What is Distribution Channel?
A distribution channel is a product or service path from the producer or maker to the final user/buyer. Distribution channels can be different, but they usually involve a producer, a wholesaler, a retailer, and the end user/buyer. A distribution channel also shows how money goes back from the buyers to the producer or original seller.
Producers must have a combination of distribution channels that make their products or services easy to find and buy for the customers, i.e., a good marketing mix. Depending on the type and size of a production business or any other business in the distribution process, the business must choose a channel or channels for good sales and customer convenience.
Distribution Channels Explained
A business's product or service must be marketed and delivered to the consumer. Moving goods from the maker to the consumer happens through a marketing or distribution channel. The manufacturers can decide whether to connect with the consumers directly or involve intermediaries to reach the final users.
Some businesses do it directly without middlemen by establishing distribution units or retail stores. But others depend on indirect channels involving wholesalers and retailers (physical and digital), providing easier access for final consumers.
A marketing channel in distribution is vital, given its ability to monitor product sales and maintain revenue flow. An effective distribution strategy involves using network resources and logistics to their full potential and at the lowest possible cost.
The decision to choose the placement for products depends on various factors. It might be the cost of distribution, sales goals, product type, and the targeted market. While multiple channels make products easily accessible to consumers, it might increase prices and affect the brand’s position in the market.
There are many other benefits of using a diversified marketing channel. A business can know about target customers’ presence, reach and acquire new customers, and gain customer loyalty. Therefore, manufacturers must be careful when choosing a marketing channel to increase sales revenue while minimizing market risk