Types of Distribution Channels – Explained
today we are going to talk about distribution channel so what is a distribution channel basically let's take some product which is manufactured and reached to the consumer but this transaction is not direct there is a path that is traveled by the product and all those divisions which fall in between this path are called channels there might be some companies who offer services instead of products these services also have to pass through channels before reaching their end consumers as we know marketing constitutes four ps that is product place price and promotion and thus channels fall under p for place here we have to decide from which location our product can be sold and how it can be sold now what are the uses of channels firstly it has to see logistics which defines how to carry products from one place to another second comes finance which defines where and how the money is being spent the third one is after sales services which are also a part of channels because whenever our product needs to be repaired we never visit companies directly but we approach service stations there are two types of channels direct and indirect direct channels are those that allow a manufacturer or service provider to directly deal with its end consumers for example an apple store in america sells its product directly to consumers the customer care assistants are employees of apple therefore they can know what is the feedback of their consumers what they think about apple products at what price certain products are being sold which location is selling the most products etc indirect channels are those where you sell your products or services to agents distributors brokers and retailers so that they can distribute products for you through this channel intermediaries become aware of consumers needs the feedback provided by intermediaries must be considered by you you cannot rely on their feedback because they might or might not be telling the truth this risk happens because they are not just focusing on your product but selling other companies products as well here lies the drawback of indirect channels where intermediaries might fail to understand your consumer's base whereas direct channels know what is the exact need of consumers and how to cater those needs manufacturers focus on delivering specific needs to consumers rather than just earning profit for the company now let's talk about benefits benefits of direct channels one the biggest advantage of direct channels is that you can understand your consumer very well too quality control is in your hand for industries such as food and nutrition when products reach the market the boxes get opened and are adulterated before reaching the final customer and such industries direct channels become imperative the drawback of this channel is that it is not competent to open stores at the desired time and locations due to its limited investment as this can abruptly increase the company's fixed cost here comes the role of indirect channels these channels are molded from the need of reaching a maximum number of consumers by getting presents at possible locations the company thinks it is easy to pay some margin to intermediaries and instead get marketed even in unreachable locations the benefits of indirect channels are one it covers larger areas two a minimal amount can be invested to gain profit three target untapped markets also the intermediaries from where they are selling products or services have the behavioral knowledge of customers of that location which can help your company to customize your products or services accordingly now you must be thinking about through which channel you must sell your product or service for an answer to this question you have to follow a simple exercise within which you'll have to make a matrix in this matrix primarily you must test whether the chosen channel is suitable for your consumers or not furthermore you must check product positioning here you have to see by choosing a certain channel if your product is improving or degrading its position for example peppermint and chocolates are sold on airports or giant stores for some targeted audiences due to its premium pricing if the same chocolate is sold at small retail outlets then positioning of that chocolate would degrade next comes organization where you have to check with your capability of managing all those intermediaries who are selling your product or service last and most important thing is finance you have to check whether after investing a certain amount you are able to make a desirable profit or not after making this matrix compare all channels with above discussed parameters you will consequently get the answer to the question it is not necessary that you must select only one channel it may be the case that initially you have decided to sell through an online channel and after a few years when your company has grown you decide to sell through a distributor channel i hope this video helps you out if you have any questions comment down below your questions help me deliver better content for you so thank you guys so much for watching subscribe to this channel it will help me to grow and give this video a thumbs up if you liked it and i see you guys in the next video
