Distribution is one of the processes carried out in economic activities and plays an important role in providing human needs. So what exactly is distribution, and what is its purpose?
In this article, several things related to distribution will be discussed in full, including:
- An explanation of what distribution is, both in general terms and according to experts.
- Distribution function in economic activity.
- General distribution purposes.
- Distribution types.
- The actors in distribution activities.
Let’s see the article until the end, so that you better understand what is meant by distribution.
Definition of Distribution Is
The word “distribution” is adapted from English “distribution” which means the act or process of sending something from one party to another.
In a business context, the definition of distribution is the process of distributing a product, be it goods or services, from producers to consumers so that the product is widely distributed and can be purchased by consumers who need it.
There is also a mention of the meaning of distribution is a marketing activity that aims to facilitate the process of delivering products from producers to consumers. In other words, distribution is the link between production and consumption activities .
Distribution is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user who needs it. This can be done directly by the producer or service provider or using indirect channels with distributors or intermediaries.
In practice, distribution is part of the marketing process that can add value to the product through various functions such as utility, place, time, and product ownership rights.
In addition, it also creates a smooth flow of marketing, both physical and non-physical such as the flow of information, promotions, negotiations, payments, and so on.
Distribution activities can be influenced by several factors, including:
- Number of products.
- Product nature.
- Area area.
- Transportation facilities.
- Means of communication.
- company factor.
- Cost factor.
- Market conditions.
Distribution Function in Economic Activities
In general, there are four main functions of distribution activities, namely purchasing, classification, promotion, and distribution. Here’s a full explanation:
1. Product Purchase
The activity of purchasing goods is the initial process of distribution produced by producers. However, if the distribution of goods from producers is carried out directly to consumers, then this process does not apply.
2. Product Classification
After the process of purchasing goods, there will be an activity of classifying goods based on their function and type so that marketing and counting goods becomes easier.
3. Product Promotion
After the goods are classified, there will be a process of promoting the goods, namely introducing the goods to the public. The process of promoting this item can be done by installing displays in store windows, advertising in various media, and direct offers to consumers.
4. Product Distribution
This is the main activity of distribution, namely distributing goods to consumers. The distribution process must be carried out quickly and precisely so that distributors benefit from distribution activities.
General Distribution Purpose
The main purpose of distribution activities is to ensure the continuity of production activities and ensure that the product is well received by consumers. Here’s a full explanation:
1. Ensuring the Continuity of Production Activities
A well-run distribution process will help production activities. By carrying out distribution activities, the products that have been produced are not held in the producer’s warehouse but move into the hands of distributors.
2. Ensuring Products Get to Consumers
In accordance with its main objective, distribution activities will ensure that products from producers can reach consumers. This distribution process can be done by introducing goods (promotions) to the process of sending goods to consumers.
Based on the role of producers with consumers, the types of distribution can be grouped into two, namely direct distribution and indirect distribution. But apart from that, there are also intensive, selective, and exclusive distribution types.
The following is a brief discussion:
1. Direct Distribution
The definition of direct distribution is an activity of distributing goods from producers directly to consumers. In other words, producers act as distributors and the distribution process does not go through intermediaries or third parties.
In practice, companies must consider the amount of investment required to implement a direct distribution strategy. For example, adding warehouses, vehicles, and delivery staff to distribute goods yourself effectively.
2. Indirect Distribution
The definition of indirect distribution is an activity of distributing goods from producers to consumers using intermediaries or third parties. In this case, the distributor can be an individual or a distribution company.
The term “intermediary” often gets a bad reputation, but in the case of distribution, intermediaries can help in the process of delivering goods to consumers.
Indirect distribution strategies involve intermediaries who assist with logistics and product placement so that they can reach customers quickly and in optimal locations based on consumer habits and preferences.
3. Intensive Distribution
This type of distribution is done by sending the product to as many retail locations as possible. However, only certain products are suitable for this method, namely products that are easy to sell. For example, cold drinks that require very little effort to sell.
4. Exclusive Distribution
Exclusive distribution is carried out by producers by entering into agreements with retailers, namely selling products only through special storefronts. One example of exclusive distribution is the agreement between Apple and AT & T in the distribution of iPhone products in America.
This distribution strategy is very suitable for exclusive products that are in demand and eagerly awaited by many people, such as the iPhone.
5. Selective Distribution
Selective distribution is a middle ground between intensive and exclusive distribution. This type of distribution is done by distributing the product in more than one location, but not as much as with intensive distribution.
For example; selectively selected well-known clothing products such as the Exclusive clothing brand. In addition to the store itself, products from the Exclusive brand can also be found in several clothing stores.
Distribution Actors in Economic Activities
Based on the distribution of goods from producers to consumers, distribution actors (distributors) can be divided into six groups, namely:
Merchants are parties who buy goods from producers and resell them to final consumers. Traders can determine the selling price of a product according to market conditions and socio-economic conditions in a society.
Agents are companies that have the responsibility to distribute goods from producers to consumers. The profit obtained by the agent is from a predetermined commission value.
A broker is a party that brings together producers and potential buyers of a product, be it goods or services. The broker does not spend any capital in the distribution process and the profits obtained are in the form of fees from producers and consumers for their services.
Exporters are parties who distribute goods from domestic producers to consumers abroad.
The opposite of exporters, importers are parties who distribute goods from abroad to consumers in the country.
The commissioner is a party who makes purchases and sales on his own behalf.
From the explanation above, we can conclude that the definition of distribution is the process of spreading a product throughout the market so that the wider community knows it and can buy it.
The distribution process involves the following:
- Good transportation system to carry products to different geographic areas.
- A good tracking system so that the product can be sent to the right party, at the right time, and in the right quantity.
- Good packaging in order to protect the product during the shipping process.
- Keep track of places where products can be marketed so that sales opportunities are better.
- A good system in retrieving goods from traders.
Thus a brief explanation of distribution, starting from its understanding, function and purpose of distribution, types of distribution, as well as several factors that influence the distribution process. Hopefully this article is useful and adds to your insight.