Distribution as a Process
Distribution is the process where a product or service is made available for the consumers or other business user who needs it further for their own processing. Distribution can be done directly by the producer or service provider, or by using other indirect channels with distributors or intermediaries. The distribution channel attempts to add value to the consumer.
Distribution makes a product available for purchase by dispersing it through the market. This involves transportation, packaging, and delivery of the goods and services while a distributor has other definitions and is an important part of this process of distribution.
What is the Distribution Channel?
A distribution channel is a chain of businesses or its intermediaries through this chain, a good or service is passed until this reaches the final buyer or the end consumer of that particular product. Distribution channels may include wholesalers, retailers and even the web facility.
Distribution channel is actually a downstream process, which answers the question "How will the products be made available to the consumer?" In most company’s distribution channel is viewed as a marketing strategy which includes the product, its promotion and its correct pricing system
A distribution channel is the stream by which all the goods and services travel to the targeted consumer. Also, the path can be described as the stream for payments make from the end consumer to the original vendor. Distribution channels can be short or even long, this depends on the number of intermediaries required to deliver a product or service to the market.
Types of Distribution Channels
A distribution channel at times may seem endless, we will talk about the three main types of channels, which consists of the combination of a producer, wholesaler, retailer, and end consumer. The type of distribution channel are:
The first channel is the longest channel as it includes all the four components - producers, wholesalers, retailers, and the consumers. Example of products distributed in this type of channel is - The wine industry. The channel operates in the three-tier system, the product is first sold to a wholesaler who then sells it to a retailer and then the retailer sells to the end consumer.
In the second channel of distribution the wholesaler is eliminated from the system. Hence, the producers first sell it directly to a retailer who then sells it to the direct customer. The second type of channel contains only one intermediary in between. Example of this channel is – Dell selling their products via this distribution channel.
The third channel is the shortest one, where the producers sell their product directly to the end consumer. Amazon or Kindle serves their customers through this channel of distribution.
Distribution Marketing
A channel of distribution in the marketing sector connects the link between the producer and the consumers. Channels of distribution enhances the efficiency of marketing, and helps in strategizing their goals to outwit their customers. This happens for the middle men who have a proficiency in the distribution network. This also reduces the cost of transaction and thus smoothen the entire process.
Distributors in this channel provides a sales and marketing service as well. This system enables the companies to reach their extended market.
What is the Difference Between Distribution and Marketing?
Marketers develop an idea and spread it far and wide, whereas distributors build a channel of network which they control and is used to connect the things to the people.
Channels of distribution for a product is the route from the producers to their ultimate consumers. The distribution channel serves the market. It is very important as product in one market while the consumption scattered in many other markets. A channel of distribution connects the various markets operating.
FAQs on Distribution Channels: Types and Importance
1. What exactly is a distribution channel?
A distribution channel is the path or route through which goods and services travel to get from the producer or manufacturer to the final customer. It includes all the intermediaries or middlemen involved in this process, such as wholesalers, retailers, distributors, and agents.
2. What are the main types of distribution channels?
There are two primary types of distribution channels:
- Direct Channel: The manufacturer sells the product directly to the consumer without any intermediaries. Examples include factory outlets, company-owned websites, and direct mail.
- Indirect Channel: The manufacturer uses one or more intermediaries to get the product to the consumer. This can involve wholesalers, retailers, or agents.
3. Why are distribution channels so important for a business?
Distribution channels are crucial because they help a business expand its reach to a wider audience. They provide several key benefits, such as making products readily available to customers, reducing the cost of sales for the manufacturer, providing valuable market feedback, and improving the efficiency of getting products to market.
4. What is the difference between a wholesaler and a retailer?
A wholesaler typically buys goods in large quantities directly from the manufacturer and sells them to retailers, not the end consumer. A retailer, on the other hand, buys smaller quantities from wholesalers or manufacturers and sells them directly to the final customer.
5. Why would a company choose a direct distribution channel over an indirect one?
A company might choose a direct channel to have complete control over its brand image, customer experience, and pricing. It also allows the company to build a direct relationship with its customers and keep a larger share of the profit, as there are no intermediaries to pay.
6. How does the type of product influence the choice of a distribution channel?
The product's nature heavily influences the channel choice. For example, perishable goods like milk or bread need a shorter, faster channel to reach consumers quickly. In contrast, expensive, complex products like industrial machinery often use a specialised, direct sales force to provide expert knowledge to the buyer.
7. Can a business use more than one distribution channel at the same time?
Yes, many businesses use a multi-channel or hybrid distribution strategy. For example, a clothing brand might sell its products through its own official website (direct channel) while also supplying them to large department stores (indirect channel). This helps them reach different customer segments and maximise sales.
8. What is meant by a 'zero-level' distribution channel?
A 'zero-level' channel is another name for a direct distribution channel. The term 'zero-level' refers to the fact that there are zero intermediaries or 'levels' between the manufacturer and the end consumer. The product moves directly from the producer to the customer.
