If delivery time is not an issue, if the demand isn’t that high, the size of orders is large or if there’s a concern of piracy among the customers, direct channels are suited.If the customer belongs to the consumer market, longer channels may be used whereas shorter channels are used if he belongs to the industrial market.Product cost, technicality, perishability and whether they are standardised or custom-made play a major role in selecting the channel of distribution for them.Perishable goods like fruits, vegetables and dairy products can’t afford to use longer channels as they may perish during their transit. require longer channels as they need to reach customers who reside in areas which are geographically diverse.If the nature of the product is more technical and the customer may require direct contact with the manufacturer, direct channels are used.
For example, bakers, jewellers, etc.When a manufacturer involves a middleman/intermediary to sell its product to the end customer, it is said to be using an indirect channel. The institutions specializing in manufacturing, wholesaling, retailing and many other areas join forces in marketing channel arrangements to make possible the delivery of goods to industrial users or customers and to final users. Our philosophy is to research, curate, and provide the best startup feeds and resources to help you succeed in your venture. Whereas, those companies to whom such control doesn’t matter or those who are just interested in the sales of their products prefer indirect channels.Did we miss something? The cost of transactions is minimised if they are undertaken regularly. The pathways through which goods move from producers to ultimate users/consumers, distribution channels include intermediaries also who participate in the flow. The producer supplies goods in bulk but wholesaler sells them to retailers in small quantities. The distribution through intermediates will be possible if products are standardised. The buyers and sellers search for each other in the market to transact for products and services. Hence these four factors should be considered before deciding whether to opt for the direct or indirect distribution channel.This includes the number of customers, their geographical location, buying habits, tastes and capacity and frequency of purchase, etc.In cases of customers being geographically dispersed or residing in a different country, manufacturers are suggested to use indirect channels.The buying patterns of the customers also affect the choice of distribution channels. They come into direct contact with the consumers by eliminating all kinds of middlemen. We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions.The site may also contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links.Product or company names, logos, and trademarks referred to on this site belong to their respective owners. Usually, the firms tend to use a similar channel as used by the competitors.
This role can be further divided into a number of different functions of distributors. Some examples: 1. A manufacturer creates value utility in the product or service but time and place utilities are created by distribution channels. This channel may be shown as follows: This channel consists of two types of intermediaries called wholesaler and retailer. The producer supplies goods in bulk to the wholesaler, who if, turn sells in small quantities to the retailers. In the present widening market, distribution channels play an important role in achieving marketing objectives of an organisation. But this doesn’t mean that all the services are always delivered using the direct channels.The internet has revolutionised the way manufacturers deliver goods. The producer supplies goods directly to the retailers who sell them to consumers. The intermediaries are more near to the consumers as compared to the producers. Before publishing your articles on this site, please read the following pages: Role of Channels of Distribution: In the present widening market, distribution channels play an important role in achieving marketing objectives of an organisation. Wal-Mart recently challenged local supermarkets by opening their new format: Neighborhood Markets. It has removed all distance barriers for businesses while performing their operations. In the words of Drucker, “both the market and the distribution channels are often more crucial than the product. The producers may set up their own retail shop or showroom at different places or at different locations of the same place.
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