What do you mean by 'channels of distribution'? What functions do they play in the distribution of goods and services? Explain.

Or

Name the element of Marketing-mix in which a set of firms and individuals creates possession, place and time utility and helps in market offering. Also explain any five important functions performed by this element.

Channels of distribution mean the path through which the ownership as well as possession of goods transfer to the consumer from the producer.

Functions of Channels of Distribution:

The following are the functions of distribution.

(i) Sorting: Middlemen purchase goods from various sources. Generally these goods are not of same size, quality and nature. After receiving goods they sort them into homogeneous groups on the basis of size, quality and nature.

(ii) Accumulation: It involves accumulation of various homogeneous goods into larger quantity so that continuous flow of supply can be maintained.

(iii) Allocation: It involves dividing homogeneous goods into various marketable lots. For example, a product may be divided into convenient packs of say 10 kg, 5kg, 2kg, and 1 kg. In this way the requirement of various types of buyers may be satisfied.

(iv) Assorting: It involves maintaining stocks of a large number of goods so that consumers can satisfy their requirement by visiting at a single shop.

(v) Product Promotion. All the intermediaries do encourage the consumers by organising advertising and other sales promotion activities. They also participate in demonstrations, special displays, contests, etc.

(vi) Negotiation: Middlemen negotiate with producer as well as with consumers regarding price, quality, guarantee and other related matters. They help in transfer of ownership in goods.

(vii) Risk Taking: Middlemen as owner of goods assume risks in the form of price and demand fluctuation on the one hand and spoilage and destruction on the other.