Make yourself comfortable, this topic is a topic that is much talked about and we will be able to see, using simple and current examples, how to destroy distribution channels.
What is a distribution channel? According to Philip Kotler and Gary Armstrong, a distribution channel “ is a set of interdependent organizations that participate in the process of making a product or service available to the consumer or industrial user .”
For me, and leaving pragmatism aside and being practical, a distribution channel "is an intermediary party that participates in the process of making a product or service from our company available to the end customer"... Being even more practical, "it is an intermediary that adds value."
What functions do distribution channels perform? We could summarize the functions of distribution channels into three groups:
1- Transactional functions: That is, all those related to the transaction of the product or service, such as those that involve communication and contact with potential clients or consumers (sales force, customer service or after-sales service, etc.).
2- Logistics functions: In this group we would include all those that are related to the handling of the product itself (storage, transportation, etc.).
3- Support functions: This would include all those functions not included in previous sections, such as financial functions, market research, etc. (Collection of consumer data, sending statistics on returns, competitor prices, payment of deposits for merchandise in warehouse, etc.).
To summarize in clearer terms these three major groups of distribution channel functions, we can cite the following points:
They deal with basic marketing tasks.
They participate in the financing of the products.
They contribute to reducing structural costs (logistics, sales, customer service, etc.).
In some cases they intervene in price setting.
They provide or collect, under our order, important information about the product, competition and market (in the assigned area).
They actively participate in promotional activities, trademarketing, etc.
They position the product in the place they consider most appropriate in their area.
They intervene directly or indirectly in after-sales service.
They act as the company's sales force.
They sell in hard-to-reach and unprofitable areas.
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What types of distribution channels exist? There are countless distribution channels and since the Internet has existed, this marketing policy has been revolutionized quite a bit. Basically, the types of distribution channels are organized according to the length of the channel. That is, depending on the number of agents involved from the company producing the product or service until it reaches the final consumer, we can define a channel as short or long and determine its length.Marketing - Germán Piñeiro - Marketing Consultant Germán Piñeiro's Blog
We could group the channels according to their length into the following types:
-Direct channel: The product/service goes from the producing company to the final consumer without any other interveners. (Direct marketing, e.g.: Colchones Lo Monaco, BBVA, ONCE, Linea Directa, etc.)
-Short Channel: The product/service goes from the producing company to the final consumer only through an intermediary, usually a retail establishment. (E.g.: Appliances, furniture, cars, etc.)
-Long Channel: In this case the product/service goes from the production company to the final consumer through a wholesaler who in turn distributes it to a retail establishment. (For example: Food to local retail stores, hospitality, tourist products, electronics, etc.)
- Double or extra-long channel: Let's say it is a long channel to which we add another intervener as an exclusive agent or similar that makes the product/service available to the wholesaler (E.g.: Importers with exclusivity contracts for a certain country)
Depending on the goods or services being distributed, we could differentiate the following types of distribution channels:
– Of consumer goods.
– Of industrial goods.
– Of services.
When designing the distribution channels to be used, the company must take into account four fundamental aspects: coverage, costs, market and control . Paying close attention to the following factors:
-Characteristics of end and intermediate customers.
-Characteristics of products or services, substitutes, etc.
-Characteristics of intermediaries that usually interven the benefits of costa rica phone data in business e in the sector.
-Characteristics of the competition that operates in each area to be penetrated.
-Characteristics of the company and financial capacity.
-Characteristics of the environment and its impact on each area.
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So... What types of distribution channels are usually the most common? Well, generally, current companies tend to follow multi-channel distribution strategies . That is to say; almost no one has a single distribution strategy or depends exclusively on a single channel. The current trend revolves around shortening the distribution channel as much as possible, and for this, the Internet and new technologies play a very important role.
A multi-channel distribution strategy is one that is managed by companies that, depending on the market they are targeting, do so through a channel. For example; you can follow a direct marketing strategy in your country or a certain area, in other countries or areas follow a long-channel strategy through a wholesaler and for other countries or areas with high entry barriers, do so through a double or extra-long channel.
Managing all of these strategies simultaneously is the challenge for many companies that have to ensure that their channels are not destroyed or cannibalized, something that the transparency of the Internet and new technologies have made more complicated, while at the same time making it more transparent.
