What is Distribution Network?

Learn about Distribution Network with Govinda

Case breakdown: Movie Pardesi Babu

The scene that you saw shows, how Raju (played by Govinda) who owns a tea estate in Darjeeling. A man who is impressed by the flavor of the tea, wants to distribute this tea across the nation and is wanting  to have a contract of dealership with Raju.

What is distribution network?

Distribution means making the goods available to the customer which is cost-effective, similar to the scene that you saw, he mentions exactly the same thing. He wants to distribute tea across the country, this can only be done through a solid distribution network in place.

Distribution network is the interconnected facility of transport and warehouses to enable inventory of good be stored and delivered to the customer. This includes logistic hubs ,transfer points and inventory management too. Distribution is part of the marketing mix.

Distribution of product and services have different channels of distribution. Appropriate channel of distribution of tea would include wholesalers, agents and retailers. For education, distribution channel can include online education, private classes, training institutes, personal teachers etc.

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Developing an effective distribution network is essential for the success of the company. If an effective system is not in place it could lead to:

  • Network costs
  • Service lead times
  • Product losses or damage
  • Excessive inventory investment
  • Product availability

Marketing channels for distribution of product and services can be direct or indirect in nature. A direct channel of marketing does not include any middleman between company and the customer. While in case of indirect channel of marketing, it can be of four types:

  1. Company- Retailers-Customers
  2. Company-Wholesalers & Retailers-Customers
  3. Company-Agents,Wholesalers & Retailers-Customers
  4. Company- Multi Middlemen- Customers

These are different levels of channels, in each channel, an extra middleman comes into picture. Extra middleman leads to increase in price for the customer.

 

References:

Consultants – Distribution Network Design

Written by: Ms. Gitika Chandra

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