Page 203 - DMGT509_RURAL MARKETING

Rural Marketing

Notes It can be seen that each type of distribution method has some advantages and some disadvantages.
Depending on the product range, product market segment, product stage in its life cycle and
capacity of manufacturer to produce, the channel is selected.
Sole distributor work on volumes of business with low margins of profit, and their market
penetration is low as they depend on their retailers. With a large operational area they tend to
lose grip on the market.
Area distributor cover certain geographic areas and sell through dealers and retailers operating
in their area. Usually area distributors work for one manufacturer only. At least they do not deal
in competing products. A major problem in case of such distributors comes from area limits, as
sales in other close by distributor’s area is affected by several distributors, which gives rise to
conflict between the distributors.
Non-exclusive distributors deal in products of a number of manufacturers but they avoid having
competing products.
Stockists keep manufacturer’s stocks for giving to the dealers or retailers against authority from
the manufactures. For this purpose they are paid a commission. Stockists help the manufacturers
in faster supplies of products to retailers, as they are located near the markets, while manufacturing
units could be quite far off.
Consignment sale stockists sell the product to the retailers after receiving the goods from the
manufacturers without paying for the goods. Once they sell the goods they send the payment to
the manufacturers.
To sum up, the distribution method choices are as follows:
1. Sole Distributor ....................... Dealer ....................... Retailer ....................... A

2. Sole Distributor ....................... Retailer ....................... B
3. Stockist ....................... Retailer ....................... C
4. Consignment Agents ....................... Retailer ....................... D
5. Agents ....................... Retailer ....................... E

6. Direct Mail ....................... F
7. Internet ....................... G
8. Catalogue Sales ....................... H
9. Franchisee ....................... I

10. Own Shop ....................... J
We will now attempt to give weightage to each of the above stated distribution methods on the
following basis:

1. Coverage of the designated area
2. Concentration possible in the area
3. Control of the manufacturer on the method
4. Cost to the manufacturer

The following table gives some idea of these factors, although they may vary from product to
product and area to area.

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