Functions and Types of Channels of Distribution

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Functions and Types of Channels of Distribution

By | Jan. 2011
Page 1 of 3
Functions and types of channels of distribution
* Functions; reconcile the needs of producers and consumers, improving efficiency, improving accessibility and providing specialist services * Consumer Channels; producer direct to consumer, producer to retailer to consumer, producer to wholesaler to retailer to consumer, producer to agent to distributor to wholesaler to retailer to consumer * Industrial Channels; producer to industrial customers, producer to agent to industrial customer, producer to distributor to industrial customer, producer to agent to distributor to industrial customer * Service Channels; service provider to consumer/ industrial customer, service provider to agent to consumer or industrial customer Determine channel strategy

* Making decisions concerning the selection of the most effective distribution channel, most appropriate level of distribution intensity and the correct degree of channel integration 3 components of channel strategy; channel selection, intensity and integration * Channel selection is influenced by;

Market factors; buyer behaviour, ability to meet buyer needs, the willingness of channel intermediaries to market a product, the profit margins required by distributors and agents compared with the costs of direct distribution and the location and geographic concentration of customers Producer factors; lack of resources, the width and depth of the product mix offered by a producer, and the desired level of control of channel operations Product factors; complexity, perishability, extent of bulkiness and difficulty of handling Competitive factors; need to choose innovative channels because traditional channels are controlled by the competition or because a competitive advantage is likely to result * Channel intensity

Intensive distribution; achieve saturated coverage of the market by using all available outlets, selective distribution, where a limited number of outlets in a geographical area are used...