Distribution channels are set of interdependent marketing organizations that participate in the marketing activities of moving goods and services from the producers to the final consumer. Channels of distribution in the field of marketing indicate the pathways or routes via which products and services flow from the manufacturer to the customer. These channels can be either direct or indirect transfer of ownership of goods as they move from the manufacturer to consumers. A channel is a pipeline via which a product flows on its way to the customer. A marketing manager places his/her goods on the pipeline channel, and it passes through different marketing individuals and arrives at the final consumer who is usually the end of the channels. Marketing channels are the crucial part of any corporation to deliver its goods and services to the customer properly. The set of interdependent organizations within the channel makes the commodity or service to be available for use by the consumer (McQuerrey, 2017).
Distribution channels are important in the business operation due to various reasons. First, it gives a company an opportunity to utilize their imaginative distribution system to create a competitive advantage. For example, Dell Company has revolutionized its distribution channel, and it is selling it electronic products directly to the final user instead of using retailer to distribute their products. Second, distribution channels assist in value addition to a companies goods or services at every level of the channel. The members of the distribution channel can offer greater efficiency in ensuring the goods are available to the target markets via their specialization, contacts, the scale of operation, and experience. Third, it gives an opportunity for the companies to promote their products through communicating to the customers about products information and offers available through advertisement. Marketing channels offer clients an opportunity to interact with the companys agent to get well-refined information about the advantage associated with the product or service being sold.
Fourth, the companies get an opportunity to pay attention and interact with their distributors as a way of their profit is maximized. In case, they pay less attention pay attention to distributors, some factors such as some customers, brand, and profit would be damaged. Fifth, distribution channels are good platforms where an organization will be able to collect and disseminate information that will help in deciding the kind of products that consumers want. An organization has to seek for useful information through conducting market research in the target market. Any company has to collect relevant information if it aims at taking the largest market share as well as maximizing profits. Lastly, through the use of marketing channels a company can offer financial support. Financial supports include purchase on credit and purchase using payment plans like hire purchase.
A direct distribution channel is the one that is organized and managed by the company itself. This means that goods are distributed directly from the producer to the final user. On the other hand, indirect distribution channel involves one or more intermediaries between the producer and the final user. In this form of marketing channel, there no contact between the manufacturer and the consumers. Companies that use direct marketing channel require their transport vehicles and logistics teams while indirect distribution channels require to build up a relationship with third-party selling systems. Direct channels are more expensive to start operating, and in some cases, they require hefty capital investment. The company has to set up logistics systems, warehouses, truck and driving staff. After these have been put in place, this kind of distribution channel becomes shorter and a bit cheaper than an indirect channel. In contrast, indirect distribution channel is challenging because another party has to be trusted with the companies products and consumer interaction. The direct distribution channel is thriving because successful logistics firms are experts at delivering products more conveniently than manufacturers. Operating direct selling on a large scale is difficult to manage, but it often gives a producer an opportunity to connect with its consumer base. On the other hand, indirect channels ensure that the producer does not incur any start-up costs. These form of distribution channels are much simpler to manage and operate than direct one when there is a good relationship between the manufacturer and distributor.
The article Relationship of Marketing and Distribution Channels is written by Weitz and Jap. Barton Weitz is a professor at the University of Florida while Sandy Jap is from Massachusetts Institute of Technology. Distribution is the process the process that creates value by ensuring products arrives at the consumer on time and in good condition. In the recent days, there is a growing interest to understand the relationship between shifts in the marketplace and the exchange parties involved. The article addresses the relationships between the manufacturers and intermediaries like wholesalers and retailers. It also discusses the relationship between the middlemen and end users such as business firms or customers (Weitz & Jap, n.d).
Distribution channels have been using authoritative control mechanism to ensure they can coordinate with the intermediary and the producer. Power coordination mechanism is asymmetric because one party is powerful than the other. Due to inconveniences that might be brought by authoritative power, many manufacturers have adopted leadership role to ensure conventional mechanism. Most manufacturing companies are the ones who formulate policies and behavior that should be conducted by a distribution channel. Many people have criticized this producer dominated perspective hence it needs to be changed. According to the article, manufacturers should no longer rely on using their authoritative control mechanism as a way of coordinating their distribution channel activities (Weitz & Jap, n.d). Empowering intermediaries well help them to become more independent channel members.
Both online and brick and mortar businesses have the same requirements regarding promoting corporations through offline and online advertising mediums. The two businesses have an aim of reaching the highest number of potential clients. Therefore, online businesses expand their market through print and broadcast platforms while offline firms step up web-based marketing and use of social media platforms to market themselves. Both companies need to know their clients before they go ahead to make an effort of reaching them. Online businesses have a potential of conducting their market all over the world, and in the recent days, many bricks and mortar firms are now taking the same approach (McQuerrey, 2017).
All these businesses utilize a marketing technique designed to tap all potential clients via innovative marketing approach. For example, pet stores being brick and mortar business use social media and other digital platforms to markets their commodities. Many customers who like buying likes to visit these stores so that they get the experience and select the best pet for themselves. On the other hand, online businesses such as ASOS.com that deals with clothing and accessories have been increasing its revenue tremendously due to its effort to market their products all over the world. The major differences in these businesses are that online businesses customer has no opportunity to interact with a client directly but is only through online platforms while at brick and mortar stores, the customer has an opportunity of interacting with the seller directly. Lastly, many businesses whether offline or online have been adopting the efficiency of marketing their ware through online platform such social media. This is the online way that will enable many businesses to thrive during this digital era.
McQuerrey, L. (2017). Similarities between Brick-and-Mortar Business and E-Business Marketing. Smallbusiness.chron.com. Retrieved 16 July 2017, from http://smallbusiness.chron.com/similarities-between-brickandmortar-business-ebusiness-marketing-21174.html
Weitz, B. & Jap, S. (n.d). Relationship Marketing and Distribution Channels. Retrieved from http://bear.warrington.ufl.edu/weitz/mar7786/articles/weitz%20and%20jap.pdf
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