This is how your product is bought and where it is bought. This movement of the product to the customer could be direct from your company or through a combination of intermediaries such as distributors, wholesalers and retailers. The internet is a marketplace and distribution channel. Correct placement is a vital to reach the right target audience at the right time. It focuses on where the business is located, where the target market is placed, how best to connect these two.

What is a Distribution Channel?

A distribution channel can be defined as the activities and processes required to move a product from the producer to the consumer. Also included in the channel are the intermediaries that are involved in this movement in any capacity. Types of Distribution Channels There are three main types of distribution channels. These are:

Direct

In this channel, you supply the product or service directly to the customer. In this instance, you may own all elements of your distribution channel or sell through a specific retail location. Internet sales and one:one meetings are also ways to sell directly to the customer. One benefit of this method is that you retain complete control over the product, its image at all stages and the customer experience.

Indirect

In this channel, you use an intermediary to sell the product or service to the customer. You may sell to a wholesaler or partner who further distributes to retail outlets. This may raise product costs since each intermediary will get their percentage of the profits. This channel may become necessary if you wish to sell through many smaller intermediaries.

Dual Distribution

In this type of channel, you may use a combination of direct and indirect selling. The product or service may be sold directly to a customer, while in other cases it may be sold through intermediaries. This type of channel may help reach more customers but there may be the danger of channel conflict. The user experience may vary and an inconsistent image for the product or service.

Channel Segmentation

Just as a customer base is segmented and addressed according to their specific needs and requirements, distribution channels can also be segmented. Not all intermediaries or the markets they serve will be similar. You need to select partners carefully, incentivize and manage them properly. Channel management is an essential activity for these relationships to work. Intermediaries need to be kept motivated and offered incentives to ensure timely and efficient delivery of products and services. Clear messages regarding products and their functionalities need to be passed on to attempt to keep clear communication regarding a product or brand all the way to the end user.

Ideas for how we might help...

• We could review your current distribution channels and compare them with those your competitors use.
• We could evaluate the revenue generated by each channel and compare this with the costs.
• We could help identify new channels you could consider or look to remove ineffective channels from your current mix.
• We could identify the optimum channels to drive international expansion and look at ways these channels might attract support.
• We could help you identify, manage or train your partners, review contracts and incentive their sales team effectively.

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