Channel For Your Business is the means the company uses to get the product from the manufacturer to the final customer. However, according to the teacher of our Official Online Master’s Degree in Direction and Management in Digital Marketing and Social Media Marketing, Nacho Somali, before the consumer can get hold of the product, it must go through three previous stages in the sales cycle:
- Knowledge (awareness). The customer has to know that we exist and have that product available for them to buy.
- Consideration: We must get the customer to accept our product as one of the appropriate options that can fit their needs. That you value our product as a possibly good option.
- Visit: The client must go to the point of sale where they can purchase our product (physical or virtual).
Types Of Distribution Channel For Your Business
Distribution channels have undergone logical changes to adapt to new technologies and digitization. It has brought manufacturers and consumers closer together, blurring the participation of the different distribution agents, but the traditional channels continue to exist and work.
Distribution Channel For Your Business may vary depending on the sector. We can generally divide them into face-to-face and remote, where digital stands out, but there are many more, catalogs, telephone, postcards, etc. We are going to define the two main types of distribution channels:
Own Or Direct Channel Channel For Your Business: the manufacturing company is responsible for delivering its product to the end customer without intermediaries. Therefore, it does not delegate storage, transport, or customer service processes. For example, the HP products company handles the distribution of its products.
External Or Foreign Channel For Your Business:
distribution and marketing are carried out by companies other than the producer. The distribution process is the business itself, giving rise to the appearance of intermediary agents. Depending on the number of participants, three types of external distribution are distinguished:
- Short: the product goes manufacturer or retailer, from the latter to the final customer. It is typical of electronic commerce, in which the e-commerce platform connects producers and consumers in an agile and simple way.
- Long: the product travels from the hand manufacturer wholesaler to the retailer until it reaches the consumer. This type of distribution is the most common and is typical of small businesses and traditional neighborhood stores.
- Double: is the one wholesalers and retailers. There is also a third-party distributor or exclusive agent who participates in the marketing of products.
It is energetic to be clear about the company’s type of product. By knowing the type of product, you better appreciate the public it is aimed at and the needs it must satisfy.
The product guides the company’s decision by adequately choosing the way it will decide to distribute its product. By understanding the nature of the product offered and the buyer’s need, factors such as:
- How quickly could a customer require the product?
- How long can the product last before it perishes?
These factors determine how quickly the product should be delivered, defining how many intermediaries the development would go through. The less direct the distribution channel
Types Of Distribution Channel For Your Business
Distribution channels can be divide into direct channels and indirect channels. Indirect channels can be further divide into one-tier, two-tier, and three-tier channels based on the number of intermediaries between manufacturers and customers.
Direct Channel For Your Business (From producer to final consumer)
Direct selling is one of the oldest ways of selling products. It does not imply the inclusion of an intermediary, the manufacturer is in direct contact with the client at the point of sale. Some examples of direct channels are street sales, branded retail stores, receiving orders on the company’s website, etc.
Manufacturers who sell perishable and expensive products and whose target audience is geographically concentrated often use direct channels.
Indirect Channel For Your Business (Sales through an intermediary)
When a manufacturer engages an intermediary to sell their product to the end customer, they use the indirect channel. Indirect distribution channels are generally classified into three types:
One Level Indirect Distribution Channel Channel For Your Business
It is characterize by the intervention of 1 intermediary: the retailer. Shops buy the product from the manufacturer and then sell it to end customers. This distribution channel works most effectively for manufacturers that sell clothing, furniture, accessories, toys, perishables, etc.
The retail establishments that acquire these products operate in the traditional consumption channel (e.g., markets, neighborhood stores, kiosks, etc.) The conventional consumption channel establishments are consider somewhat informal, allowing them to compete with prices—the reason why it is easier to establish strategies and planning.
Two-Tier Indirect Distribution Channel For Your Business
This chain unfolds as follows: manufacturer to wholesaler, the latter retailer, and later to the end customer. But, first, wholesalers buy most of it from manufacturers, break it down into small packages, and sell it to retailers, eventually selling it to end customers.
The products are more durable, standardize, economical, and whose target audience is not limit to a confined area.
In general, the two-tier distribution channel refers to retail or retail. The type of companies that develop in this type of distribution channel are companies specialize in mass marketing to many customers. Therefore, the modern consumer channel is the ideal one to function. The points of sale that are part of this channel are hypermarkets, warehouses, wholesale distributors, chain pharmacies.
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