distribution channels

(noun)

Distribution of products takes place by means of channels. Channels are sets of interdependent organizations (intermediaries) involved in making the product available for consumption.

Related Terms

  • lobbyist

Examples of distribution channels in the following topics:

  • Channel Member Characteristics

    • To maximize sales, a company must carefully consider the fit between its products and the available distribution channels.
    • Marketers must carefully evaluate how their products fit into different distribution channels.
    • It is important for a company to match its products with the characteristics of the distribution channel.
    • Candy uses an intensive distribution channel, meaning it is widely available at a low cost.
    • Explain the importance of pairing a brand's products with the appropriate distribution channel
  • Competitive Priorities in Marketing Channels

    • An alternative term is distribution channel or 'route-to-market'.
    • Cost, flexibility and quick adaptation to changing markets and demand are usually the top factors sellers consider when assess and choosing distribution channels.
    • These distribution types include:
    • Intensive distribution - this channel allows the producer's products to be stocked in major, mainstream outlets.
    • Exclusive distribution - producers select only very few intermediaries.
  • Types of Marketing Channels

    • There are basically 4 types of marketing channels: direct selling; selling through intermediaries; dual distribution; and reverse channels.
    • A marketing channel where intermediaries such as wholesalers and retailers are utilized to make a product available to the customer is called an indirect channel.
    • Dual distribution describes a wide variety of marketing arrangements by which the manufacturer or wholesalers uses more than one channel simultaneously to reach the end user.
    • Using two or more channels to attract the same target market can sometimes lead to channel conflict.
    • An example of dual distribution is business format franchising, where the franchisors, license the operation of some of its units to franchisees while simultaneously owning and operating some units themselves.
  • The Significance of Marketing Channels

    • The primary purpose of any channel of distribution is to bridge the gap between the producer of a product and its user.
    • The primary purpose of any channel of distribution is to bridge the gap between the producer of a product and the user of it, whether the parties are located in the same community or in different countries thousands of miles apart.
    • The channel of distribution is defined as the most efficient and effective manner in which to place a product into the hands of the customer.
    • Banks have responded by developing bank-by-mail, Automatic Teller Machines (ATMs), and other distribution systems.
    • Even performing arts employ distribution channels.
  • Factors Affecting Channel Choice

    • Other channel members can be useful to the producer in designing the product, packaging it, pricing it, promoting it, and distributing it through the most effective channels.
    • Achieve a pattern of distribution - structure the channel in order to achieve certain time, place, and form utilities.
    • After the distribution objectives are set, it is appropriate to determine the specific distribution tasks or functions to be performed in that channel system.
    • An ability to do this requires the channel manager to evaluate all phases of the distribution network.
    • Managers have many factors to consider when choosing a product distribution channel.
  • Customer Expectations

    • Members of a channel of a distribution are also customers of those elsewhere in the channel, and their expectations must also be met.
    • It is important to remember that a channel of distribution may be made up of organizations, but those organizations are made up of people.
    • Ideally, a channel member should coordinate their efforts with other members in such a way that the performance of the total distribution system is enhanced.
    • By ensuring there are no leadership issues and by tackling the human element of the channel of distribution, expectations of the channel members can be effectively met.
    • This distributor is a part of a channel of distribution, who must both meet expectations of its customers, as well as have its own expectations met.
  • Functions of Intermediaries

    • Intermediaries, also known as distribution intermediaries, marketing intermediaries, or middlemen, are an extremely crucial element of a company's product distribution channel.
    • Thus, while they do not own the product directly, they take possession of the product in the distribution process.
    • For example, distributors of Coca Cola will not distribute Pepsi products, and vice versa.
    • A firm can have any number of intermediaries in its channels.
    • A "level zero" channel has no intermediaries at all, which is typical of direct marketing.
  • Trade Allowances

    • Trade discounts are most frequent in industries where retailers hold the majority of the power in the distribution channel (referred to as channel captains).
    • It is important that these discounts are fair and offered to all channel members equally to avoid channel conflict.
    • Some challenges include channel stuffing, where manufacturers induce channel members to buy far more products than they can sell in a reasonable period.
    • Another challenge is diverting, which is when companies sell to channel members at a cheaper rate rather than pass on savings to consumers.
  • Selecting Marketing Channels

    • In intensive distribution (such as candy) the manufacturer attempts to get as many intermediaries of a particular type as possible to carry the product
    • Once the number of levels is decided, the channel manager must determine the actual number of channel components involved at each level.
    • How many retailers and wholesalers in a particular market should be included in the distribution network?
    • The objective is to gather enough information to have a general understanding of the distribution tasks these intermediaries perform.
    • Given the restrictions inherent in channel leadership, the final question is always "who should lead the channel?
  • Distribution Centers vs. Direct Store Delivery

    • Depending on customer needs, marketing channel strategies can utilize distribution centers or move products directly to a store.
    • Depending on the product being sold and ultimate end user, companies can choose a marketing channel strategy that involves utilizing distribution centers (wholesalers) or moving their products directly to a store, or retailer.
    • In order to decide on the types of retailers to include in its marketing channel, a firm must first understand the buying specifications of its consumers.
    • Wholesalers perform a number of useful functions within the channel of distributions.
Subjects
  • Accounting
  • Algebra
  • Art History
  • Biology
  • Business
  • Calculus
  • Chemistry
  • Communications
  • Economics
  • Finance
  • Management
  • Marketing
  • Microbiology
  • Physics
  • Physiology
  • Political Science
  • Psychology
  • Sociology
  • Statistics
  • U.S. History
  • World History
  • Writing

Except where noted, content and user contributions on this site are licensed under CC BY-SA 4.0 with attribution required.