Lecture Notes: Methods of Distribution

Introduction

• Topic: Methods of Distribution
• Context: Importance of understanding why some items are delivered quicker than others.
• Unit: Part of Unit 4, Channel Management

Definition of Distribution

• Distribution involves getting a product to the end user.
• Affects promotion and pricing.
• Coordination with supply chain is crucial.
• Distribution costs impact product pricing.

Strategies for Distribution

• Bulk Breaking: Shipping large quantities and selling smaller.
• Intermediaries: Use of agents like Freight Forwarders for efficient shipping.

Modes of Transportation

• Road Transportation:
  • Most common: trucks, cars, vans, etc.
  • Private carriers (e.g., Amazon) vs. common carriers.
  • Flexible but expensive and prone to delays.
• Rail Transportation:
  • Good for heavy, long-distance transport.
  • Inexpensive but limited to train track locations.
• Air Transportation:
  • Fast but the most expensive.
  • Suitable for light or urgent products.
• Water Transportation:
  • Includes ocean, inland, and coastal ships.
  • Cheap but slow, requires additional transport from ports.
  • Potential risks: piracy, delays, and damage.
• Pipeline Transportation:
  • For liquids.
  • Safe from theft but environmental risk from leaks.
• Digital Transportation:
  • Instant and cheap for digital goods.

Storage

• Private Warehouses: Owned by large companies for exclusive use.
• Public Warehouses: Available for lease by any company.
• Wholesaler Space: Used by smaller companies to minimize storage costs.

Types of Utility in Distribution

• Place Utility: Convenience in product location (e.g., sunscreen at the beach).
• Time Utility: Delivering products when needed.
• Possession Utility: Satisfaction from receiving products.
• Form Utility: Transforming products into useful forms; does not impact Information Utility.

Ownership in Distribution

• Transfer of ownership as products move through supply chain.
• Intermediaries take ownership; agents and brokers do not.

Conclusion

• Test Your Knowledge: Practice with DECA questions.
• References: List of sources for further study.

This summary encapsulates the key points of the lecture on methods of distribution, focusing on the definition, transportation methods, storage, utility types, and ownership transfer in distribution.