Distribution Channels – Meaning and Their Significance
After a product leaves the producer and before it comes into the hands of the final consumer, it has to pass through at least one marketing intermediary. Marketing intermediaries are retailers, distributors, wholesalers, franchises, authorised dealers, jobbers, agents, and even online services and stores. All these intermediaries are distribution channels. The job of distribution channels is to minimise the gap between production and the consumers. That means that distribution channels are there to create time, place, and possession utilities.
Distribution Channels – What They Do, and Why They’re Important
Distribution channels have a significant role in the success of both marketing and the distribution of products. These channels provide a wide array of contacts, knowledge of the products, and market expertise.
The market of today is becoming more and more complex each day. As a result of that, distribution is becoming more complicated. That is why distribution channels are necessary for any business that offers products.
6 Elements of Distribution Channels
1. Offer salesmanship
One of the key things that distribution channels can offer a business are the sales agents. They can help create a space for new products on the market. These people are professionals who know how to utilise word of mouth to boost sales and promote any product imaginable.
These agents are what ensures pre and post-sale consumer service. Since they are in a regular and direct contact with the consumers, sales agents are the best link between a manufacturer and the end users. They are the ones who can provide the most valuable feedback to the manufacturer.
2. Increase efficiency of distribution
Intermediaries make selling easier because they have a direct link to the consumers. They can significantly decrease the gap between manufacturers and consumers. At the same time, their efforts will result in more economical and more efficient distribution.
Here’s an example — four manufacturers want to sell their products to four consumers. If there’s no distribution channel, 16 transactions will have to be done to get the desired results. On the other hand, if the manufacturers use distribution channels, only eight transactions will be necessary. Four from the manufacturers to the intermediary, and four from the intermediary to the consumers.
As a result, distribution costs go down significantly.
3. Offer products in required assortments
Just like every manufacturer has their own field, industry, or niche, so do the intermediaries. Wholesalers are experts in transferring and moving products from different manufacturers to a larger number of retailers.
Furthermore, retailers specialise in selling different products in smaller numbers to a greater number of consumers.
Thanks to distribution channels such as retailers and wholesalers, consumers can buy products they want, when they want them, and find them where they need them. No one has to order from a distant factory and wait for days, weeks, or even months for their order to arrive. That’s how intermediaries help meet the smaller quantity demand of the general public.
4. Help in product merchandising
Believe it or not, merchandising done by intermediaries is what makes the products move faster. When intermediaries are involved, products will move from the retail shop to the consumer much faster.
Retail stores have a method of quiet selling that can efficiently draw consumers to new products. For example, when a customer enters a retail shop and sees an interesting display advertising a new product, they may switch to that product and leave the one they use regularly.
That’s how intermediaries help in product merchandising.
5. Help in reaching an acceptable price level
Intermediaries are what helps with reaching a price level that suits both the manufacturers and the consumers.
6. Assist in stock holding
Intermediaries help through product financing, storing, risk-bearing, and providing necessary storage space.
In the End
When we look at all the roles distribution channels have, their relevance becomes perfectly clear. They are a crucial segment of any company’s marketing strategy. Furthermore, they don’t just increase revenue; they also help expand a product’s reach and availability.
Related content:
Marketing Management Knowhow – learn more about marketing with our collection of educational articles.
From corporate custom printed pens, printed company mugs, drinks bottles, thermos flasks, through to wooden keyrings, printed hats and coasters, here at GoPromotional we believe that you are sure to find the perfect custom promo printed freebies to help successfully market your brand.
If however, you require further information or have any specific questions, don’t hesitate to give a member of our experienced team a call on 0800 0148 970 or simply email us today.
