Channel Distribution

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Date Submitted: 09/12/2012 10:39 AM

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Distribution (business)

"Distribution channel" redirects here. So does "Channel (marketing)".

Product distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.

The other three parts of the marketing mix are product, pricing, and promotion.

Channels and Intermediaries

Distribution of products takes place by means of channels. Channels are sets of interdependent organizations (called intermediaries) involved in making the product available for consumption. Merchants are intermediaries that buy and resell products. Agents and brokers are intermediaries that act on behalf of the producer but do not take title to the products.

Channel Design

A firm can design any number of channels. Channels are classified by the number of intermediaries between producer and consumer. A level zero channel has no intermediaries. This is typical of direct marketing. A level one channel has a single intermediary. This flow is typically from manufacturer to retailer to consumer.

Distribution Types

1. Intensive distribution means the producer's products are stocked in the majority of outlets.[1] This strategy is common for basic supplies, snack foods, magazines and soft drink beverages.

2. Selective distribution means that the producer relies on a few intermediaries to carry their product.[1] This strategy is commonly observed for more specialized goods that are carried through specialist dealers, for example, brands of craft tools, or large appliances.

3. Exclusive distribution means that the producer selects only very few intermediaries. Exclusive distribution is often characterized by exclusive dealing where the reseller carries only that producer's products to the exclusion of all others. This strategy is typical of luxury goods retailers such as Gucci.

Channel Mix...