Chapter 5.Formation of optimal goods distribution channels.

 

Production distribution - is one of aspects of business industrial enterprise. Sales are means of achieving the goals of the enterprise and the final stage of identifying tastes and preferences of consumers.

Production distribution is important for the company because of the following factors: sales volume determines such indicators, as the income, profit, profitability. Also production and sales depend on logistical support. Thus, in the process of marketing result is definitively determined by the enterprise, that aimed at enhancing the business activity and maximize profits.

By adapting marketing network and service before and after the purchase of goods to consumer demands, enterprise-producer increases its chances in the competition.

Length of distribution channel enterprise "Medochok" will be onel evel, that consists of one intermediary. This will appear retailer. The choice of one level channel is explained by the company is not profitable to attract other mediators through great expense to them, and the company saves money that can be used for different types of advertising.

We distribute our production, cooperating with such companies as: 'Agroru', 'Zlatomed TM' and 'Peredova Pasika'.

The task of retailer besides selling goods will also be collecting information, conducting market research and distributing of the results for saling and trading. That is, it will help the company to improve its production to meet consumers.

Participants distribution channels perform certain functions:
1. Data collection, conduct market research and spread of the results to plan marketing and barter;
2. Finding potential customers, establishing and maintaining relationships with them;
3. Sales promotion;
4. Conducting negotiations with customers on price levels;
5. Selling goods to consumers;
6. Transportation and storage of goods;
7. Funding for distribution of goods;
8. Assuming the risk.

 

For successful functioning of our business we need potential customers.So that to find them, establishing and maintaining relationships with them will deal brokers, who will be attracted by retailer.

It is important to adapt products to the requirements of customers, including manufacturing, mounting, packaging products, sorting and picking.

Retailers provide commercial, trade services, for example sale of goods to consumers.

A railway transport is well adjusted for transportation of different parties of cargoes in any weather conditions. It provides an opportunity to deliver the goods over long distances, regularity, and quite low cost of transport.

Enterprise "Medochok" personally will finance the process of distribution of commodities and accept the risks, including responsibility for product during its promotion to the consumer.

Determining the width of the channel, the company " Medochok " is oriented on the principles of selective distribution. With this division of the company limits the number of retailers, giving rights to sell its products to individual brokers. The objectives of the company are reduced to reaching a wide market, getting high profits through the implementation and ease of place of purchasing for the consumer.

A consumer will be able to buy our products in a store, where he can see the goods.

 

It is well known that the sales volume of the company is a dynamic indicator and as a result of various factors can be changed. Therefore advisable to analyze the breakeven point and to find the critical sales, where price is equal to the cost and the company with the proceeds from the sale may only cover their costs.

Income from sales: I = P*N=122,99 *168=20662,32

Variable costs = V * N = 35*168 =5880

Total costs = F + V * N =5400 + 35 *168=.11280

The volume of sales of the company is a dynamic indicator and as a result of influence of different factors (changes in economic conditions, actions of competitors, etc.) can fall. Therefore, you should conduct a break-even analysis and find the point of critical sales, where the price is the cost and the company due to income from the sale may only cover their costs. The point of critical sale divides the volume of realization(in the theoretical sense) into two intervals:

· Interval (0;N_kr), in which the company suffers losses, because P<S;

· Interval (N_kr;N_opt), in which an enterprice makes a profit,because P>S.

We need to find the critical sales volume:

 

Pic.5.1 The theoretical critical level marketing

A break-even point – is a level of physical volume sales at a given price within a particular time period (month, quarter, year), due to that an enterprise covers its costs. Profit of the company delves at break-even point. A break-even point shows at what volume productions and realization of products a profit yield from realization equals charges on a production. Enterprises makes sense to produce products, if a project will allow to provide a production and realization of commodity in a volume that exceeds the threshold of break-even, only then a project begins to bring in a return.
For volume production, the lower the threshold of break-even, the company incurred losses.
Thus, in order that an enterprise did not end up in losses, but here it will have no profits, it is needed to realize units.