Distribution Channel: Direct Reach of A Product to the Consumer

What Is a Distribution Channel?

The distribution channel are the pathways for the transfer of products and services from the manufacturer or the service provider to the end consumer. The distribution channel presents a proper chain of intermediaries and businesses through the final buyer purchase of the goods or services. Distribution channels include the retailers, wholesalers, distributors, etc. Distribution channels are networks of intermediaries which facilitate the product delivery from the manufacturer to the end customer and transfer the payments from the customer to the producer. The route through which the products or services travel from the production end to the consumer end is the distribution channel of the product or service. The choice of the distribution channel depends upon the type of product or service, the business type, the targeted market, the sales goal and the cost off distribution involved. The distribution channel ensures the supply of market information to the producer or manufacturer and financing the operations, while promoting the services and products, minimising the market risk and maintaining the product price stability. Various factors determine the distribution channels for specific products or services.

What Are the 3 Types & Methods of Distribution Channels?

There are three primary types of distribution channels which include direct distribution channel, indirect distribution channel and hybrid channel. The length of the distribution channel can be direct to the customers or have certain number of intermediaries.  The channels can be either single or multiple or short or long. The distribution channels can develop exclusive or selective distribution. The direct distribution channel ensures that the producers or the manufacturers provide their products or services directly to the consumers without any intermediaries involved. The direct distribution channels include the door-to-door distribution, chain stores, e-commerce, production plants, etc. The perishable as well as expensive goods, produces jewellers, etc. opt for this kind of distribution channel. The businesses which cater to a narrower marketplace and low or selected volume of consumers, utilise the direct distribution channels. The indirect channels are the businesses which cater to a broader range of market segments and range of customers. The products or services travel from the manufacturers to the end consumers through different intermediaries, including distributors, retailers and wholesalers. The wholesalers generally distribute the products or services to various retailers who provide them to the stores, which are hence available to the customers. The furniture, clothing, drop shipping, supermarket chains, utilise this kind of distribution channels. The third distribution channel type is the hybrid distribution channel which utilises multi-channel marketing channels. This distribution channel utilises the producer selling directly to the consumer sometimes through direct mail catalogue, with telemarketing, through retailers, etc. The hybrid distribution channels have certain advantages considering large as well as complex markets can be catered to.

What are the functions of Distribution Channel?

There are various functions of the distribution channel. The distribution channels facilitate the delivery of the services or products to the consumers primarily. Some of the other functions of the distribution channels include movement of goods or products from the warehouses to the customers, and providing the market information to the manufacturers or producers. The management of the payment flow from pre-sales to the post-purchases, is another function of the distribution channel. The distribution channel ensures the promotion of the brand and the benefits to the end customers. Distribution channels also share the market risks associated with the identified products, goods or services, with the producers or manufacturers. The distribution channels ensures the maintenance of the price stability through the absorption of any identified price increase. The distribution channels are also responsible for the logistical, facilitating and transactional functions. The provision of salesmanship, helping in the production function, matching the demand and supply of the products and services, also are some of the functions of the distribution channels.

What are the Factors Determining the Choice of Distribution Channels?

The choice of distribution channels are dependent upon various factors. The primary factors which determine the choice of the distribution channels include the nature of the product or service, the nature of market, the middlemen or intermediaries, the size of manufacturing unit and the nature of the manufacturing unit, competitors in the market and the government policies and regulations. The distribution of the goods or services depends upon the successful choice of distribution channels. The nature of the product factor includes the perishability of the product, weight and size of the product, unit value of products, technical nature of the products, standardisation, and product lines. The nature of the market factor comprises of the consumer of the industrial market, size of the order, number of the prospective buyers, geographic concentraation of the market, and the buying habits of the customers. The nature of the intermediaries include the cost of distribution of the products and services, availability of the desirable intermediaries, unsuitable marketing policies, ensuring proper volume of sales, financial and reputation effectiveness, and the type of reputation that the intermediaries or the middlemen have. The storage, credit, packing, etc. are to be determinable through the identified distribution channel efficacy. The financial stability and reputation of the manufacturer, the experience and undertaking of the manufacturing unit, industrial conventions and the services which the manufacturers are providing. The industrial conventions determine the extent of the selection of the distribution channels and the mode of distribution channel selected. The competitors in the prevalent market, also determine the distribution channel considering various manufacturers producing the same goods might employ different distribution channels. The choice of distribution channels are also dependent on the governmental policies and regulations. The governmental policies might impose certain restrictions which take over the distribution of certain services or products.

What are the major distribution channels to reach customers?

The major distribution channels to reach the customers include wholesalers, direct-to-consumer sales and retailers. Other major distribution channels include the intensive distribution, exclusive distribution, selective distribution and the dual distribution channels. Other major distribution channels include direct sales, retailer, wholesaler, channel partners or the value added resellers, etc.