First one is the direct channel or zero level channel. It is among those few strategic decisions which either make or break your company.Even though direct selling eliminates the intermediary expenses and gives more control in the hands of the manufacturer, it adds up to the internal workload and raises the fulfilment costs. For example, when all the smartphones were selling in the retail market, some companies partnered with Amazon and used Financial strength, management expertise, and the desire for control act as important factors while deciding the route the product will take before being available to the end user.A company having a large amount of funds and good management expertise (people who have sufficient knowledge and expertise of distribution) can create the distribution channels of its own but a company with low financial stability and management expertise has to rely on third-party distributors.The companies who want to have tight control over the distribution prefer direct channels. Hence, a distribution channel can also be referred to as a set of interdependent intermediaries that help make a product available to the end customer.In order to understand the importance of distribution channels, you need to understand that it doesn’t just bridge the gap between the producer of a product and its user.Channels of distribution can be divided into the direct channel and the indirect channels. Therefore, he takes the help of some intermediaries to distribute his […] Product’s availability, ease of access, and the way it reaches the customer influence its demand at many levels. Companies are not involved directly in the selling process. It is more than that; it also performs many other functions that are as follows; Information. They do all functions of stock holding and delivering it to ultimate customers. A close study of the market is extremely essential. It is the role of intermediaries involved in the selling process to find and contact prospective customers.Intermediaries meet them personally and try to match the buyer needs with their product. Some of the important role and functions of the distribution channel are discussed below:It is important that products move from producers to customers smoothly.
They handle these products safely until their final delivery to customers. The goods are produced at one place but the customers are scattered over a wide geographical area. Manufacturers of these goods often opt for direct or single level channels of distribution.
It is the intermediaries involved in the distribution network that reaches out to customers and meet them physically.They give all detail information about quality, price and various terms and conditions to customers. A distribution channel strategy is one way a manufacturer can bring its products to market.
They use various intermediaries for distributing their products among largely scattered people. This saves the producers from blocking of funds in goods till the sale of goods.When funds are provided timely the company is saved from facing any financial crisis.
The basic function of a distribution channel is to provide a link between production and consumption and to create time, place and possession utilities which constitute the added value of distribution. Direct channels are usually used by manufacturers selling perishable goods, expensive goods, and whose target audience is geographically concentrated. Storing of goods and delivering them according to needs is important role played by the distribution channels. At the time of buying goods in bulk from producers, intermediaries do payment for their purchases. Indirect channels can be classified into three types:When a manufacturer uses more than one marketing channel simultaneously to reach the end user, he is said to be using the dual distribution strategy. Distribution channel overcomes the place barrier in delivering the products.
This all collected information helps businesses in understanding the market needs better. Indirect channels can further be divided into one-level, two-level, and three-level channels based on the number of intermediaries between manufacturers and customers.Direct selling is one of the oldest forms of selling products.
Distribution channels are the one through which business is able to deliver their products. Come on! Customers interact with these intermediaries and negotiate for a fair deal. It’s very important to understand the role of distribution channel that it doesn’t just deliver the product. Companies will also incur losses no matter how efficiently they are working.
Some examples of direct channels are peddling, brand retail stores, taking orders on the company’s website, etc. They take the risk of holding their money in stock until their final sale to customers.Marketing of products is very essential to increase the sales of companies. But this doesn’t mean that all the services are always delivered using the direct channels.The internet has revolutionised the way manufacturers deliver goods. Usually, the firms tend to use a similar channel as used by the competitors. ADVERTISEMENTS: Channels of Distribution of Products: Meaning, Functions, Factors and Types! They motivate the buyer to buy the products. If the unit value is high like in the case of jewellery, direct or short channels are used, whereas products like detergents whose unit value is low use longer channels of distribution.The choice of the marketing channel is also affected by the channel selected by the competitors in the market. Functions of Distribution Channel.
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