Distribution Channels

Investopedia does not include all offers available in the marketplace. But it is costly and there is need to transport goods by road to and from the terminals. Road – is flexible because of direct access to companies and warehouses. Lorries can transport goods from the supplier to receiver without unloading en route. Raise flexibility – Development of contingency plans for urgent orders, a structure to ensure fast reaction time to unforeseen problems like product return. Improve order cycle time – Shorter time between order and delivery, improve consistency between order time and delivery time.

Manufacturers opt for a three-level channel when the userbase is spread all over the country and the demand for the product is very high. Explain the value middlemen can add to product sales and marketing success. Several leading companies have grown their focus on managing their own distribution networks.

What is Indirect Distribution?

Certain goods, like the industrial machinery, are directly sold to the consumers. Costly goods like computers and luxury automobiles, are also directly sold. Some manufacturers open their own retail shops in many localities and sell goods directly to consumers. The manufacturers also try to sell through their own mail order departments. A distribution channel, also known as placement, is part of a company’s marketing strategy, which also includes the product, promotion, and price. A distribution channel represents a chain of businesses or intermediaries through which the final buyer purchases a good or service.

For instance, in the Luxottica business model, vertical integration means the ability to control the full customer experience and to choose also the location of the retail stores. For instance, in the scenarios in which a producer sells to a wholesaler, the wholesaler sells to retailers, who reach the final consumers. Indirect and direct distribution channels may be new concepts to you. Whatever the case may be, if you are still struggling with this topic, don’t worry!

Indirect Channels (Selling Through Intermediaries)

Direct Vs Indirect Distribution Channel enablement includes the creation of co-branded sales and marketing material and the training of partners’ sales and marketing staff. The partner enablement manager facilitates communication and collaboration between the partners and assorted stakeholders and executives on the vendor side. The partner enablement manager also creates a partner certification program, which defines tiers of certification, along with the requirements to meet each tier. As vendors grow the size and scope of their distribution network, dedicated resources are often needed to ensure the success of the partner program.

Your customers can then place a direct order on your site or via email, and then you ship the goods to them via post, courier, or via your own vehicles. The largest manufacturing firms can afford to open proprietary retail stores in different regions, so that their products can get to the consumer directly. We have the small producer that has a single chain store in a single area, all the way up to the largest manufacturers that have numerous retail stores in different parts of the world. It will establish branches at every major consumer center and have a sales force that goes from door to door, selling the vacuum cleaners. Once the customers agree to buy, the producer organizes for their vacuum cleaner to be delivered from the nearest branch. If, on the other hand, the company were selling simple kitchenware, the salesmen may be able to carry them around and sell them directly to consumers.

How do you assess the right mix for your distribution strategy?

For manufacturers, it is very important to create a mix of distribution channels that allow for ease of availability for the consumer, i.e., a good marketing mix. For many businesses, their biggest challenge isn’t developing a best-of-breed product but how to promote and sell it to the public. Despite myriad options, finding the right distribution channel remains a challenge.

This channel is also suitable when the goods are of a perishable nature, and quick distribution is essential. However, the manufacturer will have to undertake such functions as transportation, warehousing and financing. When considering residential and commercial builders as the end user of a product, it is your role as a manufacturer to help them sell more buildings,… If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. ABSTRACT This paper examines maven behavior across different channels–virtual worlds, the Web and in real-life. We use a survey in Second Life and a follow-up Web survey for the same respondents.