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What is a distribution channel? what are Conventional Distributio...

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What is a distribution channel? what are Conventional Distribution Channel and Vertical Marketing System? Compare them.

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  • September 3, 2004
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Channels of Distribution

In the uncertain fluctuating market of today, it is essential for a company to hold on and face those uncertainties in order to survive. Consumers can be an aid for a company's survival, thereby it is essential for consumers to get the goods of a company whenever and however they need them. Here is where distribution channels come in and give hand. "Channels of distribution are the different paths that goods passed through in moving from the producer to the consumer", (Meyer et al, 1988). With the help of distribution channels, companies are able to overcome the time, place and possession gaps that separate goods and services from the consumers. As said by Aaker (1984), access to an effective and efficient marketing channel is often a key success factor. However, in this competitive era, an understanding of the alternative distribution channels and the trends in their relative importance can be of strategic importance for any company. For example, the growth and importance can be of a self service retail gasoline stations and the comparison growth in the importance of convenience stores such as the 7/11 chain in gasoline retailing has strategic significance to petroleum companies and distributors as well as to firms in food retailing (example adapted from Aaker, 1984). Additionally, because of competition, gaining distribution in some industries can be extremely difficult and costly. Nowadays, even large, established firms have trouble obtaining space on the supermarkets shelves for products with substantial marketing budgets.

As said by Kotler and Armstrong (2001), members of the marketing or distribution perform several functions such as providing information for the company, promotes their goods and services, have contacts with buyers, matching buyers needs, as well as negotiate prices so that goods can be transferred. Some other functions include physical distribution, financing and risk taking.

There are two types of...