Principles of Marketing Unit 4 Promotion

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Principles of Marketing Unit 4 Promotion

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A. Fill up the blanks:

1. Promotion is the process of marketing ____________ involving information?

Ans. Communication.

2. The promotion mix of a firm include five in gradients viz adverting, publicity, packaging, sales production and ____________.

Ans. Personal selling.

3. Promotional activities are organized by ____________ and ____________ both?

Ans. Manufacturer, dealers.

4. Sales promotions are only ____________ devices?

Ans. Supplementary.

5. Those market activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness are called ____________.

Ans. Sales promotion.

6. Sales promotion is a bridge in between ____________ and ____________.

Ans. Advertising, Salesmanship.

7. Sales promotion has dual objective such as increase buying response by consumers and to increase setting ____________ by dealers?

Ans. Efforts.

8. Sales promotion have temporary have temporary and short life not exceeding ____________ months?

Ans. Three.

9. Channel of distribution is composed of ____________.

Ans. Intermediaries.

10. Channel of distribution ____________ price level.

Ans. Stabilize.

11. The word ‘channel’ has its origin from ____________ word.

Ans. Latin.

B. Multiple choice questions and answers:

1. Channel of distribution is known as-

(a) Trade channel.

(b) Path channel.

(c) Proper channel.

(e) None of these.

Ans. (a) Trade channel.

2. Direct distribution system involves-

(a) Own sales.

(b) Own salesman.

(c) Mail order.

(d) All of these.

Ans. (d) All of these.

3. Which of the following is/are the functions of distribution channel?

(a) Fixing prices.

(b) Promotional activities.

(c) Routinization of decisions.

(d) All of these.

Ans. (d) All of these.

4. Which of the following is / are not a function of distribution channel?

(a) Managing finances.

(b) Aiding communication.

(c) Minimizing total transactions.

(d) None of these.

Ans. (d) None of these.

5. Which of the following factors affects to the choice of channels of distribution?

(a) Size of manufacture.

(b) Size of orders.

(c) Sales possibility.

(d) Cost of transportation.

(e) All of the above.

Ans. (e) All of the above.

6. Which of the following channels of distribution is correct?

(a) Manufacturer – Agents – Whole sales – Retailers – Ultimate consumer.

(b) Manufacturer – Agents – Retailers – Ultimate consumer.

(c) Manufacturer –  Agents – Consumer.

(d) Manufacturer – Wholesaler – Retailer – Consumers.

(e) Manufacturer – Retailers – Consumer.

(f) All of these.

Ans: (f) All of these.

7. Which of the following decisions areas includes in management of physical distribution?

(a) Size of inventory.

(b) Warehousing.

(c) Transportation.

(d) Materials Handling.

(e) Size of the order.

(d) All of these.

Ans. (f) All of these.

8. The physical distribution involves which activities?

(a) Sales force costing.

(b) Retail Warehousing.

(c) Customer service.

(d) All of these. 

Ans. (d) All of these.

9. Which of the following activities involves under physical distribution?

(a) Outward transportation.

(b) Packaging.

(c) Distribution planning.

(d) All of these.

Ans. (d) All of these.

10. Promotion program involves-

(a) Promotion objectives.

(b) Message design.

(c) Promotion Budget.

(d) All of these.

Ans. (d) All of  these.

11. Promotion media are the various vehicles that corporation can use to carry their promotion message to–

(a) Audience.

(b) Managers.

(c) Owners.

(d) None of these.

Ans. (a) Audiences.

12. Promotion mix is the particular combination of promotional tools used by a company to with its audience?

(a) Communicate.

(b) Plan. 

(c) Decision.

(d) Help. 

Ans. (a) Communicate.

C. Give the Answer:

1. What is the nature of a promotional plan?

Ans: A promotional plan is a description of the promotional mix decisions for a business.

2. What is the nature of sales promotion?

Ans. It encompasses all promotional activities and materials other than personal selling, advertising and publicity.

3. What is the role of communication in the process of promotion?

Ans: Inform and educate prospective customers about an organization and the relevant features of the goods and services that it offers.


1. What are the four main methods of physical distribution?

Ans. The major modes are air, water, rail and road.

2. What are the primary activities of physical distribution?

Ans. Customer service, order processing, inventory control, transportation and logistics, and packaging and materials.

3. What is another name for physical distribution?

Ans. Physical distribution, also known as ‘logistics’.

4. How physical distribution is managed?

Ans. In essence, physical distribution management (PDM) involves controlling the movement of materials and goods from their source to their destination.

5. What are the types of e tailing?

Ans: There are two main types of businesses  that offer e-tailing:

(a) Pure play E-tailers. 

(b) Brick and Click E-tailers.

6. What is physical distribution management?

Ans. In ecommerce, physical distribution refers to the movement of finished goods from the manufacturer to a brand’s distribution network. It consists of several supply chain functions including managing multiple warehouse locations, inventory control, order processing, ecommerce fulfillment, and shipping.

7. What is the objective of physical distribution?

Ans. The objective of physical distribution is to strategically distribute inventory across a fulfillment network, so customer’s orders are delivered faster and in the most cost-effective way to meet customer expectations.

8. What are the various costs associated with physical distribution?

Ans. There are several costs associated with physical distribution, including warehousing, fulfilling, and shipping. If you manage your own warehouse, it might also include labor costs associated with warehouse management and fulfillment.

9. What do you mean by Middleman?

Ans. Middlemen refers to,such institutions or business concerns situated in the marketing channels at points between the producer and the final buyers.

10. What is Middlemen According to American Marketing Association?

Ans. According to American Marketing Association, “A middlemen is one who specializes  in performing operations or rendering services that are directly involved in the purchase and sale of goods in the process of their flow from the producer to the final consumer”.

11. What are the two types of Middlemen in distribution?

Ans. They are functional Middlemen (Mercantile Middlemen) and Merchant Middlemen.

12. Why are middlemen important?

Ans. Middlemen are very important in the modern ever widening market, by making the distribution easy and smooth. Organized markets for many commodities are created by them. They create time, place and possession utility. Middlemen concentrate their effort on marketing and distribution of goods.

13. What are the types of physical distribution?

Ans. The types of physical distribution. 

(a) Supplying distribution. Supplying distribution is when businesses transport materials from supply to stock.

(b) Carries.

(c) Intermodal Transportation.

(d) Cargo planes.

(e) Sales and Distribution.

14. What are the steps of physical distribution?

Ans. The process of physical distribution involves co-ordinate and integration of five components:

(a) Order processing.

(b) Inventory Control.

(c) Warehousing.

(d) Material Handling and.

(e) Transport.

15. Define distribution channel?

Ans: By channels of distribution we mean the intermediaries or the process through which the goods or products are transferred from the producer to the ultimate users. In other words, distribution channels are the system of economic institution through which a producer of goods delivers them into the hands of their users.

16. Mention the functions of the channels of distribution?

Ans. The functions of the channels of distribution are:

(a) Rationalization of Distribution process.

(b) Provision of finance.

(c) Help in pricing.

(d) Aid in communication.

(e) Performance of promotional Activities.

(f) Aid in distribution of goods.

17. Write some note on distribution policies?

Ans. Channel policies are the framework for achieving channel objectives. A manufacturer should constantly review the Channel policies and make sure that they are not only adequate, but are also the best in the situation. As a matter of fact, marketing policy can never be permanent but is changing according to the nature of the product or products and the marketing area. The ultimate test of a policy must be its effectiveness and economy of serving the consumer.

18. Write a note on physical distribution?

Ans. Physical distribution is a marketing  term to describe the broad range of activities concerned with efficient movement of finished products from the place of production to the place of consumption. These activities include transportation, warehousing, material handling protective packaging, inventory control, plant and warehousing site location, order processing, market forecasting and customer service.

According to William J.Stanton, “Physical Distribution involves the management of the physical flow of products and establishment and operation of flow system”.

In the words of Cundiff and still, “physical distribution involves the actual movement and storage of goods after they are produced and before they are consumed”.

19. What is Promotion?

Ans. Promotion is the process of marketing communications involving imitated efforts to establish channels of information and persuasion to facilitate or forster the sale of goods or services or the acceptance of ideas or points of view. Thus, promotion is persuasive communication to inform potential customers of the existence of products, to persuade them that those products have want-satisfying capabilities.

20. What are the elements of promotion mix.

Ans. There are five elements of promotion mix-

(a) Advertising.

(b) Publicity.

(c) Packaging.

(d) Personal Setting.

(e) Sales Promotion.

21. What is personal setting?

Ans. Personal Setting is an oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales. Hence, in personal setting we have direct face to face communication (two way communication) between two parties. Mr. Whilehead describes personal selling as the art of presenting an offering so that the prospect appreciates the need for it and them a mutually satisfactory sale follows.

22. What is the difference between personal setting, Advertising and sales promotion?

Ans. All the three are important constituents of promotional mix and they are complementary to each other too.

Some difference between these three terms are as follows:

(a) Personal Setting and advertising both are activities of recurring nature and all types of business firms have to follow them irrespective of their size and types of business. On the other hand, promotion activities are of a non-recurring nature.

(b) In advertising a firm has to spend on external agencies what personal setting activities and sales promotion activities are organised by the firm itself.

(c) In modern times, personal setting and advertising have become indispensable due to keen competition but it is not so with sales promotion. Even now-a-days sales promotion activities are organized by well established large size and prosperous companies who can afford their huge expenditure.

23. What is meant by Sales Promotion?

Ans. Sales promotion refers to the activities which supplement and co-ordination personal setting and advertising to attract customers to buy a product. Sales promotion method include displays, demonstrations, expositions, exhibitions and other non-recurrent setting effort which aim at impelling spot buying action by prospective customers.

24. Define Sales promotion programme?

Ans. Sales promotion programme is basically effective communication with the customers. It includes estimate of all possible aspects of sales promotion, such as promotional methods, sales campaign. Sales staff, distributors and other agencies connected with the sales. Sales promotion programme is therefore a planning or process of deciding in advance all necessary aspect of sales promotion.


1. Write a note on distribution policies? What is the importance or utility of a physical distribution system?

Ans. Physical distribution is a marketing  term to describe the broad range of activities concerned with efficient movement of finished products from the place of production to the place of consumption. These activities include transportation, warehousing, material handling, protective packaging, inventory control, plant and warehousing site location, order processing, market forecasting and customer service.

The major contributions of physical distribution are as follows:

(a) Reduction in distribution cost: The major contribution of physical distribution system is the reduction in distribution cost considerably. Systematic planning of distribution leads to considerable savings in distribution cost.

(b) Increase in sales volume: Efficient physical distribution system helps in increasing sales volume of the company. Customer services, price stabilization, reduction in distribution cost etc increase in sales.

(c) Creation of time, place and possession utilities: Another contribution is the creation of time, place and possession utilities. These are done by warehousing, transportation and exchange of goods.

(d) Stabilization of prices: An efficient and effective management of physical distribution can stabilize prices of products. By having control over supply position, it can prevent unusual price fluctuations.

(e) Improvement in customer services: Efficient physical distribution system is responsible for providing better customer services. Better physical distribution services give higher overall satisfaction to customers.

(f) Larger market share: Physical distribution helps in acquiring larger market share. It is possible through decentralization of warehousing operations and use of efficient means of transportation.

2. Define distribution channel? Discuss the different types of distribution channels?

Ans. By channels of distribution we mean the intermediaries or the process through which the goods or products are transferred from the producer to the ultimate users. In other words, distribution channels are the system of economic institution through which a producer of goods delivers them into the hands of their users. 

Different types of distribution channels are as follows:

(a) Manufacturer – Consumer – Channel: It is a direct channel. There are three alternatives in direct sale to consumers: Sale through advertising and direct methods (mail order selling) Sale through traveling sales force (house to house canvassing). Sale through retail Shop of manufacture e.g Mills cloth Shops. Bata shoe company shops. This is a shortest channel a product can follow to the market. Industrial goods may be solid directly to industrial buyers. Usually we have numerous and scattered consumers who buy in very small quantities. Hence, this channel is not popular for a wider market.

(b) Manufacturer Retailer – Ultimate Consumer: This channel option is preferable when buyers are large retailers e.g. a department store, discount house; chain stores, super market, big mail order house or co-operation stores. The wholesaler can be by passed in thus trade route. It is also suitable when products are perishable and speed in distribution is essential. Automobiles, appliances, men’s and women’s clothing, shoes are sold directly to retailers, However, the manufacturer has to perform functions of a wholesaler such as storage, insurance, financing of inventories and transport.

(c) Manufacturer – Wholesaler – Relation – Consumer: This is a normal regular and popular Channel option used in groceries, drugs,drug goods etc.

It is suitable for a producer under  the given condition: 

(i) He has a narrow product line.

(ii) He has limited finance.

(iii) Wholesalers are specialized and can provide strong productional support.

(iv) Products are durable and not subject to physical deterioration or fashion changes.

(d) Manufacturer-Agent-Wholesaler-Retailer-Consumer: In this channel the producer uses the service if on agent Middlemen such as a sales agent, for the initial dispersion of goods. The agent in turn may distribute to wholesalers, who in turn sell to retailers. Many textile Mills have sales agents for distribution. We may have a large national distributor such as voltas, acting as sole agent for many manufacturers. Agent Middlemen generally operate at the wholesale level. They are common in agriculture marketing. In marketing manufactured goods agent Middlemen are used by manufacturers to make themselves free from marketing tasks. An agent Middlemen sells on commission basis directly to wholesaler or large retailer.

(e) Manufacturer-Wholesale-Consumer: Wholesaler may by pass retailer when there are large and institutional buyers e.g. industrial buyers government, consumer co-operative, hospitals educational institutions business houses etc.

3. Explain  the factors determining the choice of a suitable channel of distribution? What are the main roles of channels of distribution?

Ans. There are a large number of factors when affect the choice of a suitable channel of distribution.

They may be divided into the following five groups:

A. Product considerations: 

(i) Unit Name: If a unit of product has very low value there is strong argument for using a large channel. If its value is very high, there is strong argument of using a short direct sales type of channel.

(ii) Perishability: Perishable products must be sold through relatively short channels or directly to the customers in order to avoid losses. Durable goods can be distributed by a long channel of distribution.

(iii) Bank and Weight: Bulky items must be sold directly by the manufacturers.

(iv) Technical Nature: Highly technical products requiring specialized selling ability or service should normally be sold through the shortest channel available or directly by the manufacturers.

(v) After sale service: If after sale service is to be provided on the products, they must be sold either by the producer or through authorised dealers.

(vi) Extent of product live and alternative goods: The next factors is the extent of product line. It also affect channel decisions. General goods having many alternative of substitutes should adopt popular Channels. They must be sold through the local intermediaries. A limited product  line always prefers direct sale link. 

(vii) Ordered or standardised products: The name of the products also affects this decision. Highly standardized products often should be marketed though long and complex channels. It is usually better to distribute ordered goods directly by the manufacturers.

B. Consumer or market consideration: 

(i) Number of consumers: When there is every large number of consumers, producer is a very large number of customers, producer is likely to need at least one layer of Middlemen.

(ii) Scatter of the Consumers: When customers are widely dispersed geographically, it is generally easier to reach them through one or more layers of Middlemen.

(iii) Need for created and other facilities: The term of sale also affect this decision. If goods are to be sold on credit and other facilities are to be provided to the customers, it is better to use intermediaries. Wholesalers and retailers bring in direct touch with the customers can make better assessment of their credit worthiness.

(iv) Order size: A manufacturer may sell a large size organization because of bulk purchase. But, he will have to use wholesalers to satisfy the demand of retailers.

C. Company consideration:

(i) Scale of promotion: Large scale manufacturers manufacturing one or two items ar a large scale can distribute their products directly. On the contrary a small manufacturer cannot afford the heavy expenses of sales force.

(ii) Custom of the Business: In most cases the channel of  distribution is decided by the customer of the industry also and a new entrant cannot afford to ignore them. The will have to follow the prevailing channels of distribution.

(iii) Financial Resource: If a company’s financial position is strong, it may choose a short direct sale type of channels. A financially weak company will have to depend upon intermediaries to a large extent.

D. Middlemen Consideration: 

(i) Service of Middlemen: Middlemen provide certain important services to the customer and to the producer as well. In order to avail these services their manufacturer may. decide to go for them.

(ii) Attitude of Middlemen towards manufacturers policies: The attitude of intermediaries towards the policy of manufactures may be liberal or rigid. A liberal and cooperative attitude promotes their use while a rigid attitude restricts their use.

(iii) Sales volume possibility: Manufacturers like those channels of distribution which assure them maximum sale.

(iv) Cost consideration: Producers like those channels of distribution which have minimum cost.

E. General Considerations:

(i) Suitability: The channel of distribution under consideration should be appropriate and according to marketing policies and marketing programme of the manufacturer.

(ii) Efficiency: The efficiency of a channel of distribution should be flexibility and capable of being changed.

(iii) Flexibility: The selected channel of distribution should be flexibility and capable of being changed.

(iv) The channel of distribution being followed by competitors should also be kept in mind.

(v) Special Consideration: The attitude of the society towards the possible channel of distribution should also be examined.

The Middlemen or intermediaries involved in the channels of distribution perform the following roles:

(a) Offering goods in the form of assortments or packages.

(b) Implementing pricing policies in such a manner that would be acceptable to buyers and ensure effective distribution.

(c) Searching out buyers and sellers, matching’s goods to the requirements of market.

(d) Persuading and influencing the prospective buyers to favour  a certain product and its maker (personal selling/sales promotion).

(e) Providing feedback information marketing intelligence and sales forecasting services for the region to their suppliers.

(f) Looking after the process of distribution where necessary.

(g) Participating actively in the creation and establishment of market for a new product.

(h) Offering pre and after sale services to consumers.

(i) Communication the technique of use of the product to the users.

(j) Risk bearing with reference to stock hoarding/ transport.

4. Discuss in details the various types of distribution policies?

Ans. The distribution policy framed by a company has three alternatives:

(a) Intensive Distribution policy: It is also called the general distribution policy. It aims at maximum distribution to all outlets of a specific type. If indicates a desire to sell through all responsible and appropriate outlets. It calls for the use of more than one channel to reach the target market.

Intensive Distribution is regarded as more suitable for distributing such goods a pen, pencils, notebook, soaps, cigarettes, bread, butter, sugar, tea etc.

(b) Selective Distribution policy: Under this the manufacturer choose only those outlets that are best suited to serve the needs of the firm. The general motto of this policy is “more than one but less than all”. Only better Middlemen enjoying reputation are chosen to distribute the products. It avoids selling through those middlemen who have poor credit rating or who are not in a position to do a satisfactory marketing also.

(c) Exclusive distribution policy: It allows only one distributor to stock and sell the product in a given market. Exclusive distribution works well when there is a need to enhance the prestige of the product. It is also necessary to provide adequate services to the customers after sales. Products like automobiles, machines etc. are generally distributed under this policy.

5. What type of role played by wholesaler in distribution of goods?

Ans. The role of wholesale in distribution of goods are discussed below:

(a) Buying and assembling: A wholesaler forecasts the demand for goods and assembles different varieties of goods from several products/manufacturers and some wholesaler goods from foreign Countries.

(b) Storage: He holds large stocks and serves as a reservoir and supplies to retailers. He helps in stabilizing prices by adjusting supply of goods to their demand.

(c) Transportation: A wholesaler arranges transportation of goods from producers to his warehouse and from there to retailers.

(d) Risk taking: A wholesaler bear risks of changes in demand and prices, bad debts and damage to goods in the course of transportation and storage. By undertaking various risks he simplifies the process of distribution.

(e) Selling and dispersing: A wholesaler breaks the bulk so that retailers and users can buy them in small lots. His representative regularly call on industrial users/buyers to distribute the goods among widely scattered people.

(f) Packing and grading: A wholesaler packs and repack goods in convenient lots. He sorts out goods in different grades. He also gives brand names to the products packed and graded by him.

(g) Advertising and sales promotion: A wholesaler performs advertising and sales promotion activities to increase the sale of products. He also takes the service of experts for this purpose.

(h) Financing: Sometimes the wholesaler buys the goods from the manufacturer and sell the goods to the retailer on credit. In this way he helps both manufacturer and retailer.

6. What types of roles are played by the retailers in distribution channel?

Ans: The role of retailers in distribution channel may be discussed below:

(a) Home delivery: A retailer transport goods from wholesaler to the ultimate consumers. Sometimes, consumer provide home delivery to the customers. Thus they create place utility.

(b) Credit facility: The retailer also provide credit facility to their consumers. That means the consumer can purchase goods on credit from the retailer shop.

(c) Assurance of regular supply: Retailer maintains adequate supply of goods to the customer. So that the consumers are sure of getting regular supply at time of their need.

(d) Wide choice to consumers: The retailer anticipates needs of consumers. He assembles goods from different sources and stocks different Varieties of products. He offers a wide choice to consumers.

(e) Close interaction with customers: A retailer brings new products to the notice of customers and educates them in their uses. Thus, a retailer acts as a friend band guide to the customers.

(h) Availability of goods: A retailer provides ready / supply of goods so that consumers can buy conveniently and quickly in small lots without any inconveniences of placing advance orders and waiting for supply.

7. What are the factors that influence the selection of a channel?

Ans. Factors influencing the selection of a channel are : 

(i) Market Consideration:

(a) Nature of the market: This is one of the important factors in market consideration. Consideration takes place about the product which is meant for customer or the industrial buyer. Long channel will have to be employed if the product is meant for consumer market and industrial market.

(b) The number of potential customers: There is the need for a number of Middlemen service if the number of potential customers is large. If the number of potential customers is small direct selling is suggestible.

(c) Geographic concentration of the market: Direct selling is effective if the customers are concentrated in a few places. If they are situated over the whole country, then a large number of Middlemen will have to be employed.

(d) Order Size: If the sales volume is large, direct selling is suitable. Industrial distributors sell industrial operating supplies.

(e) Customer Buying habit: This affects the channel policies very much. When the buyer’s habit and purchase pattern of consumers are frequent and small in size, then indirect selling  is suitable.

(ii) Product Consideration: 

(a) Unit sale value of the product: When the unit value of a product is high, direct channel is effective. On the other hand, when the unit value is low, the direct channel is ineffective. If the product is of low value, larger and cheaper channels will be better. Short and costly channels may be used of the products is of high value.

(b) Bulk and weight: To minimize the freight, heavy or bulky goods may be sent by train or truck.

(c) Perishable Nature: Perishable products such as milk, dairy products, bread, meat etc are sent by shorter channel or direct channel, while long channel is used for non perishable products.

(d) Technically: The Technical nature of the product requires services. Hence, sales and servicemen are needed to explain the use of the product to the customers. For products like computers, business machines etc., direct channel is more adventurous.

(e) Seasonal: Sales of the product are subject to seasonal variation, for example, woolen clothes etc. Hence to sell these seasonal products intermediaries are needed. Direct selling is ineffective.

(iii) Company Consideration: 

(a) Financial strength: Financially sound companies are in a better position to select and design their distribution channel. As such, direct channel is adopted. On the other hand, financially weak companies have to select indirect channels as they depend on the intermediaries.

(b) Reputation: It has been said that reputation travels faster than man. There are many companies, which have good reputation because of the product preference by the customers. Many intermediaries are eager to have connection with such companies.

(c) Market Control: When a firm wants to exercise control over the price, the way in which customers are served etc., direct Channel is suggested.

(iv) Middlemen Consideration: The middlemen, who is able to offer a good facility of storage may be considered. The channel which facilitates maximum sales must be preferred. The cost of each attractive channel may be estimated on the basis of unit sale. The best type of channel which gives a low unit cost of marketing may be considered.

(v) Consumer Consideration: The characteristics of buyers as to their number, location, frequency of the purchase, quantities bought by them etc influence the channel selection. If the customers are scattered geographically, a long channel can be adopted. Consumers may wish to have the product at a convenient place; for example daily consumption items like milk, paper, bread etc consumers may like to have them at the door. The channel adopted must facilitate the commodities produced to be available to the consumers in time.

8. Why is physical distribution important in ecommerce?  Explain the four functions of Physical Distribution?

Ans. Even thought e commerce takes place online, physical distribution is important because it is linked to three critical business objectives that impact your bottom line: faster shipping, reduced logistics costs,and high customer satisfaction.

Here is a closer look at how physical distribution contributions to supply chain efficiency: 

(a) Supports faster shipping times: The ability to offer customers faster and affordable shipping options has proven to reduce cart link Amazon and Walmart Marketplace have set high expectations for fast shipping.

Physical distribution for faster shipping can be done by strategically storing inventory across several locations (or a centralized location) based on where your customers are, rather than shipping all orders from a single warehouse (for young brands, a single warehouse is often close to where they live, but this is not always close to the majority of their customers).

For instance, if you store inventory in Chicago, you can reach other regions of the country faster, then let’s say, storing all your inventory in Los Angeles when you have customers in both the Midwest and the East Coast.

Ultimately, the quicker a customer gets their order, the happier they are and more likely they are to buy again.

(b) Reduces physical distribution costs: If you achieve a faster, more efficient last-mile delivery without the need for expensive expedited shipping, you not only reduce costs for you but you can also pass those savings on the your customers, whether you offer free shipping in exchange for a minimum spend or charge real-time carrier rates.

For example, if your customers are scattered across the US, distribution products in different US regions can reduce the average shipping zone a package is sent to reach its destination. The higher the zone, the more expensive it will be further building the case for optimized physical distribution.

Note: You can use historical order data and other distribution metrics to determine where your customers live and if it makes sense to store inventory in one or more locations to save on costs.

(c) Improves customer satisfaction: Strategic physical distribution not only improves your bottom line, but it ultimately leads to higher customer satisfaction and a better customer experience.

By optimizing shipping routes and storing inventory closer to your customers, you save money while reducing time in transit, so customers receive their orders faster and at an affordable price.

Implementing a cost-effective physical distribution model can also allow for better shipping incentives, such as free shipping on offers like bundles, upsells, or a minimum spend threshold to further offset costs.

Here are the different functions of physical distribution that every ecommerce business should pay attention to:

(a) Automated order processing: Implementing technology that automates order processing allows you process orders from anywhere by tracking orders in real time.

No matter where a customer places an order, order processing technology allows you to automatically verify and process orders. Order information is automatically sent to the fulfillment center location closest to the order’s shipping destination.

Order processing software is often integrated with a fulfillment or inventory management system, making it easier to track inventory and manage orders in one place. This way, you can better control stock, optimize inventory levels, and make sure you have enough inventory stored at each distribution location.

(b) Warehouse management: How you manage a warehouse also impacts how well your physical distribution model works. Warehouse management consists of receiving inventory, optimizing storage, tracking stock levels, and picking, packing and shipping orders.

To keep your warehouse running efficiently, consider adopting a warehouse management system (WMS) that will give you visibility into your warehouse operations, which SKUs are stored at which location, inventory forecasting data, and operational workflows.

A WMS can also help keep warehouses organized by SKU, optimize space, and reduce human error by eliminating manual processes.

(c) Inventory control: Keeping an eye on inventory as it moves can be a time-consuming task, but with the right inventory tracking processes in place, you can easily optimize inventory levels across your network and avoid stockouts and dead stock, as well as warehouse picking errors.

Inventory control focuses on optimizing operations and often involves the implementation of a WMS, from scanning in new items in real time on the warehouse floor to preparing units for kitting and assembly.

By implementing technology processes to better control inventory, you can improve inventory optimization while expanding into multiple distribution center locations.

(d) Automated shipping: Physical distribution of inventory also requires a shipping strategy. You will need to think through how orders from a warehouse or fulfillment center will be shipped  to the customer in the most cost effective way possible.

Shipping accounts for the bulk of physical distribution costs, so it’s important to keep track of your shipping costs throughout your network.

If you partner with a 3PL like ShipBob, you can automate the shipping process no matter how small or large your distribution network is.

Automating the shipping process comes with several key advantages, including the ability to aggregate and access shipping insights such as data on average transit times, cart values, shipping methods, and shipping destinations, to help you Optimize your costs and test different shipping price strategies.

ShipBob also partners with major shipping carriers to negotiate rates, so you can pass the savings on to your customers.

9. Difference between Wholesaler and Retailer.


BasisWholesaler Retailer
LinkWholesaler servers as a link between producers and retailers on the other hand, a retailer provides a link between wholesalers and consumers. Wholesaler is the first link, whereas retailer is the last link in the chain of distribution of goods.
Purpose of sellingA wholesaler sells goods for resale.On the other hand, a retailer sells goods for ultimate consumption or use.
Scale of operations A wholesaler carries on business on a large scale and requires huge capital. A retailer, on the other hand, deals generally on a small scale and capital invested in retail trade is relatively small.
Range of goodsA wholesaler generally deals in one commodity. But a retailer deals in a large variety of goods and caters to the diverse needs of his customers.
DealingsA wholesaler generally sells goods to retailers on credit.But a retailer usually sells goods to consumers on a cash basis.
LocationA wholesaler can have a go down in a corner of the city and can supply goods there from.But the shop of a retailer needs to be located in the heart of the city to attract a large numbers of customers.

10. Explain the various sales promotion Methods?

Ans. Following are the various sales promotion methods or techniques:

(i) points of purchase displays: This is a very effective sales promotion tool. Under this method product itself or its photograph is displayed in the windows or show rooms of the shop. Points of purchase displays establish a link between the product advertised and the product displayed. These displays are presented in a very suggestive and attractive manner.They tell the customers about the product and its possible uses.

(ii) Direct Mail promotion: Under this method individual typed letters, postcard leaflets booklets, Catalogs, charts, research bulletins, calendars and business cards are sent potential customers through mail. It is a person to person method of promotion. It is always aimed at target customers. The sales promotion literature is interest in the product. Detailed description of the product its uses, time of the manufacturer, sources from where it can be obtained etc, from the subject matter of direct mail promotion technique.

(iii) Merchandising Aids: Merchandising aids are given to induce business buyers to purchase goods in large quantities. Manufacturers import free training to their business buyers on such matters as stores control system and stores layout. They also do all advertising for the business buyers. These devices help a manufacturer in obtaining the patronage of buyers.

(iv) Premiums: Sometime customers is given a product free or at a normal price to induce him to buy soure other products. Such gifts or commissions are known as premiums. Premiums are generally given in the case of consumer convenience goods such as bladders, tooth pastes and brushes. These products are generally of low unit value. Premiums are not given for consumer durables of high unit value because such items are not frequently purchased by the customers.

(v) Samples and free gifts: Samples and free gifts are also given to customers to induce a new product or to increase the sales of an existing product. The main objective is to create consumer awareness and develop grand preference.

(vi) Product demonstration: Another effective sales promotion tool is the actual demonstration of the product. Representative of manufacturers go from to shop and house to house to demonstrate the uses of the product to middlemen and ultimate consumers.

(vii) Quiz of profit and pleasure: Contents are also organised for the purpose of increasing consumers awareness of a product. Rewards are given to winners. Bournvita Quiz contest is an example of the sale promotion tool.

11. Explain the concept of personal selling? Distinguish between personal selling and publicity(advertising).

Ans: Personal selling is a technique that involves face-to-face selling between a sales rep and a prospective customer. With personal selling, sales representatives try to persuade a potential customer to purchase your product or service.The salesperson tries to highlight various features of the product to convince the customer that it will only add value. However, getting a customer to buy a product is not the motive behind personal selling every time.Often companies try to follow this approach with customers to make them aware of a new product.

BasisPersonal selling Publicity(Advertising)
CostThese are the most costly methods.It is a relatively less costly method.
TimeIt takes more time in conveying any information to the customer.It takes a little time to convey any information to the customer.
FormThese are impersonal.These are Personal.
MediaThrough a salesman.TV, radio, newspaper & magazine.
FeedbackThe reaction of the customer becomes immediately affected.This gives no information about the reaction of the customer.
FlexibilityIt is completely flexible.It lacks flexibility.

12. What are the importance of promotion? What are the objectives of sales promotion?

Ans. The main purpose/ importance of promotion are stated below:

(a) Promotion activities are essential for imperfect competition.

(b) It is also responsible for creation of demand.

(c) It is an exercise in information, persuasion and influence which are interrelated.

(d) The middlemen, communicate to the consumers about the product. Thus, promotion is the important process of market communication.

(e) Due to increase in the physical distance between producers and consumers, there is the increase in need of promotion.

(f) There is also the increase in the number of potential consumers which increases the problem of promotion.

(g) During economic decline, selling is a problem. At that time, promotion is essential to maintain the standard of living and the high level of employment in the country.

(h) Now adays consumers give more importance to want satisfaction rather than to their needs. Therefore, a firm must have the best promotional programming to attract such customers.

The main objectives of sales promotion are as follows:

(a) To attract customers.

(b) To face competition effectively.

(c) To keep the memory of the product alive in the minds of the consumers.

(d) To stimulate to demand by popularizing the products.

(e) To supplement personal selling and advertising.

(f) To establish and maintain communication with large market segments.

(g) To induce middlemen to purchase goods in large quantity.

(h) To arrest seasonal decline is sales.

(i) To help in introducing new products in the market.

(j) To assist salesmen in increasing sales and achieving sales targets.

13. Discuss in details the various Importance of sales promotion.

Ans. The sales promotion activities help in promoting the sales of the concern effectively.

Following are the importance of sales promotion:

(i) For selling the goods in imperfect markets: Every market is imperfect market condition the product cannot be sold easily only on the basis of price differentiation. It is the promotional activity that provides information about the differences, characteristics and the multiusage of the products of various competitors in the market. The customer is attracted to purchase the goods on the basis of such information.

(ii) Distance between consumers and producers: Due to previlant market conditions mass selling is quite impossible without promotional activities. The distance between producers and consumers has so widened in present days to get them acquanted with the product, promotional activities are necessary.

(iii) Instance competition: The instance competition has necessitated the sales promotional activities. When one manufacturer increased his promotional spending and adopt aggressive strategy in creating brand image, others are also force to follow the suit. This leads virtually a “promotion war”.

(iv) Increase standard of leaving & employment opportunities: Large scale production is the theme of the day. Sales production. But this could be achieved only with appropriate methods of large-scale selling is possible only with the help of promotional activities. In this way promotional activities increase the standard of leaving by providing the better goods at a reasonable rates.

(v) Increase trade pressures: The growth of large scale retailers, such as supermarkets, chain stores etc have brought greater pressure on manufacturer for support and allowance so, in order to aid the retailers and also to ensure their share of self space many manufacturers have taken sales promotion activities.

(vi) Effective sales support: Basically sales promotion policies supplement the effort of personal and impersonal Salesmanship. It is found that good sales promotion material make the salesman’s effort more productive. Activities reduce his time spent in prospecting and reduce the term downs.

(vii) Increase speed of product acceptance: Most of the sales promotion devices can be used faster than the other promotion methods such as advertisement.

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