Wednesday, 26 August 2015

Distribution of Goods and Services as one of the basic economics activities of man

Distribution also is considered as one major economic activity in addition to the three basic economic activities. It is the activity that comes after production and its job is to distribute the goods and services that have been produced during the period to their points of consumption. Goods produced does not get consumed in the local market of your region itself when productions are on large scales. So, the goods need to be transported to all corners of the market depending upon their requirements. First of all, you may need to create awareness in the market about your produce so that people come to know of it and demand it for their requirements. This involves publicity and advertisement. Then, you need the transporting facilities and storage facilities also for the goods till they get consumed.

So, distribution of goods and services involve these following major activities.

To get requirement or demand for your goods, the public should be aware that you are producing so and so goods and/ or services. This can be achieved through advertisements in all leading newspapers or broadcasts on Radio and TV. Further, awareness about your products as to their quality and functions also need to be publicised through distribution of pamphlets and TV advertisements. This will make interested people to demand for your products.

When you receive requirement for goods, you need to transport them to the required places. This can be done either with your own fleet of vehicles or through public transportation facilities available like carriers, couriers, railway freight services, cargo services, etc.

Distribution of goods may require storage space and facilities also for storing the goods at destination points or even at intermediary points till actual consumption takes place to protect them from heat and rain. You can't ship each and every requirement separately, since it will be not economical and may delay the supply also. So, storage occupies an important role in the distribution of goods.

So, from above analysis, you can see that distribution of goods is a very complex economic activity involving publicity, transportation and storage of goods also and it needs to be considered as the second major economic activity after production.

There can be exceptions, in which case there may not be the need of this distribution activity taking place. For example, food consumed directly at small roadside eateries, a hair-cut in the saloon, etc. where there is no involvement of distributing activities. It is a case of direct production and consumption.

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