What is Distribution Network?

Learn about Distribution Network with Govinda

Movie Case Study

The scene that you saw shows, that Raju (played by Govinda) 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 dealership with Raju. This blog, Learning Perspectives will explore the meaning of distribution networks.

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 precisely the same thing. He wants to distribute tea across the country, this can only be done through a solid distribution network.

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

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The distribution of products and services has different channels of distribution. Appropriate channels of distribution of tea would include wholesalers, agents, and retailers. For education, distribution channels can include online education, private classes, training institutes, personal teachers, etc.

Effective Distribution Networks

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

Marketing channels for the distribution of products and services can be direct or indirect in nature. A direct channel of marketing does not include any middleman between the company and the customer. While in the case of an 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 emerges. Extra middleman leads to an increase in price for the customer.

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