A C T A U N I V E R S I T A T I S L O D Z I E N S I S FO L IA OECONOM ICA 17, 1982
R o m a n G ło w a c k i *
D ISTR IB U TIO N CH AN NELS AS A TOOL O F M ARKETING PO LICY
1. SOC IO -ECO NO M IC SEN SE O F D IST R IB U T IO N
In m inds of m an y decision-m akers re p re se n tin g v arious levels of m anagem ent th e re is still deeply inrooted a conviction th a t th e m ost im p o rta n t th in g is to produce a product. T he v e ry m a n n e r of tra n s lo -cation of th e p ro d u ct to th e end u se r as w ell as th e tim e and place of th is o p eration a re of secondary im p o rtan ce in th e ir opinion. This con-viction has been accom panied for m an y y e a rs by a view th a t one of basic principles of th e socialist tra d e should be possibly th e low est costs of its functioning as only th e n it can be effective.
The econom ic practice provides best evidence testify in g to th e fact how m uch sim plified and even socially h a rm fu l such view s can be. They account for a m echanistic appro ach to th e w hole com plex d istrib u tio n process and recognition of a fu n d am e n ta l re q u ire m e n t th a t th is process should be organized in such a w ay th a t it can best serve, firs t of all, th e b u y e r — prom oting his satisfactio n w ith consum ption.
T he d istrib u tio n system co n stitu te s a basic in g re d ien t of th e m a rk e -tin g process. A lm ost all u tilitie s ap p earin g in th is process are, to a sm al-ler or bigger degree, im plem ented by th e d istrib u tio n system . It is e x a c tly th is w hich testifies to th e big im p ortance of th is system . The set of u tilitie s cre a te d in th e m a rk e tin g process can be expressed by th e follow ing equation:
Sum of F orm T im e P lace Possession
u tilitie s u tility + u tility + u tility + u tility
F orm u tility is p rim a rily cre a te d by activities u n d e rta k e n in p ro -duction sp h ere and also, a lth o u g h to a sm a lle r degree, in th e m ark e tin g process. P roduction is co n c en tra te d on technological and technical
aspects of th e m a n u fa c tu r ing process (how to p roduce, w h a t tech niques of production to use). The task of m ark etin g , on th e o th e r hand, is to d e te rm in e w h a t products (services) to produce (w hat to produce and in w h a t quantities) on the basis of thorough analysis of m ark et req u ire -m ents. To p e rfo r-m actions of th is ty p e it is necessary to -m an ip u la te a ctively creation of th e form u tility i.e. to m ould p ro d u ce rs’ decisions — w h a t th e y should produce and in w h a t q u an tities. T he d istrib u tio n sy -stem m ay re n d e r in v alu ab le services in th e field of c re a tin g th e u tility of form as it m ain tain s d ire c t and p e rm a n e n t contacts w ith end users. O w ing to th a t it can recognize th e ir needs, preferen ces and responses to offered p ro d u cts (services).
A ccordingly, th e role of d istrib u tio n should not be re s tric te d to tran slo catio n of goods from production to consum ption sphere, as such tre a tm e n t of d istrib u tio n functions w ould alm ost exclusively boil dow n to technical aspects.
In as m uch as in th e case of th e form u tility th e d istrib u tio n sy -stem should p a rticip a te in its creation jo in tly w ith production so in the case of rem ain in g u tilitie s it operates alone as th e y co n stitu te a m ain dom ain of its activity. It is not enough to produce even th e best p ro -duct. By c re a tin g th e tim e u tility and place u tility th e d istrib u tio n system paves th e w ay for socio-economic rationalization of th e m ark e-ting process. A system , in w hich bu y ers w ishing to satisfy th e ir needs w ould have to tra v e l a ro u n d th e c o u n try v isiting d iffe re n t p la n ts in o rd er to purch ase n ecessary goods, w ould be v e ry ineffective. On th e o th e r h and, it w ould be irra tio n a l to p ractice sales of all p ro ducts (ser-vices) on b u y e rs prem ises. B oth solutions w ould lead to a big w aste. T h at is w h y su ppliers w ishing to co n tact bu y ers open a n e tw o rk of o u tle ts in th e ir places of dw elling. In th is w ay a physical distance b etw een sellers and b u y e rs becom es sh o rte r w hile sim u ltan eo u sly th e b u y e r saves tim e re q u ire d for b u ying goods or services.
F in ally , an im p o rta n t ta sk of th e d istrib u tio n system is to tra n s fe r th e title of possession (utilization) of a product. This m ay be done th ro u g h th e bu y in g -sellin g act or in a n o th e r w ay (e.g. ren tin g , leasing). T he socalled possession u tility involves still o th e r im p o rta n t in g re -dients. Its e x tre m e ly im p o rta n t com ponent is creatio n of b u y e rs satisfaction w ith possessed products. T h a t is larg e ly d e te rm in e d b y f a -vourable conditions of utilizing th e p u rchased goods cre a te d by the d istrib u tio n system . H ence, task s of th e d istrib u tio n system should not end w ith passing th e ow nership title. It m u st provide such services as giving a g u aran tee, supplying a pu rch ased p ro d u ct to b u y e r’s prem ises, its in stallatio n , m aintenance, rep airs, su p p ly of sp are p a rts etc. P ro v i-sion of these services is an indispensable condition of bu y ers
satisfac-tio n w ith pu rch ased goods. I t also consolidates a good im age of th e c o m p an y am ong th e society and rep re se n ts one of essential factors d e -term in in g rep e a te d purchases of a given product.
C re a tin g th e above m entioned u tilitie s th e d istrib u tio n system r e -m oves or a t lea st cushions conflicts or, in o th e r w ords, disproportions b e tw e en su p p ly of goods or services offered b y p ro d u cers and dem and re p re se n te d by buyers. T hese conflicts a re a re s u lt of divergences ap p e arin g b etw een p referen ces of end users and producers.
The so-called a sso rtm e n t conflict is m ost im p o rta n t here. C onsu-m e rs w a n t to b uy a w ide a sso rtonsu-m e n t of p ro d u cts a t p ro p e r tionsu-m e and place. T hus th e y w ould like to have m ost p ro d u cts o ffered for sale a t ■one place. S uch a ran g e of goods cannot, how ever, be tu rn e d out by one producer, as pro d u cers striv in g fo r a hig h p ro fita b ility of th e ir . p ro d uction m u st specialize in tu rn in g out d efin ite p ro ducts for
defin ite m a rk e t segm edefints (groups of buyers). T hey are, m oreover, idefin te re -s te d in p ro ducing long -serie-s of good-s and big q u atitie-s.
T he second ty p e of conflict is rep re se n te d b y q u a n tita tiv e conflict. It is caused by d ifferences b etw een q u a n titie s of goods offered b y p ro -d u c e rs (big lots) an-d q u a n titie s pu rch ase-d by consum ers (sm all lots). T h ere is often p re se n t a tim e conflict. It is caused by th e fact th a t p ro d uction and purch ase periods do not overlap one an o th er. It is espe-cially acute w h en production e.g. a g ric u ltu ra l p ro d uction is of seasonal c h a ra c te r w hile d em and is Of continuous c h a ra c te r, or in th e rev erse o rd e r — w h en d em and is of seasonal c h a ra c te r w hile pro d u ctio n is c a rrie d on th ro u g h o u t th e w hole y e a r (e.g. pro d u ctio n of skis).
T hese conflicts a re g ra d u a lly dim inished by th e d istrib u tio n system along w ith a passage of th e p ro d u ct th ro u g h consecutive lin k s from places of p ro d uction to end users. In th is w ay, e.g. organizations of w holesale tra d e possess a m uch w ider asso rtm e n t of p ro d u cts th a n each p ro d u cer supplying them . R etailers have a t th e ir disposal an even w i-d e r assortm ent. B y perfo rm in g storage functions i-d istrib u tio n can also m itig a te or even elim in ate tim e disproportions. T h rough th e so-called com m ercial grading it a d ap ts th e q u a n titie s supplied by p ro d u cers to re q u ire m e n ts of end users.
2. CONCEPT OF D IST R IB U T IO N CH A N NEL AND IT S ROLE
I t can be seen from th e above re m a rk s th a t th e d istrib u tio n system should p e rfo rm a n u m b er of functions w hich are im p o rta n t from socio- -econom ic point of view. A ccom plishm ent of these fu n ctio n s involves
tra n sfo rm a tio n of nu m ero u s m ate ria l and in fo rm atio n flows. T hese flow s a re effected by m eans of d istrib u tio n ch an n els also called m a rk e t channels. T he d istrib u tio n channel concept is defined in d iffe re n t w ays according to th e sta rtin g point w h e th e r it be a tra d itio n a l or m odern concept.
In th e firs t case a d istrib u tio n channel is understood in th e sense of th e in te rn a l s tru c tu re of a com pany and e x te rn a l in stitu tio n s w ith th e help of w hich goods o r services a re tran slo c a te d fro m th e ir places of production to consum ption. A tten tio n is paid h e re to physical flow of goods and tra n s fe r of ow nership title accom panying it. A c tu a lly th e d istrib u tio n channel concept is synonym ous h e re w ith th e concept of goods flow. In th is sense, th e w hole d istrib u tio n channel is com posed of m any b u y in g-selling acts accom panying a pro d u ct sta rtin g w ith th e m om ent it is sold by th e p ro d u cer to th e m om ent it is pu rch ased b y th e consum er (end user).
Such in te rp re ta tio n of a d istrib u tio n chan n el allow s to explain som e of its aspects and follow a physical flow of th e p ro d u ct as w ell as a tra n s fe r of th e o w nership title . T his in te rp re ta tio n is characterized , how ever, w ith some shortcom ings since m an y sp h eres of a c tiv ity — essential from th e po in t of view of th e m a rk e tin g process — a re n o t included in th e scope of th is concept. It encom passes only d iffe re n t ty p es of com m ercial m iddlem en o p e ra tin g b etw een th e p ro d u cer and end users of th e p ro d u ct w hile th e re a re fo rg o tten o th e r in stitu tio n s (tra n sp o rt and financial organizations, m a rk e t analysis agencies, a d v e r-tising agencies, insu ran ce com panies etc.) p a rtic ip a tin g in th e d is trbution system . P a rtic ip a tio n of th ese in stitu tio n s in m ark e tin g ac tiv i-ties is indispensable alm ost in e v e ry case. B ypassing all th ese n o n -tra d e in stitu tio n s, typical fo r th e tra d itio n a l concept, n a rro w s the field of observation. W henever in analysis of a d istrib u tio n channel th e re a re ta k e n into consideration tra n s fe r of th e ow nership title and physical flow of goods accom panying it, th e n th e re pass unnoticed m an y com -plicated operations d e te rm in in g th e scope of m ark e tin g a c tiv ity or — to be m ore precise — d istrib u tio n activ ity . This obviously produces nega-tive effects in decision-m aking sp h ere as it becom es im possible in such a case to p e rfo rm a p ro p er assessm ent of th e ran g e of activ ities carried out by a given d istrib u tio n channel.
The tra d itio n a l concept bypasses also m a n u fa c tu re rs of p ro d uction ra w m ate ria ls as all diagram s illu stra tin g d istrib u tio n ch an n els s ta rt w ith a pro d u cer of th e end product. A fte r all, it is know n th a t m an y m ark e tin g activities are c a rrie d out e a rlie r i.e. before th e p ro d u cer tu rn s out th e end product. In these activ ities p a rtic ip a te m any in s titu -tions and it w ould be im possible to develop m ark e tin g a c tiv ity
connec-ted w ith a d efin ite p ro d u ct if th is a c tiv ity w as n o t ap p lied firs t in r elation to raw m aterials. U nderstood in th is w ay th e p ro d u cer of ra w m ate ria ls co n stitu te s one of lin k s in a d istrib u tio n channel.
In th e lig h t of th e above an alysis w e can say th a t all econom ic u n its p articip a tin g d ire c tly or in d ire ctly in m ark e tin g activ ities estab lish a di-strib u tio n channel. B ypassing th em leads to decrease of cognitive and p rac tic a l u tility of m ark e tin g chan n el analysis.
In th e m o d ern concept a d istrib u tio n channel (chain) is understood to be a set of consecutive lin k s (in stitu tio n s or persons) th ro u g h th e m ediation of w hich is effected a passage of one or m ore flow s connec-te d w ith m ark e tin g activity. These flow s include physical tran slo catio n of products, tra n s fe r of o w nership or u tilizatio n rig h ts, tran sm issio n of in fo rm atio n to th e m ark e t, o rd erin g of products, re m ittin g m oney due, risk taking, tra d e negotiations, g a th e rin g of in fo rm atio n ab o u t th e m a r-ket. T hese flow s m ay be analyzed in v e rtica l cross-section (e.g. from a p ro d u ce r of raw m a te ria ls to end u ser of a product). We can th e n observe th e directio n tak e n by th ese flows. Such flow s as physical tran slo catio n , tra n s fe r of ow n ersh ip title , prom otion pass from th e p ro -d u c e r (m a n u fac tu re r of a raw m aterial) to en-d user. Flow s connecte-d w ith ord erin g a p roduct, re m ittin g m oney due, in fo rm atio n about req u irem e n ts of b u y e rs tak e a rev e rse directio n i.e. from b u y e r to p ro -ducer. R em aining flow s accom panying tra d e negotiations, ris k tak in g and financing m ark e tin g a c tiv ity can tak e bo th directio n s depending upon d efin ite situ atio n s w hich include also tra d e custom s (e.g. pro d u cer m ay su p p o rt fin an cially tra d e com panies b u t th e situ a tio n m ay be reversed).
A nalysis of a d istrib u tio n ch an n el in v e rtica l cross-section m akes it possible to tra c e th e passage of all flow s th ro u g h p a rtic u la r links of th e channel. H ow ever, in th is case w e can tak e in to co n sideration only one in stitu tio n in each in te rm e d ia te lin k (one producer, re ta ile r, tr a n -sp o rt com pany etc.). As a ru le th e re op erate m an y in stitu tio n s a t each level, th a t is m an y w holesale, re ta il, tra n sp o rt com panies etc., and not only one organization, and — th e re fo re — it becom es also necessary to analy ze a d istrib u tio n channel in h o rizontal cross-section. A lthough this tim e we can analyze only one se p a ra te flow , still w e can d e te rm in e th e a c tu a l n u m b er of in stitu tio n s p a rtic ip a tin g in th e d istrib u tio n process in p a rtic u la r links (the n u m b er of w holesalers, re ta ile rs, tra n s p o rt com -p anies etc.).
These tw o approaches to a d istrib u tio n chan n el — v e rtic a l and ho-rizo n tal are not only useful for assessm ent of d istrib u tio n ch an n els fu nctioning b u t th e y a re also of p rim a ry im p o rtan ce in m aking decsions connected w ith creatio n of d efin ite ty p es of channels. T hus d
i-strib u tio n ch an n els rep re s e n t an im p o rta n t in stru m e n t of m ark e tin g a lth o u g h th e ir effectiveness depends on fu lfilm e n t of m an y re q u ire -m ents.
3. R EQ U IR EM ENTS POSED BEFO RE D IS T R IB U T IO N CHANNELS D istrib u tio n channels should be, firs t of all, tre a te d as a tool in te g ratin g p a rtic u la r links (spheres) of th e m ark e tin g system — p ro -duction, d istrib u tio n (goods tu rn o v er), and consum ption spheres. It is by m eans of d istrib u tio n channels th a t m ate ria l and in fo rm atio n flow s b etw een these sp h eres a re effected. We a re dealing h e re w ith an a p p ro -p ria te n etw o rk of feedbacks. E ffectiveness of th e m ark e tin g system is d e term in ed by efficient organization of ties b etw een m ate ria l and in fo r-m ation flows.
This w hole system of ties is sim u ltaneously of com p lem en tary charac ter. A ctivities perfo rm ed w ith in th e sp h ere of realizatio n are com -p lem e n ta ry in rela tio n to those -p erform ed in -production. T herefore, it is n ot enough to produce a p ro duct b u t th e re m u st be en su red such conditions fo r it th a t it can be passed to b u y e rs a t p ro p er tim e and place as otherw ise, as w e have a lre a d y pointed out, th e m a rk e tin g sy -stem becom es ineffective producing d efin ite losses on th e social scale. It is also erroneous to th in k th a t effective fu nctioning of th e d is tri-b u tion sp h ere depends solely on solutions adopted w ith in th is sphere. Decisions m ade in production are of essential im portance fo r effective functioning of th e d istrib u tio n sphere. The point h e re is not only an ap p ro p riate q u a n tity and s tru c tu re of goods su p p ly b u t also th e ir a p p ro -p ria te -p re-p a ra tio n for sale (services, u n it -packaging, in fo rm atio n about u tility values of products, prom otion etc.) E ffectiveness of th e re a liz a -tion process depends on th e w ay goods have been p rep a re d for trade. C o m plem entary n a tu re of p a rtic u la r spheres of th e m ark e tin g sy -stem g e n erates a need for ra tio n a l allocation of outlays b etw een th em as w ell as b etw een p a rtic u la r lin k s (levels) of d istrib u tio n channels. D ecrease of ou tlay s on th e realizatio n sp h ere m ust b rin g about some dislocations in th e m ark e tin g system and also increase of social costs.
It should sim u ltan eo u sly be rem em b ered th a t b etw een m ark e tin g activities w ith in th e above m entioned spheres occur, to some e x te n t, s u b stitu tio n relations. If e.g. consum ers purch ase goods in bigger q u a n -titie s th e n th e y tak e over a p a rt of fu n ctio n s connected w ith storage of stocks. This leads to decreased fre q u e n c y of p urchases in tra d e n e tw o rk w hile sim u ltan eo u sly it decreases its load.
tion sphere. It ap p ears e.g. th a t a change in p ro d u ct technology (in tro -d u ction of brea-d rem ain in g fre sh over longer tim e) la rg e ly fac ilita te s th e selling process, and first of all, it elim in ates r e tu r n of stale bread and decreases costs accom panying it. In o th e r w ords, a change in te c h -nology produces bigger effects th a n e.g. im p ro v em en t in a system of d e-liveries.
E xistence of c o m p lem en tary and especially s u b stitu tio n ties is of e x tre m e ly g re a t im p o rtan ce for im proving effectiveness of d istrib u tio n channels. In practice it im plies th a t if th e re ap p e ar bo ttlen eck s in an y links it is not alw ays necessary to u n d e rta k e rem ed ial actions in th is and not a n o th e r link. Such bottlenecks, as in th e case of th e bread, can be rem oved by in tro d u ctio n of changes in o th e r spheres.
In o rd er to obtain a d v an tag es cre a te d by th e phenom enon of com -p le m e n ta rity and su b stitu tio n it is necessary to in te g ra te m a rk e tin g ’ activ ities of p a rtic u la r links in a d istrib u tio n channel, or m ore p rec
i-sely — of pro d u cer of raw m a te ria ls and end products, m iddlem en, and o th e r organizations p articip a tin g in th e m a rk e tin g process in a given m ark et.
Such in te g ratio n is easiest if th e p ro d u cer has a t his disposal his ow n n e tw o rk of o u tle ts and reaches th e end u ser w ith his products. This solution m ay, how ever, rep re s e n t only one out of m an y v a ria n ts of d istrib u tio n channels organization. In m ost cases th e p ro d u ce r relies on e x te rn a l in stitu tio n s (in d ep en d en t organizations of w holesale, r e -tailing, tra n sp o rt etc.), and th e n obviously his influence on th ese in sti-tu tio n s is m uch sm aller. It is m ore difficu lt th e n to in te g ra te activities b etw een d istrib u tio n channel links. This situ a tio n does not release him from a necessity of p e rfo rm in g in te g ratio n of activ itie s as each u n it c a rry in g out activities connected w ith d istrib u tio n , reg ard less of its organizational affiliation, rep re s e n ts an ex ten sio n of in te rn a l o rg aniza-tion of th e in d u stria l com pany.
A cceptance of th is assum ption is a logical consequence of a thesis th a t th e p ro d u ce r’s resp o n sib ility is not lim ited only to pro d u ctio n of a p ro d u ct even th o u g h p ro d u cers in ou r c o u n try v e ry often perceive th e ir role in th is w ay. T h a t is, how ever, a pathological situation. T he u ltim a te testin g ground fo r u tility of a p ro d u ct (service) is th e m ark e t. The producer, w ho is n ot tak in g a n y in te re s t in th e fate of his p ro d u cts th e m om ent th e y have le ft th e pro d u ctio n p lan t, does n o t p e rfo rm p ro p e rly his role in th e w hole m ark e tin g process. He applies a ty p ical p ro d uction o rie n tatio n (production for th e sake of production) and not m a rk e t o rien tatio n . T h ere a re m an y reasons accounting fo r th is situation. F irs t of all, it re su lts from m onopoly of production, in su fficien t su p p ly of goods, lack of a d eq u ate incentives etc. P ro d u c ers also often fo rget
th a t realizatio n (sale) of a pro d u ct does n ot depend e n tire ly on its u tility values b u t also on creation of p ro p er conditions of d istrib u tio n , com bi-n atio bi-n of th e ir e ffo rts w ith those of rem aibi-n ibi-n g ecobi-nomic u bi-n its o p era-tin g w ith in a d istrib u tio n channel.
It w ould be advisable for one of p aticip an ts in a given d istrib u tio n channel to perfo rm a role of th e in te g ra to r (leader). F o r m an y reasons it w ould be d esirable for th is function to be perfo rm ed by th e pro d u cer as in th is w ay he can e n su re a close co n tact w ith end u sers of his p ro -ducts, control all stages connected w ith pro d u ct tran slo catio n in tim e and space, and m ost e ssen tially — he can m anage th e m ark e tin g a c ti-v ity in a w ay allow ing all channel p a rtic ip a n ts to d eriti-v e b enefits re s u ltin g from th e analyzed c o m p lem en tary and s u b stitu tio n ties. This, h o -w ever, does not im ply th a t such function should be al-w ays p erform ed by th e producer. In some situ atio n s (e.g. due to w eakening of т о ш ь polistic situ a tio n of th e producer) it w ould be desirab le fo r th e in te g ra -tion func-tion to be p erfo rm ed by a tra d e com pany. The problem of w ho should p lay th e ro le of th e in te g ra to r in a given d istrib u tio n channel should n ot be decided on th e basis of a d m in istra tiv e decisions b u t th ro u g h v o lu n ta ry ag re e m e n t of p a rtic u la r p a rtic ip a n ts w ith in a given d istrib u tio n channel. On th e o th er hand, th e organs of m a rk e t policy should control th ese m a tte rs so th a t in te g ratio n is not developed in a w rong direction, and th u s in a d irectio n incom patible w ith th e b u y e r’s in te re s t and social preferences. It is n o t so m uch a m a tte r of organizational (capital) in te g ratio n b u t — firs t of all — of fu n corganizational in te g ra tio n b etw e en in d ividual p a rticip a n ts of a d istrib u tio n channel. In te -g ratio n should b rin -g closer all p articip an ts, a n d especially th e p roducer to th e m a rk e t or s tric tly speaking — to end users. A t p resen t, he is in m ost cases sep ara te d from th e end user.
T his sep ara tio n is a consequence of in tro d u ctio n of uniform o rg an i-zational m a rk e t stru c tu re s. In d u stria l com panies a re to produce, tra d e com panies — to sell th e o u tp u t of in d u stria l com panies. S olutions of th is ty p e c re a te a situ a tio n of production m onopoly and of selling m o-nopoly. S pecialization is obviously recom m ended b u t it should n o t con-s titu te th e on ly v a ria n t acon-s negative effectcon-s a re rev ealed then. Thicon-s m o-nopoly is f u rth e r deepened b y add itio n al factors. T he point is th a t w ith in th e fra m ew o rk of these tw o m u tu a lly in d ep e n d e n t organizatio-nal system s (in d u stry and trad e) th e re a re established larg e com panies (organizations) possessing exclusive rig h ts in th e field of producing or selling a given product. A basic p rere q u isite of such solutions is a d e-sire to b en efit fro m effects of large scale p ro d uction or sales. T h a t is b u t one po in t of view w hich an y w ay cannot prom ote ra tio n a l solutions. It tre a ts th e problem of effectiveness in a too n a rro w w ay. Such
so-lu tio n s correspond w ith conditions cre a te d by c e n tra l d istrib u tio n of goods b u t th e y can n o t m eet th e re q u ire m e n ts of m odern m ark etin g . T h ey do n ot ta k e in to account social costs w hich p ro b ab ly exceed effects produced by big scale. F u r th e r organizational changes seem to be consolidating th e m onopoly situ a tio n w hich can best be seen in th e sp h ere of m ark etin g . F o r a n u m b e r of y e a rs th e re existed, a lth o u g h to a lim ited e x te n t, com petition b etw een organizations grouped w ith in th e „Społem ” chain and sta te tra d e com panies. A t p re se n t th e „S połem ” ch ain co n trols alm ost co m pletely th e foodstuff m a rk e t in tow n w hile sta te tra d e com panies co n tro l tra d e in o th e r articles, each of these ' v e rtica l system s possesses its ow n sp h ere of in te rests, in w hich it holds
a position of a m onopolist.
It is q u ite in te re stin g to note th a t a lth o u g h w e do not approve of th e . tre n d to w a rd s m onopolization of tra d e in cap italist countries, w e tr e a t its consolidation in socialist econom y as a n o rm al phenom enon — as if it w ere w ith o u t a n y significance fo r its functioning. T he socialist sta te should prom ote h e a lth y riv a lry b etw een economic u n its as w ith o u t it no progress is possible.
W hen c o n stru ctin g d istrib u tio n channels, w hich m eans th e ir s tru c - z tu re , n u m b er of organizations p a rtic ip a tin g in th e m a rk e tin g process a t all levels of a given channel it is necessary to tak e into account the social costs. These costs include bo th a ll costs connected w ith th e m a
r-m
m k etin g process, w hich a re reg iste red in economic reco rd s (m ark etin g costs a t th e level of production, goods tu rn o v e r, an d a fte r-sa le services) and additional costs in cu rred by th e b u y e r and th e n atio n al econom y as a re s u lt of tim e-consum ing queuing, delays in execution of orders, b reak s in p ro d uction due to delayed deliveries, lack of p ro p er goods, shopping done d u rin g w orking hours etc. It is difficu lt to e stim ate p re -cisely all th ese ad ditional costs especially if th e y a re in cu rred by indi-vidual buyers. N onetheless, th e y should not be om itted from th e calcu-lus of social costs.
H igh level of additional costs leads to socially u n fo u n d ed allocation of tim e and resources w hich can be m ore ra tio n a lly utilized fo r o th e r purposes. A p a rt fro m th a t, such situ a tio n causes dissatisfaction, f r u -stra tio n , and o th e r negative phenom ena c re a tin g a b a rrie r for f u rth e r im p ro v em en t of lab o u r p ro d u c tiv ity in m an y sectors of th e n atio n al econom y. B etw een th e firs t group of costs (registered) and ad ditional costs th e re p ro b ab ly tak es place a negative co rre la tio n i.e. too low m a r-k etin g costs, due to u n d erd ev elo p m en t of m a rr-k e t functions, lead to increase in additional costs. In o th e r w ords, econom ies effected in th e m ark etin g process lead to increase in social costs. U n fo rtu n a te ly th is obvious tr u th is n o t respected.
F in ally , one of basic req u irem e n ts posed by organization of d is tri-b u tio n ch an n els is to m ake provisions for all social p referen ces and in d ividual p referen ces of p a rtic u la r groups of b u y e rs (m ark et segm ents) com patible w ith social preferences. I t especially re fe rs to location of re ta il netw o rk . Location of re ta il o u tle ts is often based on c rite ria fallin g w ide of rea l needs (preferences) of b u y e rs or social preferences. D e-cisions concerning opening of new sto res a re not preceded by analysis of p refe re n c e s of prospective b u y e rs (after all th e re is no need fo r it since decision-m akers need not consult th e ir opinions know ing best th em selves how to spend social m oney). E xperience of m an y co u n tries could prove to be of g re a t in te re s t here. In places w h e re com m on sense d ictates to organize shopping cen tres, th e re a re opened officies th e ac ti-v ity of w hich has little in com m on w ith m arketing.
As it w as a lre a d y m entioned, location of re ta il o u tle ts and th e ir n u m b er a re often not corresponding to social p references. T h ere a re q u ite com m on in stan ces th a t e.g. in th e close v icin ity (200 to 300 m ts) th e re a re sev eral liq u o r stores and sim u ltaneously no stores selling o th e r a rticles (e.g. m in e ral w a te r, soda w a te r etc.). N eedless to say, such con-venience in b uying alcohol prom otes and n o t h am p ers its increased consum ption. T h e re w as a tim e w h en selling of alcohol w as pro h ib ited on Sundays. T oday m an y g ro cer’s stores open on S undays sell alcoholic drinks. It is in th is field th a t it w ould be d esirable fo r social reaso n s to m ake p u rch ase of alcohol difficult, ask people to queue. In o th e r w ords, d istrib u tio n ch an n els should be tre a te d as in stru m e n ts of con-scious and socially ratio n al fo rm atio n of consum ption. B ut to effect th is it w ould be necessary fo r e x p e rts to p a rticip a te in m aking m ark e tin g decisions.
It is often fo rg o tten th a t location of goods is a key p roblem in th e field of location, its d e riv a tiv e is location of a d efin ite selling point. U n fo rtu n a tely , location of goods is often p erfo rm ed according to fo rm a -lized principles, being a re s u lt of m echanical approach to d istrib u tio n of goods. No w onder th e re is a p o p u lar saying th a t „ th e re is ev e ry th in g in P oland b u t not w h ere it should b e”. M any a rticle s (e.g. co n stru ctio n m aterials, fu rn itu re and household appliances etc.) can be m uch easier bought in th e village. Am ong th ese a rticle s often p ro v ail such fo r w hich th e to w n m a rk e t rep re se n ts a basic segm ent.
4. D IR ECTIO N S OF IM PR OV EM EN T O F D IST R IB U T IO N CHANNELS The size of th is p ap e r m akes it im possible to p re se n t all concepts p e rta in in g to th e pro b lem in a n y bigger d etail. T herefore, o u t of n ecessity, w e can b u t p rese n t a ro u g h o u tlin e of m ain directio n s of im p ro
v e m e n t of d istrib u tio n channels. T hey re fle c t th e re q u ire m e n ts p re se n -ted in th e previous p a rt of th e paper. We have a lre a d y p o in-ted out th a t b e tw e en sp h eres of production, d istrib u tio n and consum ption occur n u -m erous tie s of c o -m p le-m en tary and su b stitu tio n c h a ra c te r. W ishing to u tilize th e effects accom panying th ese phenom ena it becom es necessary to tre a t th e w hole m a rk e t sy stem as an in te g ra te d w hole. S ep a ra te m a -nag em en t of p ro d uction and rea liz a tio n sp h eres and in tro d u c tio n of se p a ra te organizational s tru c tu re s on th e scale of th e w hole m a rk e t pave th e w a y for fo rm atio n of th e in stitu tio n a l in d u s try a n d in stitu -tio n a l tra d e , w hich in consequence produces m an y n egative effects.
M anagem ent should encom pass all stages of th e m a rk e tin g process s ta rtin g w ith production and ending w ith sale of th e p ro d u ct to its end users as th e m a rk e t is indivisible from functio n al view point. S uch ty p e of m an ag em en t req u ires larg e pro d u ctio n and tra d e com plexes. These com plexes, how ever, should not be set up on th e basis of a d m in istra -* tiv e decisions. T he po in t is to release fun ctio n al in te g ra tio n b etw een
d iffe re n t p a rtic ip a n ts of a d istrib u tio n channel by m eans of p ro p er con-stru c tio n of organizational s tru c tu re s of th e m ark et.
To th is end, it becom es essen tial to estab lish m ixed o rg anizational s tru c tu re s of th e m ark e t. T h e re should e x ist not only com panies spe-cializing in production or tra d e of a d e fin ite p ro d u ct line — as it is th e case to d ay — b u t also com panies p a rtic ip a tin g in all stages of th e m a r-k e tin g process (from p ro d uction of a p ro d u ct to its fin al sale), and th u s p ro d u ctio n tra d e or tra d e p ro d u c tio n com panies. Such m u ltiv a -ria n t c h a ra c te r of organizational s tru c tu re s in th e m a rk e t elim in ates si-tu a tio n s of m onopoly in p ro d uction or selling. In th e sisi-tu a tio n w h e n in th e m a rk e t ap p e ar com panies encom passing th ro u g h th e ir activ ities both pro d uction of goods an d th e ir sales to end users th e n com panies spe-cializing in e ith e r production or selling w ill be forced to in te g ra te th e ir functions. In o th e r w ords, th e re w ill ap p e ar th e n d iffe re n t v a ria n ts of in te g ra tio n w ith each of these v a ria n ts p rom oting d ev elopm ent of fu n c -tio n al in teg ra-tio n .
The socialist s ta te has a t its disposal u n lim ited possibilities of a p p ro -p ria te sha-ping of organizational m a rk e t s tru c tu re s in such directio n th a t th ese s tru c tu re s becom e an effective in stru m e n t of its m a rk e t policy. So fa r th is in stru m e n t has not b een fu lly utilized. F irs t of all, o rg an i-zational s tru c tu re s w h en shaped a re not aim ed a t g e n e ra tin g d e sira b le com petition b etw een econom ic u n its w hile sim u ltan eo u sly inducing th e m to in te g rate .
T his problem seem s to have one m ore im p o rta n t aspect. H ith erto , th e re w e re p re se n t tw o tre n d s in m an ag em en t of th e n a tio n a l econom y, th e so-called cen tralized m an ag em en t system (w ith pred o m in an ce of d
i-rective tools) and decen tralized system (m ainly based on econom ic instru m en ts). In both cases, th e m an ag em en t system w as not linked w ith th e p roblem of organizational s tru c tu re s of th e n ational econom y, including m a rk e t s tru c tu re s alth o u g h these tw o th in g s should not be sep arated . It is a fte r all possible w hen a com petitive situ a tio n ap p e ars in th e m ark e t, w hich is p rim a rily d ep e n d en t on a c tiv ity of a p ro p er n u m b er of economic subjects, to tra n s fe r som e decisions to th ese s u -bjects, including even pricing decisions. In such a case prices w ill be a value in d ep e n d e n t of th e com pany as th e y w ill be fixed in th e m a r-ket. So m uch so, th e economic policy, including also m ark e t policy, should co n c en tra te its a tte n tio n , to a large degree, on ap p ro p riate con-stru c tio n of organizational s tru c tu re s of th e m ark e t, i.e. it should em ploy m anagem ent of su b ject ty p e leaving th e rig h t of m aking deci-sions concerning concrete m ark e tin g processes (w hat to produce, in w h a t q u an tities, w h e re to locate goods etc.) w ith economic subjects.
F inally, it is e x tre m e ly im p o rta n t for economic su b jects to be able to utilize in th e ir o p erational a c tiv ity a lte rn a tiv e d istrib u tio n channels, to a larg e e x te n t, w ith in th e fram ew o rk of th e above m entioned orga-nizational s tru c tu re s of th e m ark e t, an d th u s w ith in gen eral solutions in th e field of d istrib u tio n channels. T he point h e re is th a t th e ro u te of pro d u ct flow from production to consum ption should be ad ap ted to ch a-ra c te r of th e p ro d u ct and th e m ark et. A p a rt from th a t, th e sam e pro^ d u cts m ay have d iffe re n t d istrib u tio n channels d epending upon th e m a rk e t segm ent (group of buyers) th e y a re in te n d e d for.
The d istrib u tio n system shapes th e im age of a n y econom ic system . If d istrib u tio n is to re p re se n t a system from its best side th e n it should be rem em b ered th a t its effectiveness is not d e te rm in e d by objective fac to rs alone b u t also by su b jectiv e factors. T h at is w h y it is necessary to engage h e re people w ith professional background, fam iliar w ith p rin ciples and m ethods of m ark etin g , and especially w ith m odern d istrib u -tion. This p o stu la te re fe rs to all levels of m anagem ent. A big p a rt of people holding responsible posts in th e d istrib u tio n n e tw o rk a re guided by ty p ic a lly a d m in istra tiv e categories a n d grew up in conditions of cen-tr a l d iscen-trib u tio n of goods.
T hey have not had an y real contact w ith tru e trade. Selling personnel, on th e o th er hand, has developed bad habits. N ot only a re th e y ill p re -p a re d for th e ir w ork and have -poor qualifications b u t th e y have lea rn ed to tre a t a custom er like a su p p lia n t is tre a te d in a public office. It be-com es necessary to ap p ly d iffe re n t rem edies in o rd er to elim in ate g rad u a lly such socially u n fav o u rab le p a tte rn s. One of such rem edies is w id er tra in in g of m anagem ent personnel in foreign co u n tries h aving a h ig h er level of developm ent of th e m ark e tin g process, including d
istrib u tio n . T here should be also considerably m odernized teaching pro -gram m es in th e discussed field in secondary and h ig h er schools.
R o m a n G ło w a c k i
K A NA ŁY D Y STRY BU C JI JA K O NA RZĘDZIE P O L IT Y K I RY N K OW EJ
W ychodząc z an a liz y społecznego i ekonom icznego sensu d y stry b u c ji i w szy-stk ic h użyteczności p o ja w iają cy c h się w ty m procesie, a u to r d o k o n ał szerokiego om ów ienia p ojęcia k a n a łu d y stry b u cji, jego ro li a zw łaszcza w ym ogów ja k ie w in -ny być sta w ia n e k an a ło m d y stry b u c ji. P rz e c iw sta w ia ją c się tra d y c y jn y m p o g lą-dom i rozw iązaniom zaw ężający m pojęcie i ro lę k an a łó w d y stry b u cji, w sk azał n a k ie ru n k i d o sk o n alen ia k an a łó w d y stry b u c ji zw iązane z ew o lu cją sy stem u za rząd z an ia w gospodarce n aro d o w ej, a w sferze o b ro tu tow aro w eg o — w szcze-* gólności.
