Distribution Channels get Your Product to Consumers

Businesses get their products to final consumers by using different distribution channels. Using a proven distribution channel allows a small business to minimize its marketing efforts and focus properly on making a quality product. Established distributors have the marketing muscle that small businesses typically lack.

Finding appropriate distribution channels is a key task in marketing. Distribution channel strategy involves selecting the right channels of distribution, and forms a major component of your suite of marketing strategies. A clear idea of available distribution channels can help small businesspersons go about this task more effectively.

Types of Distribution Channels

There are a number of ways you can sell and distribute what you offer.

• Direct Selling involves dealing directly with the final consumer. Direct selling can be done in different ways:
  • Personal Selling as when a house painter goes around houses that looks like they need a coat of paint and trying to sell his services
  • Direct Mail to a number of prospective customers explaining the offer and seeking orders
  • Website that describes the offer and provides facilities for placing orders and making payments
  • Sales Team of salespersons who meet the final consumers and gets them to buy the product
• Selling through Retailers can also involve all the above approaches, with the difference being that contacts are made not with the final consumer but a retailer. The retailers stock the product, get a margin on each sale and might also get training and incentives
• Value Added Resellers might organize a complete and customized solution to their customers and might use your product as part of this solution
• Wholesalers and Distributors usually buy in  bulk and stock products from different producers and sell a full range of products to retailers or sell through other intermediaries
• Consultants who have established relationships with your target customers might agree to sell or recommend your product to their clients
• Commission Agents get orders without stocking your product and get a commission against the orders they bring in

Observing the distribution practices of your competitors will give you ideas for your own distribution channel strategy.

Distribution Channel Management

Distribution channels, both direct and indirect, need to be managed effectively to achieve desired sales volumes and cash flows. Management typically involves developing a complete marketing plan that spells out the marketing strategy, and setting quantitative targets for each channel and distributor.

• Select distributors who have demonstrated both competence and a habit of fair dealings with their principals
• Provide them marketing support in the form of publicity materials and campaigns where necessary
• Monitor their performance on a continuing basis

You cannot just select a few distributors and hope they will do a good job. In particular, distributors will typically buy from you on credit and you will have to ensure that they pay you in a timely manner.

Developing an effective distribution channel strategy and managing the channels you select are thus key marketing tasks.