Distribution Channel
Availability of products, easy approach and the way it reaches the end consumer affects the demands in the market at various levels. The distribution channel is a crucial element around which many marketing strategies of a product revolve. So, what is distribution channel and how does it influence the product demand, we will know everything in the below article.
What is distribution channel?
Who doesn’t want to create brand awareness and maximize revenue? Every small, medium or large business wants to reach their customers quickly and apprise them about their product or services. A distribution channel does the same by creating an easy-to-access route through which the company deliver its product to the customers.
This route or path can either be a direct communication between the company and customer or various interconnected intermediates such as wholesalers, distributors or retailers. Therefore, by distribution channel definition, we mean a set of interdependent go-betweens that work concurrently to make a product reach the end consumer.
What are the functions of distribution channels?
As we have explained the distribution channel definition, we will now know its functions to understand the importance of this concept. The role of the distribution channel is not just to connect the manufacturer and the buyer, but also to provide the suitable time, place and ownership value. It means when, and where a product should reach a customer in the desired quantity. To comprehend this term better, let's get to know the following functions a distribution channel typically carries out:
Physical distribution and logistics:In this phase, the distribution channel performs four functions; assembly, storing, sorting out the product, and transportation from the production to the final buyer.
Facilitation: These intermediaries can also handle the task of pre-sale and post-purchase services of a product, such as financing, maintenance, disseminating information and coordination of channels.
Enhancing efficiency: There are two methods of creating efficiencies in the process; bulk breaking and making assortments. The wholesalers and retailers buy the goods in bulk from the manufacturers but break them into different quantities to sell them to various channels or customers. Moreover, they also offer various products in a single place which is often a big advantage to the purchasers as they need not have to go to different retailers and wholesalers for different products.
Marketing: Distribution channels also act as touchpoints or points of interaction where various marketing strategies are executed. They remain in direct contact with the consumers and support the manufacturers in creating brand awareness and disseminating product benefits and other significant advantages to the customers.
Risk sharing: As distribution channel buy products beforehand, and that too in bulk, they also shoulder the responsibility with the manufacturers to sell as much as possible.
What are the different distribution channels in the digital age?
The advent of digital technology has impacted the concept of distribution on various levels. Digital tools such as e-commerce, marketing & advertising like content and social selling, and enterprise software have made sales and distribution far more efficient and appealing.
How can you choose a distribution channel for your product?
One might need more than one approach for distribution, especially when there are different kinds of products. The best way to figure this out is to look at the product and ask yourself does it need to reach the buyer quickly such as fruits or vegetables and meat, or does it needs to be bundled with other products to make it an attractive package such as computer hardware?
What are KPIs?
KPI stands for Key Performance Indicator, and it plays a crucial role in sales metrics. It is one of the best ways to determine the current performance of your business. In combination with analytics, the KPIs can help you make sound decisions, in terms of distribution strategy.
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