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Distribution channel marketing


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A distribution channel is the network of person and corporation involved in getting a product or service from the creator to the customer. Distribution channels are also known as marketing channels or marketing distribution channels.

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Distribution channel marketing

  1. 1. Distribution Channel Marketing/Nino Joseph Mihilli What is a Distribution Channel? The distribution function of marketing is comparable to the place component of the marketing mix in that both center on getting the goods from the producer to the consumer. A distribution channel in marketing refers to the path or route through which goods and services travel to get from the place of production or manufacture to the final users. It has at its center transportation and logistical considerations. Business-to-business (B2B) distribution occurs between a producer and industrial users of raw materials needed for the manufacture of finished products. For example, a logging company needs a distribution system to connect it with the lumber manufacturer who makes wood for buildings and furniture. Business-to-customer (B2C) distribution occurs between the producer and the final user. For instance, the lumber manufacturer sells lumber to the furniture maker, who then makes the furniture and sells it to retail stores, who then sell it to the final customer. Direct vs. Indirect In marketing, goods can be distributed using two main types of channels: direct distribution channels and indirect distribution channels. Direct Distribution A distribution system is said to be direct when the product or service leaves the producer and goes directly to the customer with no middlemen involved. This occurs, more often than not, with the sale of services. For example, both the car wash and the barber utilize direct distribution because the customer receives the service directly from the producer. This can also occur with organizations that sell tangible goods, such as the jewelry manufacturer who sells its products directly to the consumer. Indirect Distribution
  2. 2. Indirect distribution occurs when there are middlemen or intermediaries within the distribution channel. In the wood example, the intermediaries would be the lumber manufacturer, the furniture maker, and the retailer. The larger the number of intermediaries within the channel, the higher the price is likely to be for the final customer. This is because of the value adding that occurs at each step within the structure. . Distribution Channels Concepts & Steps Before you begin You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s especially important to think about distribution when you’re going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business. Evaluate how your end-user Evaluate how your end-users need to buy Your distribution strategy should deliver the information and service your prospects need. For each customer segment, consider:  How and where they prefer to buy  Whether they need personalized education and training  Whether they need additional products or services to be used along with yours  Whether your product needs to be customized or installed  Whether your product needs to be serviced Match end-user needs to a distribution strategy  If your end-users need a great deal of information and service, your company can deliver it directly through a sales force. You can also build a channel of qualified resellers or consultants. The size of the market and your price will probably dictate which scenario is best.  If the buying process is fairly straightforward, you can sell direct via a website/catalog or perhaps through a wholesale/retail structure. You may also use an inbound telemarketing group or a field sales team.
  3. 3.  If you need complete control over your product’s delivery and service, adding a channel probably isn’t right for you. Identify natural partners If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re natural partners. Build your distribution channel If you’re setting up a distribution channel with one or more partners, treat it as a sales process:  Approach the potential channel partner and “sell” the value of the partnership.  Establish goals, service requirements and reporting requirements.  Deliver inventory (if necessary) and sales/support materials.  Train the partner.  Run promotions and programs to support the partner and help them increase sales. Minimize pricing conflicts If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one channel at a lower price than from another, your partners will rightfully have concerns. Pricing conflict is common, and it can jeopardize your entire strategy, so do your best to map out the price at each step and develop the best solution possible. Drive revenue through the channel Service your channel partners as you’d service your best customers and work with them to drive revenue. For example, provide them with marketing funds or materials to promote your products; run campaigns to generate leads and forward them to your partners. After Designing Your Distribution Channels As you’re creating a new channel you’ll need a pricing strategy and a sales process. When your channel is up and running, you can start launching marketing campaigns to channel partners and end-users. Here More information about Nino joseph mihilli