Understanding The Types of Distribution Channel in Marketing!



Distribution Channel in Marketing, Channel of Distribution - StudyShout, Supply Chain Management


Distribution Channel Types in Marketing:


Distribution Channel is one of the important factors in the supply or distribution of the product or service of the company. A Company may have unique features in the product with less price but, what if the company does not have any proper Supply Chain or Distribution Channel Strategy?


Channel Manager builds Distribution Channel Strategy & develops Distribution Strategy in such a way that Product Distribution & Supply Chain will be smooth.


Distribution Channel is very crucial in Marketing Management. If a company does not have the proper channel for supply or distribution of the product, consumers will switch their product's brand and ultimately the company has to bear the loss.

It is necessary to build Distribution Strategy in such a manner that the product will safely reach in the hands of consumers. Before planning for distribution strategy, a company must decide about targetted geographical locations.

On the basis of the chosen location, the company has to build a distribution channel. Whether the company is targetting the local audience, state audience or wants to build a distribution channel nationally, depending upon it company has to decide the type of distribution channel.

Some factors in Distribution Channel also affected due to a type of the product. A product could be durable or perishable. The company must make Distribution Strategy in such a way that the product consumed by its consumer before the expiry date.



Types of Distribution Channel, Distribution Channel, Distribution Strategy
Types of Distribution


There are various Types of Distribution Channel in Marketing Management are elaborated as below:


1. Direct Channel or Zero Level Channel:

                    When the goods or services are sold directly to the end user or consumer instead of any middlemen or intermediaries then it is known as Direct Channel or Zero Level Channel. 

How a huge company sells their product directly to its consumer without any middlemen in the distribution process? 
The Company sells through retail outlets, mail orders, Internet selling, and E-commerce selling.


2. Indirect Channels:

                  When a manufacturer is unable to sell his/her product directly to the consumer and gets the help of one or more intermediaries for the distribution strategy, is called an Indirect Channel for the Distribution.

So, following are the types of Indirect Channels:



(I) One Level Channel:

This is the type of distribution channel where there is the existence of only one intermediary in the distribution process. A manufacturer sells his product to the retailer and retailer sell to the end user or consumer.


(II) Two Level Channel:

Two level channel of distribution includes two intermediaries or middlemen in the supply chain or distribution process. In the two-level distribution channel, wholesaler and retailer are included.

Wholesaler purchases the product in bulk from the manufacturer and sells to the retailer in small quantity and finally, the retailer sells the product to its end user or customer.

Two level distribution strategy is generally seen in the products like Detergent Powder, Soap, Salt, Cigarettes etc.


(III) Three Level Channel:

Three level distribution channel includes three intermediaries in the distribution process. In the three-level channel of distribution, agent, wholesaler, and retailer are included.

Some big companies who cannot directly contact the wholesalers they take help of the Agents. Agents purchase the product directly from the manufacturer and sell it to the Wholesaler.

As this type of distribution channel includes three intermediaries or three middlemen, the price of the product consumer has to pay will be high.



Conclusion:

The Type of Distribution Channel is affected due to the kind of the product. If the product produced by the manufacturer is a routine based item like soap the company can't sell such kind of products directly to its consumers. So in such cases, the company build a distribution strategy.

So, the company has to make a distribution channel strategy by undertaking various factors. If a company acquires three level distribution when it can directly reach to their customers, there will be an increment in the cost.





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Understanding The Types of Distribution Channel in Marketing! Understanding The Types of Distribution Channel in Marketing! Reviewed by Bhavik Chhuchha on November 27, 2018 Rating: 5

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