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Last updated date: 21st Feb 2024
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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

1. How Does a Distribution Channel Add Value to the Customer?

Ans. Channels of distribution benefit consumers by making the variety of products available to them in one place. Without these channels, the consumers would only buy products directly from producers, this would lack variety and would be impractical.

The intermediaries add value to the marketing of the product by bringing specialization, marketing knowledge, capacity to segment and focus the market, and selling skills which allow the companies to implement their marketing strategies effectively.

2. What are the Advantages Provided by Channels of Distribution?

Ans. The channel of distribution which is adopted by maximum companies serves unending advantages. The advantages are as follows –

  • Reduced costs. 

  • A tight focus on the core competencies of the company.

  • More efficient form of marketing.

  • Wider customer reach is achieved.

  • Logistic support is provided by these distribution channels. 

  • Easy feedback can be collected from the customers.

  • Faster growth of the company is assured.

3. Who is a Distributor?

Ans. Distributors are the connecting link between the manufacturers and the retailers or the end consumers. The key responsibilities of a distributor are of moving the products and making them available in the market. The right distributor will enhance a company's goodwill in the product market and can give a tough competition in the market stand among the other competitors.

4. Why is Distribution Called a ‘Downstream Process’?

Ans. The downstream process which refers to the distribution method, including elements such as distribution, wholesaling and retailing, all of these methods are involved in ensuring efficient delivery to the clients. This finally bridges the product and the end user. The channel is focused down to the customer base hence known as the ‘downstream’ process.