Distribution Research

Unit 4 - DISTRIBUTION RESEARCH It refers to the study of the physical flow of goods from the manufacturers to the final consumers. Goods may be distributed through different channels, e.g. the manufacturer, wholesalers, retailers and consumers. The main objects of distribution research are distribution channel research, retail stores investigation, dealer survey and location research. i) Distribution channel Research: The distribution channel may be direct or indirect. Direct distribution means selling gods by the manufacturers to the final consumers by mail or through chain stores or depots ( e.g. ACER Mall, Reliance web world, Vodafone mini stores). Middlemen between manufacturer and consumers are involved in the case of in direct distribution. There maybe different channels open to the manufacturer to resort to the distribution of a product. These channels have their respective costs and benefits. Once a channel is accepted, it is very difficult to change it. Therefore, a careful selection of the channel must be made. It is possible with the help of distribution channel research, whereby costs, benefits, effectiveness and performance prospects are analyzed to adopt suitable channels of distribution. Distribution costs including opportunity costs are more important factors than production costs. In many cases, the distribution costs are higher than the production costs. If the Distribution cost is minimized, the product can get a stimulus in the market. The distribution cost constitutes a special study which examines the variable costs of distribution to find out their importance and possibilities of reduction cost. Apart from the distribution cost, there are various factors to be studied before selecting the channel and appraising the existing channel. There may be the nature of the product, size of the market, availability of surplus capital, expansion of production capacity and degree of competition. ii) Dealer Surveys: this involves the research of the attitude and behavior of distributors or dealers. The performance of a particular dealer is also evaluated in this research, whereby stock levels, stock condition, the size of the order and the selling effort of the dealer are matched. The salesmen are also required to examine the marketing activities of the dealers relating to the products. Ineffective and non productive dealers are stopped supplies unless they improve their sales performance.

The dealer’s performance can be evaluated by establishing some standards depending on the previous sales and work-norm. The dealer research can reveal how to establish good relations between the manufacturer and the dealers. There may be various ways of stimulating

dealers, to make them more effective. Supply of advertising materials, house magazines and organizing meetings may be useful methods of developing pleasant relations. The periodic study of dealer’s attitude, their selling methods and policies, level of sale and their effectiveness are essential to evaluate the dealer’s performance. iii) Shop Audit: A manufacturer can gather adequate information and data about his product’s sale from shops. Some shops are selected, and information pertaining to his sales volume can be obtained from them. This will also reveal the trend of his sale. The causes of the trend can be revealed by the shops. They can also provide suitable and sufficient information pertaining to competitor’s product sale. The manufacturer can improve the situation and increase his market. Thus, this research provides factual survey and not opinion. It is an easy and simple method of knowing the market position of his own product and competitor’s product. But, it will not reveal the taste, attitude and desires of the consumers for which a consumer survey is essential. Effectiveness of advertising, pricing policy, brand image and promotional policies can be measured easily by a shop audit. iv) Retail store investigation: the retail stores investigations may involve investigations relating to customers and to goods and services. It will reveal how many are local customers, what are their trends of shopping and problems of sales. The retailers for investigation are selected at random. If the investigator wants classified information, stratified samples are selected. The retailers may receive enquiries about the problem of sales, the size and style of the sale, new lines of sale, competitor’s attitude and sales, the effectiveness of publicity and advertisements, and customers’ attitude towards the product of the manufacturer. v) Location Research: in the present age of international marketing when the market is being expected from a local market to national and even to an international market, the importance of location research has increased considerably. This research facilitates determination of the physical facilities at a particular place. The population, education, income and infrastructure facilities are important elements to determine the potential market. Population movement, the trend in national income as well as disposable income, decentralization of production activities, development of more rapid and improved forms of transportation, all these have increased market potential. The location research will help decide the trend of demand of the product at a particular place. Quantities of goods moving form one place to another, cost of transport per unit, cost of warehousing, time and place of delivery, ad the total amount of production are evaluated to meet the requirements of the market at a

particular place. The external factors such as the sociopolitical environments, labor supply, and geographical conditions are also studied I the location research.