Distribution – An Important Element Of Marketing
Distribution is one of the element of the 4p’s of marketing. As a variable in the marketing mix, distribution is as important as product, promotion and price. Distribution is the actual movement of goods and services from the source of supply or manufacture to the ultimate consumer.
It plays a very important role in the marketing process. There would be no trade if the means of distribution were not created. Distribution provides time, place and ownership utilities by bringing the goods and services at the time and place where they are needed and to who needs them. Apart from the cost of raw materials, the cost of distribution is very significant item in the final price of any product.
Channels of Distribution
Any sequence of institutions from the producer to the consumer including one or any number of middlemen is called channel of distribution. Because production is made to satisfy the needs of the consumers, so it must reach the consumers for whom it is made. Thus a way through which goods flow from the producer to the consumer is what we mean by channel of distribution.
Definitions: Morden, A. R. (1987) sees channels of distribution as a link between production and consumption. Stanton (1981) has defined channel of distribution in these words — “a channel of distribution (sometimes called a trade channel) for a product is the route taken by the product as it moves from the producer to the ultimate consumer or industrial user”.
The entire function of getting goods into the hands of the consumer is often referred to as distribution. The term channel of distribution is used to denote the middlemen engaged in moving goods from the place of production to the place of consumption. It is the channel through which goods are made to move as smoothly as possible to the desired places.
Channels of distribution are the means employed by manufacturers and sellers to get their products to the market and into the hands of users. Channels are management tools used to move goods from place of production to place of consumption.
The primary purpose of a distributive channel is to bridge the gap between producers and users. For this, certain essential functions need to be performed. These are:
the flow of information to and from the consumer;
the product flow: handling, moving and storing, which may include sorting by grading and breaking bulk;
the title flow: the passage of Ownership with the possible attendant risk.
The term middlemen refer to those institutions or individuals in the channel which either take title to the goods or negotiate or sell in the capacity of an agent or broker. Thus, from the marketing point of view, the middlemen and. intermediaries are the same. On the basis of the position of the middlemen in the channel of distribution, they are also classified into wholesalers and retailers. Wholesalers are closer to the manufacturers while retailers have a close touch with consumers. The various types of middlemen are:
Agents: They are middlemen who do not take any title to goods but they take active part in the marketing mechanism rendering all services required.
Brokers: Brokers are agents who have no direct and physical control of the goods in which they deal. They represent either the buyer or the seller in negotiating purchases and sales for their principals.
Dealers: Dealers are persons who buy or resale products at either retail or wholesale basis.
Distributors: It is a general term used to mean wholesalers.
Jobbers: The term is used in certain trade and localities to designate special types of wholesalers. They are usually found in stock markets.
Resident Buyer: An agent or a person who specializes in buying on a fee or commission basis chiefly for retailers.
Retailers: A merchant or occasionally an agent whose business is selling directly to the ultimate consumer.
Wholesalers: A business unit which buys and resells merchandise in bulk to retailers and other merchants. Wholesalers does not sell insignificant amounts to ultimate consumers.
Types of Distribution Channels
Channels are pipeline for goods from the manufacturers to consumers. It is important to note that while we have live channels alternatives for the marketing of consumer products, (here exist only four channel alternatives for the distribution of industrial products.
Channels of Distribution for Consumer Goods
1. Agent to Wholesaler to Retailer to Consumer: In this channel there are the brokers, the manufacturers agents, the commission^ merchants and the export merchants. – It is a three level indirect channel and probably the longest channel in the distribution chain. Usually the manufacturer uses this channel when he cannot afford to invest the amount required to develop a sales force of his own.
2. Manufacturer to Agent to Retailer to Consumer: This is the most popular channel. Every big producer uses this route. This type of channel is an indirect two-level channel used in the marketing of important goods through the agents. The manufacturer passes over the marketing function to the agents.
3. Manufacturer to Wholesaler to Retailer to Consumer: This is the traditional channel of distribution. The wholesaler buys the large quantities from the producer and sells it to a number of retail buyers. This type of channel whereby the producer has to pass through wholesalers and retailer to the final consumer is another form of indirect, two-level channel used in the distribution of convenience and shopping goods.
4. Manufacturer to Retailer to Consumer: This is a channel of distribution where the manufacturer decides to use retailers to sell his goods to the consumer. Manufacturer to retailer to consumer is used in distributing mainly convenience goods where maximum exposure of the product is very essential. This type of channel is an indirect or one-level channel, because it consists of one intermediary. The channel tries to eliminate wholesalers from the channel of distribution.
5. Manufacturer to Consumer: The producer sells direct to the consumer and assumes the responsibilities of marketing functions. In selling direct to the consumer the producer can use door-to-door, producer’s own retail store or by mail order. Products sold through this channel are mostly expensive items. This type of channel is known as a direct or zero level channel of distribution.
Industrial Products Channels
There are only four channels for the distribution of industrial products. The four, channels widely recognized for industrial marketing are:
1. Producer to Industrial Users: This channel is also known or referred to as the “direct” or “zero-level” marketing channel. This is so because the producer did not make use of any middleman or channel intermediary. This is the most commonly used channel in the distribution of industrial goods. Manufacturers of machinery prefer to adopt this channel to avoid unnecessary expenditure on transport, insurance, etc. Most high-Tech and expensive industrial items(e.g. computers, trains, aircrafts, industrial generators, ships, etc.) are usually marketed through this type of channel.
2. Producer to Industrial Distributor to Industrial User:
When the producer cannot profitably get to many industrial Users in different industries, he then tends to seek the professional services of industrial distributors who will buy in large quantity; and then break the bulk to the numerous industrial users. This channel is used in the distribution of accessory equipment which are required by users. The channel is also an indirect and one level industrial channel.
3. Producer to Agent/Broker to User: This is an indirect, one level, channel used in the distribution of industrial goods. Manufacturers who do not have their own marketing departments, and not also conversant with the market find it convenient to &ave agent at different selling points. This arrangement is considered good for introducing new products, and in international marketing where the producer may not have knowledge of the market.
4. Producer to Agent/Broker to Industrial Distributor to User: This is an indirect, two-level channel for the distribution of industrial products. It is a combination of the .above two channels adopted to suit varying conditions on the basis of geographical factors. This channel happens to be the longest in the distribution of industrial products;
Should Middlemen be Eliminated?
Some critics are of the view that the middlemen are wasteful and avoidable link between the producer and the consumer and hence should be eliminated.
Argument Against the Existence of the Middlemen
Middlemen are responsible for increasing the cost of distribution.
It is the middlemen who create a long chain between the actual producer and consumers, and thus prevent the two classes of people to come into direct touch.
The producers are kept in dark as regards the actual demand potentials because the middlemen generally suppress the market trend in favour of their interest
Middlemen encourage black marketing by cornering all the available supply of goods. They corner the available supply of commodities and then dictate any price which the consumers have to pay or go without it
The middlemen develops their own brand and earn goodwill for themselves on the cost of producers
The middlemen raise prices of goods and make excessive profits.
Some middlemen’s profit margin is not known as such they are able to evade taxes.
Argument for the Existence of the Middlemen
With all the criticisms against middlemen, producers still uses them. The million Naira question then is: Why are middlemen used?
1. Concentration on Production: The middlemen enables the manufacturer to pursue relentlessly the principle of mass production by taking over the marketing function from the manufacturer.
2. Distribution Facilities: Middlemen are the vital link between manufacturers and consumers. They make goods widely available and accessible to target markets.
3. Helpful in Demand Analysis and Forecasting: Middlemen remain in touch with the consumers and keep them informed about the changes, fashion and demand
4. Help in Price Determination: Manufacturers does not know what the customer can pay for his goods. So it is the middlemen who know the reactions of the customers and what they can pay.
5. Advertisement: The middlemen advertise manufacturer’s goods by selling under the manufacturer’s brand name.
6. Extent of Market: Middlemen widens the market for the good of the producers. They sell their goods in new markets through their own sales organisation.
7. Many producers lack the financial resources to embark on a programme of direct marketing e.g. brewers of beer.
8. The middlemen perform a very necessary function in many markets by consolidating what might be many small shipments from producers-to single customers. This is best shown visually in the diagrams in figure 13.3 and 13.4 which compare the direct (A) and indirect (B) modes.
Marketing Channel Function
A marketing channel is essentially a method of organizing the work that has to be done to move goods from producers to consumers. The purpose of the work is to overcome various gaps that separate the goods and services from those who would use them. The work of middlemen is designed to create form, time, place, and possession utilities. Several functions or tasks are involved in this work. The major ones being:
Research: The gathering of information necessary for planning and facilitating exchange.
Promotion: The development and dissemination of persuasive communication about the offer.
Contact: The searching out and communicating with prospective buyers.
Matching: The shaping and fitting of the offer to the buyer’s requirements include such activities as manufacturing, grading, assembling and packaging.
Negotiation: The attempt to reach final agreement on price and other terms of the offer so that transfer of ownership or possession could be effected.
Physical Distribution: The transporting and sorting of the goods.
Financing: The acquisition and disposal of funds to cover the costs of the channel work.
Risk Taking: The assumption of risks in connection with carrying out the channel work.
The first five functions deal primarily with consummating transactions, while the last three act as facilitating functions.
It is not a question of whether these functions must be performed in order to bridge the gaps between producer and customer they must — but rather who is to perform them.
All of the function uses up scarce resources, often they can be performed better through specialization,-and they are shift-able. To the extent that ff the manufacturer performs them, its costs go up and its prices have to be higher. When some of the tasks are delegated to middlemen,-the producer’s costs and prices are lower, but the middlemen must add a charge to cover the use of scarce resources.
The issue of who should perform various channel tasks is largely one of relative efficiency and effectiveness. To the extent that specialist intermediaries achieve economies through their scale of operation and their know-how, the producer can gain by transferring some of the channel functions to their charge.
Determining Channel Objectives and Constraints
The starting point for the effective planning of channels is a determination of which markets are to be reached by the organisation. In practice, the choice of markets and choice of channels may be inter-department.
In choosing the channels of distribution, producer always have to struggle with what is ideal and what is available. Often a company must settle for a chanael that is less than ideal because there are various factors which put limitations on this ideal choice.
Each producer develops its channel objectives in the context of constraints stemming from the customers, products, intermediaries, competitors, company policies and environment.
(1) Product Characteristics: The product characteristics play an important role in influencing the channel selection. The marketing executive must study the uses of a product, its frequency of purchase, perishability, rapidity of fashion change, the service required, its value, and its bulk.
(a) Purchase Frequency: The more frequently purchases are made, the more feasible it is for a manufacturer to use direct distribution. This require extensive distribution which involves a financial consideration.
(b) Perishability: Perishable and fashionable products such as dairy and bakery products, fruits and vegetables or sea foods must be placed in the hands of the. final users as soon as possible after its production. These usually require more direct marketing because of the dangers associated with repeated handling and delays.
(c) Weight and Technicality of the Product: Products that are bulky, large in size, and technically complicated are usually sold directly by the company to the consumers because of the difficulty of finding middlemen for these lines.
(d) Selling Price Per Unit: If selling price per unit is low, the channel of distribution may be long as in the case of cigarette and watches. If selling price is high the channel is more direct as in the case of television and radio.
(2) Market Factors: The following market characteristics influence the channel decision:
(a) Consumer or Industrial Market: The producer of consumer product may choose a long channel involving wholesalers and retailers depending upon the nature of the product. In case of industrial product the channel is comparatively short because retailers are not required in such cases.
(b) Number of Purchasers: Where the number of consumers is large, the channel may be indirect and services of wholesalers and retailers become necessary. But, if customers are few, direct sale can be entertained through representatives.
(c) Geographical Distribution: If customers are geographically dispersed, the channel may be long. In contrast, if they are concentrated, direct selling may be done.
(d) Size of Orders: Where customers purchase small quantities frequently and regularly, lengthier marketing channels are needed. If the size of orders from the consumer is large, the channel may be shorter.
(3) Company or Enterprise Factors: The choice of channel is also influenced by company characteristics such as its financial position, size, product mix, morale of its employees, past channel experience and executive prejudices and overall marketing policies.
(a) Financial Resources: The financial strength of the company determines which marketing tasks it can handle efficiently and which ones are to be delegated to the middlemen. A company having good financial resources may engage itself in direct marketing in a profitable manner. A weak financial position may force a company to use financially strong intermediaries even if this is not profitable.
(b) Size of the Company: A large company already handling a wide line of products may be in a good position to take an additional product of the same line and handle it the same way, usually directly. But a smaller firm or one with narrower lines would find middlemen more practical.
(c) Attitude of Company Executives: The attitude * of company executives may also influence the channel selection. Their experience of working with certain type of middlemen may tend to develop channel preferences or prejudices.
(d) Marketing Policies: The company marketing policies such as speedy delivery, after-sale-services, heavy advertising, uniform retail price also influence the decision of channel. If it is of the view that intermediaries can provide the services to customers according to company marketing policies, it can delegate its selling activity to middlemen, otherwise, it may engage itself in direct selling.
(4) Middlemen Consideration: The choice of channel also depends upon the strengths and weaknesses of various types of middlemen performing various functions. Their behavioural differences, product lines, location and size differ and affect the “design of the channel.
(a) Services Provided by Middlemen: Service provided by the middlemen may affect the choice of the channel. If middlemen can provide the services to the customers which the company requires to provide, the middlemen can be appointed, otherwise, the company will sell the product direct to the consumers because the middlemen have failed to perform effectively.
(b) Attitude of Middlemen: The attitude of middlemen towards company policies may affect the channel decision. For example, some middlemen desire to fix their own price for the product, and if the company agrees to allow them to do so they can very ‘happily’ agree to sell the product of the company.
(c) Availability of Middlemen: The kinds of specialists, the company would like to use may not even be available or willing to cooperate, especially, if the company is a late entrant in the field and his competitors already have ties of the middlemen perhaps as part of a selective or exclusive distribution policy. Aggressive market oriented middlemen usually are not available and waiting for a company to pick them up. In such cases, the company will have to manage its own channel.
(d) Cost of Channel Usage: The cost of performing the marketing functions at each level of distribution and the overall cost of performing the total marketing task has an important bearing on the choice of channel. Those channels which ensures efficient distribution at least expenses and which secure the desired_ volume of sales should be chosen.
(5) Environmental Factors: The environment factors such as economic, ethical and social conditions and law of the land also influence the channel decision.
(a) Economic Conditions: When economic conditions are depressed the producer prefer shorter channels to cut costs. If there is multipoint tax on sales, the line should be shorter to avoid the tax burden of the consumers, and the company should sell directly to the consumers.
(b) Social and Ethical Considerations: Social and ethical considerations such as distribution through black marketing involves question of ethics and injurious to society. Thus the producer does not always enjoy complete freedom in selecting marketing channels.
“Plantain cannot be said to be plantain if it is at Obite when it is needed or desired in Port Harcourt”
Physical distribution is planning and implementing the physical flows of materials and final goods from points of origin to points of use or consumption to meet the needs of customers at a point. Physical distribution is sometimes used interchangeably with the words transportation and logistics. Physical distribution, consists ‘of all activities concerned with moving the right amount of the right products to the right place at the right time (Stanton, 1981).
According to Bowersox, physical distribution is “the process of strategically managing the movement and storage of materials, parts, and finished inventory from suppliers, between each level in the distribution system, to customers”.
Physical distribution is also defined as every activity related to the physical movement of products from the initial supplier or seller to the buyer or user. However, physical distribution can be simply defined as the actual movement of raw materials and parts to the manufacturer and the storage, warehousing and transportation of finished goods from the source of supply to the consumer or industrial user. Putting it in a schematic illustration the physical distribution flow system starts from the source of raw materials, parts or plants and equipment.
The aspect of physical distribution starting from the raw materials stage has to be emphasized here because a lot of managers think that physical distribution has to do only with finished products.
The Physical Distribution System
The study of physical distribution is one of the classic examples of the system approach to business problems. A, system can be defined as an organised or conceptualized whole, one assemblage or combination of things or parts forming a complex uniting whole (Cleland and King, 1975). Whereas Bonne and Kurtz (1989) defined a system as an organised group of components linked according to a plan for achieving specific objectives. Therefore, the word system refers to an organised relationship among components. This means that a system is made up of sub-systems that are interrelated and interconnected in a holistic manner to achieve a common goal, or objective. Each component must function properly if the system is to be effective and organisational objectives are to be achieved. The physical distribution system contains the following elements:
Customer Service: What level of customer service should be provided?
Transportation: How will the products be shipped
Inventory Control: How much inventory should be maintained?
Protective Packaging and Materials Handling: How can efficient methods be developed for handling products in the factory, warehouse, and transport terminals?
Order Processing: How should the orders be handled?
Warehousing: Where will the products be located? How many warehouses should be used?
The above components are interrelated; decisions made in one area affects the relative efficiency of others. The physical distribution manager must balance each component so that no single aspect is stressed to the detriment of the system overall functioning. .
Components or Elements of Physical Distribution
Physical distribution involves a broad range of activities aimed at efficient, movement of finished products from-the “end ‘ of production line to the consumer. There are key decision issues that relates to physical distribution. These activities include, order-processing, warehousing, inventory management, materials handling and transportation.
Order Processing: Order is the communication aspect of physical distribution which relates the customer’s orders through the various information to ensure that order cycle time is complete. Information for physical distribution should link producers, intermediaries and customers.
Information flow is a vital ingredient in order processing. Of course, order processing is the starting point in physical distribution system. Inaccurate information affects transactions in physical distribution.
Order processing involves the use of telephone, order acquisition, invoicing, billing documents, the use of computers, customers credit check, procedure or system of inventory check. An item that is not available for shipment is known as a stock out. This occurrence requires the order processing unit to advise the customer of the situation and the contemplated action.
Warehousing: Warehousing provides storage functions in marketing. Warehousing serve as the storage depot, a transit facility for incoming merchandise. Storing is necessary because it involves holding and properly preserving products from the time of their production until their final sale.
The following have been identified as the functions of warehousing:
Receiving Goods: The warehouse accepts merchandise delivered from outside or from an attached factory.
Identifies Goods: The appropriate stock-keeping units must be recorded, and a record made of the quantity of each item with a physical code, tag, or other means.
Sort Goods: The warehouse may sort merchandise to the appropriate storage areas.
Dispatches Goods to Storage: The merchandise must be put away where it can be found later.
Holds Goods: The merchandise is kept in storage under proper protection until needed.
Recalls, Selects or Picks Goods: Items ordered by customers, for example must be efficiently selected from store and grouped in a manner useful for the next step.
Marshals the Shipment: The items making up a single shipment must be brought together and checked for completeness.
Dispatches the Shipment: The consolidated order must he packaged suitably and directed to the right transport vehicle.
Types of Warehouses
There are different types of warehouses or depots that operate other than wholesalers and retailers. The major ones are as follows:
1. Private Warehouses: Owned and operated by a company or enterprise foi\the purpose of distributing its own products. These warehouses may be a distinct and separate operation of the firm or they may be integrated with other activities.
2. Public Warehouses: Operated for the benefit of the general public and charge fees. Even though they may be owned by business organisations (privately owned), operations and fees may be regulated by government. Public warehouses may provide such services as filling orders, financing, displaying products, and co-ordinating shipments. In addition public warehouses also offer services such as providing security for products that are being used as collateral for loans.
3. Field or Custodial Warehouses: It is a temporary warehouse established by a public warehouse at the premises of the owner of the merchandise or inventory. The space is leased to a public custodian who has physical and legal control of the goods, even though the goods remain on the premises of the owner. A field warehouse provides warehouse receipts which can be used as collateral for loans.
4. Government – Warehouse: This type belong to the government. Examples are customs warehouses, internal revenue warehouses and so-called exclusive warehouses which are used to stockpile government purchase, i.e. arms and ammunitions.
5. In-plant Warehouses: Most manufacturers have their own warehouses though the size may be small. The entire production is not immediately sent to the market. In most one products have to wait for some time.
6. Co-Operative Warehouses: The. ownership of these aienouSeS is vested in the hands of a few primary cooperatives societies. This is not a very popular method in Nigeria, but if properly organised it will be a boom to tne agriculturists.
7. Specialty Warehouses: Certain products like explosives have to be stored under special conditions. To meet these needs specialized warehouses came into operation specialty warehouses are:
General merchandise warehouses
Special commodity warehouses — Grains, Cotton
Refrigerated warehouses (cold storage for perishable commodities)
Inventory Management or Control
Inventory management is a, major component of the distribution system. Inventory is referred to. as the maintained for a variety of purposes — resale, further manufacturing, maintenance of equipment, etc. The goal of inventory control is to fill the orders promptly completely and accurately while minimizing both the investment and fluctuations in inventories.
Inventory management involves two basic decisions: when to order (order point) and how much to order (order quantity). Therefore, a company should know its customers’ expectations regarding order fulfillment. Out-of-stock conditions result in lost of sales, loss of goodwill, even loss of customers.
Management must establish the optimal quantity for recorder when it is time to replenish inventory stocks. The economic order quantity (EOQ) is the volume at which the sum of inventory – carrying costs and order – processing costs are at a minimum.
To avoid situations where orders cannot be fulfilled because of non-availability of stock, it is often necessary to keep a certain amount of stock to guard against such eventuality, this is what is referred to as safety stock.
Materials Handling: This is the physical handling of the product and it constitutes a significant activity in warehouse operations as well as along the channel’ of distribution. The nature and characteristics of a product will determine the handling operation. Serious consideration is given to materials handling during design and packaging stages of a product. Hence, packaging, loading and movement system must be properly coordinated to enhance efficiency in material handling and general customer satisfaction.
Transportation: A major function of the physical distribution system in many companies is transportation — shipping products to customers. It is a means of moving people and goods from one point to the other. It also involves the movement of finished goods from the plant to the warehouse or distribution centers and to customers.
Five modes of transport are used to move goods: rail, road (highway), water, air and pipeline.
In choosing transportation modes, Nwokoye, identified six criteria for choosing or selecting modes of transport. These are:
6. Operational Capability
While Pride and Ferrell (1989) identified five factors for selection of a transportation mode as:
Importance of Transport
Transportation is a necessary function of marketing because markets geographically are located far from the areas of production. All goods whether manufactured in the factories or grown in the fields are not consumed at the place of their origin, ” Transport is the physical means whereby goods are moved from the point of production to the place of their consumption.
Transport thus play a prominent part in the distribution of goods. In fact, it has shaped and influenced the entire structure of distribution. Not only does transport extend the area within which goods can find purchasers but it also affect competitive costs and the retail prices. Without the “place utility” which transport creates, the distance factor in consumption and the location factor in production would have been insoluble. Transport is the life blood of distribution system.
Functions of Transport
It helps the growth of industries whose products require quick marketing. Articles like fish, green vegetables are carried to various consumers quickly even in distant markets.
It increases the demand for goods. More customers in new places can be easily contacted and products can be introduced to them. Today markets have become international because of transport.
It creates place utility. Geographical and climatic factors force certain industries to be located in particular places. These places are far away from the market places where production takes place, and demand may not be there for these products. As such transport bridges the gap between production and consumption centres.
Of late it has started creating time utility also. This has been made possible mainly by virtue of the improvement in the speed of transport. It now helps the product to be distributed in the minimum possible time.
Transport exerts considerable influence upon the stabilization of the prices of several commodities. This is achieved by moving commodities from surplus to deficit areas. This will equalize the supply and demand factors and make the price of commodities stable.
It ensures even flow of commodities into the hands of the consumers throughout the period of consumption.
It enables the consumers to enjoy ‘the benefits of many goods not produced locally. This increases the standard of living.
Transport increases the mobility of labour and capital. It makes people to migrate to other places in search of jobs. Even capital — machineries and equipment are imported from foreign countries.
Rail: The means of rail transport is by the use of train. Trains run on lines and tracks, which are usually referred to as railway. Arising from the huge amount involved in constructing railways private individuals and business organisations do not own railways in Nigeria. Trains have coaches and can convey bulky goods.
There are two main types of railway trains, which are passenger and goods trains. The passenger trains operate first, second and third class services mainly for comfort. The amount of comfort enjoyed varies and these are reflected in the service charges in each case. Transport by rail is cheaper than road transport, however, rail transport is slow,, inconvenient and not available nationwide.
Road (Highway): This is the most commonly used mode of transport in Nigeria, and indeed, most other countries. The medium used for road transport include motor vehicles, trailers, tankers, etc. Trailers and tankers are used to deliver bulky and liquid products respectively.
Road transport is popular. This is due to its ready availability, convenience, low cost and speed. Road transport in Nigeria plays, and will continue to play, a primary role in the movement of products as long as the network of railways remain limited.
Water: Water transport is one in which ships, barges, canoes, ocean liners, costal liners or steamers, tramp liners, launches, and engine boats are used during transportation. In Nigeria, water or sea transport serves to move bulky goods to and from distant countries overseas. The major ports of call of sea -vessels are Lagos, Warri, Port Harcourt, and Calabar.
Water transport is usually the cheapest but the slowest means of moving products. It is mostly suited to moving non-perishable, bulky items.
Air: Air transport is the most expensive form of transport. It involves the use of aircrafts or aeroplanes in conveying goods especially, perishable items and bulky industrial products. Air transport is the most convenient and speedy means, but its cost is high.
Pipeline: This mode of transport is used in conveying goods/products in liquid or gaseous form. This mode of transport is particularly useful in the oil and gas industries. Pipelines are usually laid on the surface of the ground or beneath the surface of the ground. Although pipelines transportation is cheaper than other modes, its usage is limited by its lack of flexibility generally. Pipelines are not present everywhere, and so their accessibility is low.
Cost of transportation
Reliability in meeting delivery schedules
Variety of products carried
Some what limited
Number of geographic locations served
Most suitable products
Long hauls of carloads, quantities “.of bulky products
Bulky, low value non-perishable
Short hauls of high value goods
Oil, ‘ natural gas products
High value perishable
Problems of Physical Distribution in Nigeria
According to Nwokoye, N.G., the basic infrastructure needed to support modern marketing activities are poor in developing economies. These cause distribution bottlenecks which in turn increase the rate of price inflation. This also describes the condition of physical distribution in Nigeria. The condition leads to ineffective movement of whatever stocks that are available in the country.
1. Road Transportation is very poor in Nigeria. Road in Nigeria are often poorly constructed and not well maintained; access roads to remote areas such as crop-producing areas are typically nothing more than bush paths. This deplorable condition of roads in the country contribute to the high cost of maintaining vehicles and often make it difficult for movement of goods and persons.
2. Rail transportation is not even better. In addition to the fact that its network is not nationwide, the services offered by the rail system in Nigeria are often slow and sporadic.
3. Modern communication networks are also not adequate. Mails take many weeks to reach their destinations; telephone services are only limited to the cities or urban centres, and the quality of service offered is often poor.
4. Air transport is known for its speed; however, in Nigeria it is characterized by frequent flight cancellations and high fares.
5. Warehouses are few, and materials handling equipment is very unsophisticated. Specialized storage structures, like large storage tanks for petroleum are few or non-existent. High rents and acquisition Cost of distribution centres or warehouses are also some of the problems of physical distribution in Nigeria.