Distribution Essay ⋆ Business Essay Examples ⋆ EssayEmpire

In business, distribution is the process by which a good or service is made available to the consumer. Distribution is one of four elements of the marketing mix, along with pricing, product, and promotion— “the four Ps,” as they are called when distribution is bent over backwards and called “place.”

The idea of the marketing mix comes from the 1950s and early 1960s, the heyday of the Mad Men and marketing firms whose professions were seeing a new level of professionalism and inter-industry discussion to match the new revenue streams provided by television. Marketer Jerome McCarthy, author of the influential textbook Basic Marketing, was the first to propose the four Ps as a solution to the suggestion that there should be something recipe-like underlying marketing decisions. In their brevity and alliteration, the four Ps are themselves a very marketable idea, a catchy notion. Naturally the notion lends itself to expansion, and some marketing texts or gurus may add to the Ps—packaging, personnel, premium, et cetera.

The best way to define the marketing mix is by reverse engineering: that is, the primary end of marketing is the optimization of the marketing mix, and so therefore that which must be optimized is the marketing mix. The product, of course, is the good or service, and may be improved or optimized in all sorts of ways depending on its nature; the price must fit the product’s place in the market, while occupying a comfortable position relative to the customer’s ability and the supplier’s necessity; promotion encompasses advertising, public relations, word of mouth, and point of sale. The use of the term mix here does not mean that these elements change in relation to each other, nor do they have a mathematical relationship to each other as in a “recipe”—that is, there is no element that scales, the way flour does to sugar when doubling a cookie recipe. Changing the price in the marketing mix does not necessarily impact the other elements, and certainly does not represent a quantity to remove from other elements.

Channels

There are different possible channels of distribution, and a product very often (but not always) has more than one. Beginning with the channel with the fewest intermediaries, there are direct sales made by the producer—which encompasses everything from farmers selling goods on their farm to a home business selling goods on eBay or through an online store. There are agents selling goods on the producer’s behalf, such as in a consignment shop or literary agents brokering deals with publishers. Wholesalers buy from the producer and resell to retail locations. Retailers sell to consumers (and may deal with a wholesaler, an agent, or directly with the producer).

Franchising impacts the distribution channels, as when a franchise restaurant prepares food at some central location, selling it to the individual franchises to be cooked or reheated for sale to the customer. Even when all food is prepared from scratch on site, if the recipes originate with the franchising company there is some sense in which the product has been distributed to the franchisee before being resold to the customer; this is true too of service franchises, like gyms, salons, and other businesses where a process, concept, or even just a brand name originates with the franchiser and is sold to the franchisee.

The question of how many intermediaries to use in distribution is an important one for every business, and is decided according to the nature and scale of the business. Although profits are shared with more parties when more intermediaries are involved, the costs of distribution are also shared. Marketing and advertising costs can be located at any level of distribution; while in most cases the producer is expected to be principally responsible for advertising, the producer may expect wholesalers or retailers to do their part to support the product as well, and this may include exclusivity agreements.

The comic book industry in the 1990s was subject to a great deal of change and shifting fortunes as the typical retail location shifted from the neighborhood newsstand to the comics specialty shop, increasing the importance of the comics distributors who worked with those shops (often referred to as the “direct market” in the industry, even though direct sales were not being made to customers). Marvel Comics, one of the two big publishers, acquired the comics distributor Heroes World to use as its exclusive distributor, resulting in similar moves throughout the industry, amidst a tulip-bulb-like collectors’ mentality that encouraged the creation of distributor-exclusive editions of comics with metallic-ink covers and other gimmicks. Eventually, though, sales faltered to such a degree that the temporary bumps caused by such gimmicks—whether in packaging, like those special ink covers, or in the form of stories about Superman’s death—were necessary to keep revenues healthy.

The principles of distribution and its optimization apply to the transfer of goods and services within a company’s “internal market,” among its myriad departments or locations, as much as it does to the transfer of those products to customers. An apparently seamless system can sometimes become problematic when a factor changes unexpectedly. When agriculture shifted from small or medium-sized farms to multi-state businesses, for instance, the new business model tended to call for feed to be produced in one location, sometimes stored in another, and then transported to the livestock at still another location—as opposed to the zero-intermediary system previously employed, wherein a farmer would graze the livestock or raise their feed himself. This system originated when fuel was cheap enough to justify the increased cost invoked by transport, because economies of scale allowed agricultural businesses to save money in other areas and to profit from lower profit margins due to volume sales. One reason for the rise of food commodity costs in 2007–08 was the spike in fuel costs, which suddenly doubled the cost of an aspect of this distribution channel.

Bibliography:

H. Borden, “The Concept of the Marketing Mix,” Journal of Advertising Research (v.4, 1964);
Michael Hammer and James Champy, Reengineering the Corporation: A Manifesto for Business Revolution (Harper Business Books, 1993);
Robert Lauterborn, “New Marketing Litany: 4 Ps Passe: C Words Take Over,” Advertising Age (October 1, 1990);
Jerome McCarthy, Basic Marketing: A Managerial Approach (Irwin, 2001).

This example Distribution Essay is published for educational and informational purposes only. If you need a custom essay or research paper on this topic please use our writing services. EssayEmpire.com offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.