DISTRIBUTION CHANNELS, WHICH IS THE RIGHT FOR YOUR BUSINESS?

How do our favorite yogurts get to our regular supermarket? And how does that dress that I ordered online come to my house? Through numerous agents participating in the distribution and marketing of products . It is a perfectly geared system to put manufacturers and consumers in contact, but which channel is the most suitable for my company?

Distribution channels are the set of means that the company uses to get the product from the manufacturer to the final customer. However, according to the teacher of our Official Online Master in Management and Management in Digital Marketing and Social Media , Nacho Somalo, before the consumer can get the product, it must go through three previous stages in the sales cycle:

  • Knowledge . The client must know that we exist and that we have that product available for them to buy.
  • Consideration : We must get the client to accept our product as one of the appropriate options that can fit their needs. That you value our product as a possible good option.
  • Visit : The client must go to a point of sale where they can purchase our product (physical or virtual).

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TYPES OF DISTRIBUTION CHANNELS

With the popularization of the internet and the establishment of electronic commerce, distribution channels have undergone logical changes for adaptation to new technologies and digitization. This has caused the rapprochement between manufacturers and consumers, blurring the participation of the different distribution agents, but the traditional channels continue to exist and work.

Distribution channels may vary depending on the sector. In general we can divide them into face-to-face and at a distance where digital would stand out, but there are many more, catalog, telephone, postal, etc. We are going to define the two main types of distribution channels:

– Own or direct channel: the manufacturing company itself is in charge of getting its product to the end customer without intermediaries. Therefore, it does not delegate processes of storage, transport or attention to the consumer. For example, the HP product company handles the distribution of its own products.

-External or external channel: distribution and commercialization is carried out by companies other than the producer. The distribution process is the business itself, leading to the appearance of intermediaries. Depending on the number of participants, three types of external distribution are distinguished:

  1. Short : the product goes from the manufacturer to the retailer or retailer, and from this to the final customer. It is typical of electronic commerce, in which the e-commerce platform connects producers and consumers in an agile and simple way.
  2. Length : the product travels from the manufacturer’s hands to the wholesaler’s, from the latter to the retailer until reaching the consumer. This type of distribution is the most common and is typical of small businesses and traditional neighborhood stores.
  3. Double : it is one in which, in addition to wholesalers and retailers, there is also a third distributor or exclusive agent who participates in the marketing of products. It belongs to franchises or travel agencies.

The choice of the most appropriate channel for each business will attend to reasons of costs, prices, business strategies, industrial sector, type of market, etc. Each type of channel will offer a different control over the product and its marketing.

DISTRIBUTION STRATEGIES

When a manufacturer develops a product, “it must decide as part of its strategy through which distribution channels the product will be sold,” says Nacho Somalo. For example, if we produce infant formula, we could choose to sell it in large distribution chains (Carrefour type) or in pharmacies. “Obviously, choosing one or the other channel has many implications. The same thing happens in the digital sphere. There are different alternatives depending on the sector and the target audience you are targeting. Each product requires an ad hoc analysis of its distribution strategy ”, explains the ENyD teacher. Here we define the most important:

-Exclusive strategy: the sale is made through a single intermediary. The latter undertakes to make a minimum sales of said product and not to distribute those of the competition.

-Selective strategy: distribution is carried out through a limited number of intermediaries. The selection will be made according to the sector, prestige of the agent, importance, position in the market, etc.

-Intensive strategy: the sale is made through multiple agents with the aim of locating the product in the largest number of shops possible. It is typical of the goods of frequent consumption.

BRAND POSITIONING

Have you ever wondered how distribution can affect positioning or brand image? According to Nacho Somalo, it can affect “in a decisive way”. The example of infant formula is illustrated very well. «That same product changes its perception of quality and positioning (possibly also of price) if we sell it in supermarkets or pharmacies. The chosen channels must be in accordance with the brand positioning. If this strategy is not consistent, everything else can be spoiled », clarifies the ENyD teacher.

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But ultimately, each business must study which distribution channel and strategy are the most convenient for them to generate higher sales at minimum cost, analyzing their own products, distribution capacity and business strategy. The type of channel and strategy used will affect issues such as positioning or brand image. If you want to go deeper into distribution channels, at the Business and Management School we have an Official Online Master in Management and Management in Digital Marketing and Social Media in which we explain operations and logistics in e-commerce.

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