In this article, we will talk about what Channels Of Distribution Is and where it fits in the broader Marketing perspective? We will talk about the types of Channels and how to select them with an example.
So Lets Start.
Channel Of Distribution :
Process or partners that moves the product from the producer to the customer.
In other words we can say, its the answer to the question which ask – Where & How will the customer gets the product or services.
It fits in the broader perspective of our marketing within the 4 P’s i.e. Channel (Place).
- The channel mainly connects producers with the customers.
- It completes the transaction.
- Handles Logistics
- Post sale support
Some of the synonyms are :
There are mainly 2 types of channels :
- Direct Channel – When a producer and customer interact directly.
- PRODUCER -> CUSTOMER
- It can happen in many ways like Company own stores (apple products), sales force team(IBM), internet (DELL)
- Indirect Channel – When there are independent distributors between Producer & Customer. e.g. Coca-Cola
- PRODUCER -> RETAILER -> CUSTOMER
- e.g. – If you need to buy a can of coca cola u need to visit some retail shop to get it. Company doesn’t sell cola directly to customers. Also applicable to insurance companies where they have brokers to interact with customers to sell their policies.
Now lets take an example and walk with the various channels we can use and decide the optimum channel for our product.
OUR PRODUCT : ICE CREAM
- HIGH PRICE POINT
For selecting a channel for our product, we have to ask ourselves 4 key questions :
- Does the channel fit the target customer?
- Does the channel fit the brand positioning?
- Is the channel good fit for our organisation?
- Can we achieve our economic goals through this channel?
And while answering we can create a Channel decision matrix, which will help us choosing the right channels for our product and organisation as a whole. In this matrix, we will come up with different options and mark its answer for the above 4 questions we need to ask. So lets go ahead and create the matrix for our ice cream product and choose the optimum channel for its distribution.
This matrix shows how exactly we need to move ahead with our channel decision strategy. We can go ahead with multi- channel distribution strategy for maximum benefits if done correctly.
But in indirect distribution, we need to convince the 3rd party to sell our products using their medium. Like in our case, we need to convince the ice cream shops to carry our ice cream in their store.
So, How do we convince or motivate channel partners? Lets see some potential ways you can apply :
- Channel wants the opportunity of profit.
- Fair price, terms and conditions
- Support & Training
- Product Line : Present & Future direction
- Attractive Brand
- Personal Attention
So lets summarise together the key points we discussed :
- Channel is processes & partners that move product from producer to customer.
- 2 main types of channels : Direct & Indirect
- Channels provide unique added-value for particular target markets.
- 4 Key questions which can help us choose the right channel.
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