DISTRIBUTION CHANNELS: TYPES, CHARACTERISTICS, EXAMPLES - DUDAS - 2024

The distribution channels are the different entities that intervene in the business structure and marketing of a product. Its objective is to ensure that the product is transferred from the factory to the final consumer.

The distribution channel of a product is made up of individuals or companies who are responsible for its physical transfer and ownership without modifying it. Because when this happens, then a new product is born.

So, for an intermediary to be considered as a channel of a product, it must acquire its property from the manufacturer or intermediary (channel), and then sell it to another or to the final consumer.

The distribution system can include primary participants or channels (wholesale or retail). Specialized participants can also take part.

This includes transport companies, freight forwarders, warehouses, commission agents and product marketers. The distribution channel is one of the four components of the marketing system, along with the product, the price and the market or place.

Types of distribution channels and their characteristics

Distribution channels can be classified into:

Consumer goods channels

In turn, these are divided into:

Direct channel

It is the one that goes from the producer to the consumer. This channel is the simplest and most immediate that exists to distribute consumer goods, since it does not involve intermediaries.

Retail channel

Distribution follows the producer - retailer - consumer scheme. Includes large supermarket and department store chains.

It is the most visible channel for the final consumer. Often times, purchases that involve the general public are made through this channel.

Wholesale channel

Distribution is carried out according to the scheme: producer-wholesaler-retailer-consumer. The distribution of medicinal, hardware and food products is carried out using this channel.

High-demand goods are generally distributed through these channels. This makes it possible for manufacturers to cover the entire market.

Agent / intermediary channel

Follow the pattern producer - agent - retailer - consumer. Instead of using the wholesale channel, producers prefer to incorporate intermediary agents or commission agents to get their products to the retail market.

Products are generally sold to large retail companies. This scheme is very frequent in the distribution chains of perishable food and oil.

Double channel

The sale of the product from the producer to the consumer is done following the scheme: manufacturer - agent / intermediary - wholesaler - retailer - consumer.

Manufacturers sometimes resort to intermediary agents. These, in turn, employ wholesalers who sell to large chain stores or small stores.

Channels for distribution of industrial goods

These types of channels distribute raw materials and other products whose final consumers are other companies that use them in the manufacture of new products.

The distribution of industrial products is different from the distribution of consumer products. Four channels are used in this type of distribution.

Direct channel (Producer - industrial user)

It is the most common for the acquisition of products for industrial use, since it is the shortest and most direct.

Manufacturers that purchase large volumes of raw materials, supplies, equipment or processed materials from other manufacturers are in this channel.

Manufacturers or producers use their own sales force to market and sell their products.

Industrial distributor

Follow the producer - industrial distributor - industrial user scheme. Manufacturers use industrial distributors as intermediaries to sell to their customers. An example of this are the manufacturers of air conditioners.

Agent / intermediary channel

The intermediary can be the producer, the agent or the industrial user. It is a very useful channel for companies that do not have their own sales department.

Agent / intermediary channel - industrial distributor

Here the intermediary can be an industrial distributor, the producer, the agent or the industrial user. This type of channel is used when the sales scheme does not allow the industrial user to sell directly.

Distribution channels services

Due to the nature of the services provided, these channels give rise to various special distribution needs.

Producer - consumer

The intangibility of the services provided requires personal contacts between the manufacturer / producer and the consumer. This occurs both in the production process and in derived sales activity.

Such is the case of a medical or legal consultation, an electrical service, among others.

Producer - agent - consumer

Here, personal contact between the producer and the consumer is not necessarily required to fulfill the distribution of the service. Then, the agent or intermediary enters as an active part.

For example, the travel agency for ticket sales or accommodation meet this characteristic.

Multiple distribution channels or dual distribution

Several channels are used to better cover the market.

Non-traditional channels

They serve to establish differences between one product and another from different companies (competitors).

Reverse channels

These are used when products are returned to the manufacturer for repair or recycling, but this is done through different distribution channels.

Examples of distribution channels

Direct channel

The forms of distribution most used with this type of channel are: traditional door-to-door direct sales, telemarketing, telephone sales or mail-order sales. Intermediaries do not participate in this type of channel.

This is the case with companies like Avon and Amway.

Retail channel

This is the case with Wal-Mart stores that buy directly from their exclusive manufacturers. It also includes supermarkets that purchase agricultural products directly from the producer.

Other examples are auto dealerships, gas stations, and clothing stores.

Wholesale channel

A representative case of this channel is the travel agencies that buy tour packages from wholesalers. Another case is the small shops in the towns, which sell products bought from wholesale distribution companies.

Double

Examples of this type of channel are the different franchises on the market and exclusive importers.

References

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