Place/Physical Distribution Concept Channels of Distribution

3 Marks Questions

1. Ajay was appointed as the marketing head of 'Alfa Enterprise', manufacturer of

toothpaste and toothbrushes. His target sale was 2000 units a month. Apart from thinking about various channels of distribution to achieve the target, he himself started visiting schools in backward areas. He found that even after taking various steps and counselling, some school children had not started brushing their teeth. He investigated and found that they could not afford to buy toothbrush and toothpaste. So, with due permission, he started donating 200 toothbrushes and toothpastes every month to such schools. .

(i)Identify the channel of distribution Ajay would adopt for distribution of toothpaste and toothbrushes and justify it by giving one reason.

(ii)State any two values, which Ajay wants to communicate to the society.(HOTS; VBQ; Delhi 2013)

Ans. The company would like to develop a direct contact with the children, as the geographic area is concentrated at one place. The units to be distributed are small in number. These factors will help in deciding the channel used

1. Ajay, marketing head of Alfa Enterprise, adopted the zero level channel in order to

distribute the toothpaste and toothbrushes. By this mode of distribution, goods are made directly available to the customer without involving any intermediary.

Channel adopted by Ajay is justifiable as this will help in creating straight and direct relation with customer and this will help to achieve the target.

Direct Channel (Zero level)

Manufacturer | Customer

1. Ajay communicated the following values:

• By donating toothbrushes and toothpastes, he is satisfying the social responsibility of business.
• Secondly, he is promoting the concept of healthy lifestyle among the children.

1. What is meant by 'direct channels of distribution'? List any four methods of direct distribution. (Delhi 2009; All India 2009)

Ans. When goods are made directly available by the manufacturer to the consumer, it is known as direct channel or zero level channel. No intermediary is involved in the transaction, e.g. selling through internet, non-retail outlets, mail order selling, selling through own work force, etc.

Methods of direct distribution are: (Any four)

1. Tele marketing
2. Internet selling
3. Mail order selling
4. Selling through own workforce
5. Door-to-door selling

3. What is meant by 'indirect channels of distribution'? Explain any two indirect Channels Of distribution. (Delhi 2009; All India 2009)

Ans. Indirect channels of distribution means making goods available from the point of production to the point of consumption by employing one or more intermediaries. Two Indirect channels of distribution are:

1. One level channel (Manufacturer-> Retailer-> Consumer) In this form of

arrangement, one intermediary i.e. retailers is used between the manufacturers and the customers. That is, goods pass from the manufacturer to the retailers who in turn sell them to the final users.

1. Two level channel (Manufacturer -> Wholesaler-> Retailer-> Consumer) This is the

most popular distribution network for consumer goods like soaps, oil, clothes, rice, sugar and pulses. Here, the wholesaler and retailer functions as connecting links between the manufacturer and consumer.

4. What is meant by channels of distribution? Explain the types of channels of distribution. (All India 2009)

Ans. Channels of distribution means the path through which the ownership as well as possession of goods transfer to the consumer from the producer. There are two types of channels of distribution

1. Direct channel When goods are made directly available by the manufacturer to the

consumer, it is known as direct channel or zero level channel. No intermediary is involved in the transaction, e.g., selling through non retail outlets, mail order selling, selling through own work force, etc.

1. Indirect channel When a manufacturer employees one or more intermediary to

move goods from the point of production to the point of consumption. The distribution network is called indirect. This may take any of the following forms:

• One-level channel Manufacturer->Retailer-> Consumer.
• Two-level channel Manufacturer-> Wholesaler-> Retailer-> Consumer.
• Three-level channel Manufacturer->Agent->Wholesaler-> Retailer Consumer.

4/5 Marks Questions

1. What is meant by physical distribution? Explain its major components.

(Compartment 2014) or