Meaning of Distribution channel

What is Distribution Channel:

A distribution channel refers to the points of sale or distribution to other stores of the products or services sold.

Distribution channels are important because they fulfill the function of product circulation. In this way, without adequate distribution channels, the good to be sold will not reach the consumer efficiently.

That is why it is essential in any strategic plan, be it business or marketing, to define distribution channels according to the characteristics of the product or service.

A distribution channel is one of the paths to the consumer of the commercial distribution system. It is also known as the intermediation system between production and consumption.

A distribution channel is known, in turn, as a marketing, product distribution and sales channel.

Characteristics of a distribution channel

A distribution channel must consider the characteristics of the product or service to be sold. The most important feature of a distribution channel is its ability to reach the final consumer in the most efficient way, maximizing sales.

Distribution channels are an important part of the final phase of business plans or marketing plans, as they are the means by which results will finally be measured.

Types of distribution channels

The main forms of classification of distribution channels are divided into the extension of the chain or length, the technology used for the dynamics of buying and selling and the organization of the system.

Extension or length

The number of links between the manufacturer to the final consumer determines what type of distribution channel corresponds and its specific characteristics. The longer the chain, the greater the necessary resources, but on the other hand, the profits may be greater.

  • Direct distribution channel: from the manufacturer to the consumer, for example, small food producers who sell in markets.
  • Short distribution channel: from the manufacturer, to the retailer, to the consumer, for example, product chains that work with long-distance logistics.
  • Long distribution channel: from the manufacturer, to the wholesaler, to the retailer, to the consumer, for example, large supermarkets and retail distribution stores.
  • Dual distribution channel: manufacturer to exclusive agent to wholesaler, to retailer to consumer, for example, products with authorized agents such as Manzana.

Trading technology

The technology used to purchase the products defines different types of distribution channels.

  • Traditional distribution channels: physical premises
  • Automated distribution channels: product vending machines or vending machines
  • Audiovisual distribution channels: food home deliveries
  • Electronic distribution channels: Internet shopping

Organization

The way distribution channels are organized can alter the dynamics of the distribution chain.

  • Independent distribution channels: decisions are made by the distribution unit without depending on hierarchies.
  • Managed Distribution Channels: Decisions are made by the distribution chain manager.
  • Integrated distribution channels: they work integrated into a strategic plan that can be horizontal integration, many channels in a small area or vertically integrated, many branches in more remote and hierarchical areas.
  • Associated distribution channels: they are all part of a network, generally international, where there are large associates and branches where they manage other distribution channels under their responsibility.

Marketing distribution channel

A distribution channel in marketing is a path of circulation of the product from its manufacturer to its consumer. A good marketing plan must define the distribution channels that will reach the end consumer more directly, immediately and efficiently.

In this sense, distribution channels are an integral part of any business plan and must study the nature of the product to be sold, the profile of the consumer and the logistics involved in a certain distribution chain and its viability.

In marketing, distribution channels usually cover the traditional types of distribution, but in the case of services, technological distribution channels are the most used.

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