Link:

A retailer is a connecting link between the wholesaler and consumer. He purchases goods from the wholesaler and sells the same to the end consumer.

ii. Marketing Function:

Whenever the wholesaler is not capable of carrying out marketing functions transportation and warehousing of goods, the retailer takes over the responsibility. The retailer also helps in advertising the goods and services effectively as he is in direct contact with the consumers.

iii. Market Information:

A retailer provides the following information to the wholesaler:

a. Tastes and preferences of consumers,

b. Current market trend for a particular product and

c. Demand for competitors’ product.

This helps the wholesaler in understanding the products that are currently in demand. A retailer provides the consumers with detailed information regarding the product attributes, price, warranty etc. enabling them to make an informed decision regarding the purchase.

iv. Helps Distribution:

In the case of perishable goods like fruits, vegetables, poultry or dairy products, it is necessary that the goods reach the end consumers in time. This is because they have a short shelf life. Since retailers are in direct contact with a large number of consumers, they help in the faster distribution of goods.

v. Creates Demand:

A retailer tries to draw consumers’ attention towards the newly launched goods through the medium of window display and banner advertisements. The retailer is also able to convince the customers into buying a certain product due to personal relations he has with them. This helps in creating demand for the products.

vi. Local Convenience:

Retailers are usually located in residential areas and remain operational throughout the day. The customers have the flexibility of purchasing goods from such nearby retailers as per their convenience. They do not have to travel long distances to reach the wholesaler or the producer. Also, the manufacturer is assured that his goods are reaching the place of consumption on a timely basis.

Consumer

A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, not directly related to entrepreneurial or business activities.

Functions of Consumer

1. A consumer is the one that buys goods for consumption and not for resale or commercial purpose.

2. The consumer is an individual who pays some amount of money for the thing required to consume goods and services.

3. Consumers play a vital role in developing the economic system of a nation.

4. With consumer demand, producers have motivations to produce and to sell.

5. The consumer also forms part of the chain of distribution.

The choice of channels depends on various factors. Usually, manufacturers consider which distribution channel would be objective and efficient.

The selected channels must have the lowest cost with a maximum overall profit. It should also be remembered that there is no single channel of distribution that will always result in optimum profit. The integrated marketing concept has prompted many manufacturers to employ several kinds of channels.

Choice of distribution channels can be influenced by the following criteria or considerations:

1. Market Variables: This relates to where the majority or bulk of the consumers has related i.e nearness to consumer location, patterns of consumer buying behavioural.

2. Product Variables: This relates to weight, unit, value, technicality, and perishability of a product, nature of product e.g. agricultural products, petroleum products, machinery and plants.

3. Company Variables: This relates to the financial capacity of manufacturers, size, expertise and desire for managerial control.

4. Intermediary Variables: This relates to cost, availability and kind of services provided.

5. Behavioural Variables: This relates to collective bargaining and behavioural pattern of consumer.

6. External Environmental Variables: This relates to government policy/regulations/policies competition, technological innovation, prevalent economic conditions, political and cultural settings etc.