Distribution Policy, Concept and Distribution System (Commodity...

4.2.4. Distribution Policy

The notion and distribution system (commodity circulation, marketing)

activities to plan, implement and control the physical movement of materials and finished products from their places of origin to places of use in order to meet the needs of consumers and with the benefit to the manufacturer.

Tovarodvizhenie - one of the main elements of the marketing complex, characterized by the physical movement of goods and services from the producer or seller to the final consumer. This approach allows you to focus on the methods of delivering goods to representatives of the target market. The consumer can receive the product of interest directly from the manufacturer, through one or more intermediaries or through one or several channels ensuring the availability of the desired product in the right place at the right price, at the right time and in the right amount.

In the process of distribution, the final result of all efforts of the enterprise aimed at developing production and obtaining maximum profit is determined. Focusing on the buyer, the manufacturer has much more opportunities to gain advantages in the competition.

In the marketing system, in particular in the distribution policy of an enterprise, a significant place is occupied by the policy of organization of channels of commodity circulation (sales, distribution, sales). Its purpose is to organize an optimal distribution system for efficient sales of manufactured products, including the creation of its own distribution network of wholesale and retail stores, intermediate storage warehouses, maintenance outlets, trade and service centers and exhibition halls, the definition of optimal routes for goods movement, transportation, shipment and loading of goods, logistics issues, the supply system, ensuring the efficiency of commodity circulation and sales and much more.

From a marketing standpoint, marketing is seen as performing the functions of transporting, storing, storing, refining in the sale process, moving to wholesale and retail trade (for trade enterprises), pre-sale preparation, sale of goods.

Sales channel is an organization or individuals engaged in the movement and exchange of goods; a set of firms or individuals that take over or help transfer someone else ownership of a particular product or service on their way from producer to consumer.

Sales channels distinguish by length - the number of participants or intermediaries in the sales chain (from zero to multilevel) and width - number of independent sales participants at a separate stage of the sales chain.

There are direct sales channels - moving goods from the manufacturer directly to the consumer, bypassing independent intermediaries, and indirect - use of independent intermediaries, to which the goods are moved from the producer in order to sell it to consumers.

Sales channel level - any intermediary performing some work on approaching the goods and ownership of it to the final buyer (see Figure 4.21).

The length of the channel is determined by the number of intermediate levels it has: one-level channel - one intermediary (retailer), two-level channel - two intermediaries (wholesale and retail traders), etc.

Classification of resellers

There are wholesalers - legal entities or individuals acquiring a significant amount of goods from the manufacturer and organizing his further movement in the trading network, and retailers - physical or legal persons selling products to the end user.

A broker - a person selling a product without purchasing it, but only reducing the seller and the buyer and getting commissions from the transaction.

The commissioner is a person who has a warehouse and sells the goods on his behalf, but at the expense of the manufacturer.

Wholesale agent - a person working under a contract with the manufacturer and conducting operations at his expense.

Consignor - a person who has his own warehouse and goods transferred to him by the manufacturer on consignee terms.

Dealer - an independent entrepreneur who usually specializes in selling durable goods that require special service, the owner of the product.

Sales Channels>

Fig. 4.21. Sales channels

If the manufacturing company does not intentionally invest in the organization of the sales system, it is more expedient to work through the intermediary.

As foreign experience shows, about% of export deliveries of machines and equipment of companies of developed countries are carried out through trade departments and branches, as well as agent-intermediaries and Uz equipment supplied to end-users directly, bypassing the intermediate links (mainly this is a unique technological and complete equipment, performed by special orders).

According to marketers, even if the enterprise has sufficient funds to create its own sales network, in many cases, it will prefer to resort to the services of independent intermediaries, and available funds will invest in production, its core business, which will give it a big profit.


When choosing a reseller, more caution is required than when choosing a company - a partner of commercial transactions. In addition to the basic requirements for the selection of counterparty firms, it is recommended:

o make sure that the selected intermediary is not at the same time an intermediary of the competing enterprise, since it can completely cut off the sales market for the enterprise's products;

o other things being equal, give preference to a specialized intermediary, because he has more experience selling this particular product (although the product can be sold more intensively if it is offered together with other goods, ie, a universal intermediary);

o prefer a more famous enterprise with a stronger reputation in the market;

o find out the sources of financing of the intermediary (whether it is granted loans and which bank exactly);

o determine the degree of equipment of the intermediary's material and technical base (offices, warehouses, repair shops, demonstration halls, training centers, etc.), the level of qualification of the working staff (experience in handling, operating and repairing the supplied products);

o conclude trial short-term mediation agreements (one year), allowing in practice to learn about the opportunities and business responsibilities of the intermediary firm;

o visit (personally, in place) an intermediary company to make sure of its solidity and competence;

o expand the number of intermediary organizations, because with a limited number of them, dependence on them increases and, consequently, the degree of risk;

o take into account the location, the number of stores, the depth of geographic penetration, the specialization and range of goods and services sold, the overall marketing concept and the intermediary program.

When choosing a reseller, great care is required, since not one or several transactions are compromised, but the quality of the company's marketing activities on the market and the course of commercial operations as a whole.

The choice of this or that method of organizing the marketing activities of an enterprise depends on the specific market conditions, sales and strategy of the enterprise itself. Often an enterprise, especially a large one, prefers to work by combining all available types of organization of the sales network by markets and goods.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)