Logistical and transactional Functions of Channels of Distribution
Functions of Channels of Distribution.
Functions performed by Channels of distribution can be categorized in to three main groups. They are:
1. Transactional Functions.
2. Logistical Functions.
3. Facilitating Functions.
Transactional functions: Functions necessary for the transaction of goods are called transactional functions. Risk bearing, buying and selling comes under this function. Producers, after producing the goods, sell it to the intermediaries. Distributors or intermediaries sell these goods to the next intermediaries or to the end user. Likewise the users of the goods buy it from the distributors. Buying, selling and risk bearing comes under the transactional functions. Distributors buy goods from the producers in anticipation of selling it to the consumers for a profit. Due to the fall in price, the distributors may suffer loss in the process. So they are bearing risk of loss of money. Some goods are perishable. For example vegetables and fruits my get spoiled during the transit. Brake down of truck which carries the perishable goods may spoil the goods. Distributors bear the risk of such damages. Buying and selling the goods help the transfer of title from the producer to the user.
Logistical Functions: Logistical function performs the flow of goods, resources and information between the point of origin to the point of consumption in order to meet the requirements of the customers. Logistics involves the functions like integration of information, inventory, material handing, grading, packing, transportation, warehousing, packaging, security of the goods etc. To facilitate the supply of goods on time, proper storage is necessary. Perishable goods like meat, fruits, vegetables etc. need more attention in storage. Logistical functions performs such activities. With the help of Logistic function, goods are made available by the distributors to the consumers at the time of need.
Facilitating functions: Facilitating function facilitate both physical exchange and transaction of goods. It involves the post purchase services, maintenance, financing, market information etc. Distributors help the customers to chose the appropriate product for the consumption. Distributer convey the demand of the customer to the manufactures. Also the distributor convey the opinion of the consumer to the producer. After sales services and maintenance are required for certain goods. Distributors facilitate such functions. Sellers sometimes provide financial assistance to the buyers. They also provide necessary information about the products to the customers. Facilitating functions involves financing, market information, after sales service, etc.
The channel of distribution performs a verity of functions such as selling, buying, risk bearing, assembling, storage, transportation, grading, maintenance, post purchase service, market information, financing etc. Electronic goods need after sales service and maintenance. Perishable goods need proper storage facilities. These are the main function of the Channels of Distribution.
- What is a channel of distribution.
What is a channel of distribution. The channel of distribution is the network of institutions that perform a verity of interrelated and coordinating functions in the movement of goods from produces to...
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