Before we talk about the various types of distribution channels, it is important to know the distribution channels’ definition. “The route or the path through which product is transferred from the place of the production the final consumers is known as distribution channels.”
You may transferred goods through both direct and indirect ways. A distribution channel may be called direct when the manufacturer supplies the goods directly to the ultimate consumer and uses no intermediaries. Here the marketing functions are carried out by the manufacturer of the product by him.
If a manufacturer sells the goods to the consumers through one or more than one middleman, the channel is called the indirect channel of distribution. In the indirect channels of distribution, the functions of buying, selling, transporting, storing, are undertaken by the middlemen.
Types of Distribution Channels in Marketing
There are four major types of distribution channels, which are as below. You need to be aware of them all.
- Direct Channel
- Indirect Channel
- Selective Distributive Channel
- Intensive Distributive Channel
When the manufacturer or the producer supplies goods directly to the consumers is called a direct channel. The manufacturer in this stage of distribution channels performs all the marketing functions himself. No middleman is involved. In the direct channels of distribution, the manufacturer attempts to reach the consumers through his
- Own retail stores,
- House to house selling,
- By mail and
- By sales from the factory door.
The manufacturer to consumer link no doubt appears to be a simple and low-cost method of distribution channels, but it is not practicable for the marketing of a large amount of consumer goods. Imagine for a moment, the difficulties which a producer of soap, hairpins, toothpaste, shoe polish, cigarettes, beverages, etc will face in selling the goods directly to the consumers.
Indirect channels are also called exclusive distribution channels. It can be defined as the marketing of goods first to the retailer who in turn sell it to consumers is known as the Indirect Channel of distribution. It is the most effective method of product distributions and effectively used for promoting clothes, machines, automobiles, furniture, etc.
The reasons for selecting indirect channels of distribution are:
- Better control of the supply of goods.
- Speedy disposal of products.
- Lesser expenses on selling.
- Better training of salespeople and
- Rapid feedback.
Selective Distributive Channel
Marketing through Wholesaler is one of the widely used ways of distribution all over the world. These distribution Channels enables the manufacturer to sell goods in lot to a few selected wholesalers, who sell it to retailers, who further, in turn, to sell products to the consumers.
The wholesaler acting as a middleman, take little to the goods, assume risks, appoint dependable retailers, provide goods on cash as well as credit and thus spreads sale on a wide market. These types of distribution channels are effective for the promotion of drugs, hardware, tobacco, toys, food products, etc.
Intensive Distributive Channel
In intensive distribution channels, the producer uses many wholesalers and retail middlemen for the promotion of the product. The producer uses this route of marketing for saturating the market with the product.
Distribution Channel for Industrial Goods
The distribution channels through which the industrial goods travel from the place of the production to the final consumers is known as industrial distribution channels. In the distribution of industrial goods, there are fewer middlemen and shorter channel of distribution, which should be in your mind:-
The industrial goods are mostly purchased by industrial users in large quantities. They are, therefore, purchases directly from the manufacturer of the source of supply.
Purchase in bulk
The industrial user buys products mostly of technical nature. The technical information regarding the performance, standard of the product, the installation of machinery, the maintenance services, etc cannot be reliably furnished through the middlemen.
The industrial user thus wants direct dealing with the manufacturer to get full technical information on products. The middleman is thus eliminated from the distribution channels.
Another reason for the short channel of distribution for industrial goods is that most of the industrial markets are generally concentrated in a small geographical area. The purchasers of industrial goods directly contact the sellers and thus there does not arise the need of the agent.
Contact on Telephone & Fax
Industrial users generally purchase goods in bulk. The cost of direct correspondence is probably through contacts on telephones, mobile numbers, Fax, or in person, etc. The buyers, therefore, eliminate the middleman and contact the manufacturer directly for the purchase of industrial goods.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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