Channels Of Distribution SS2 Marketing Lesson Note

DISTRIBUTION CHANNEL

The Channels of distribution are mainly determined by where the purchasers want to buy the product. Channel is seen as the agencies through which the seller who may or may not be the manufacturer, markets a product to the ultimate consumer.

Distribution channel or channel of distribution is therefore defined as the route, avenue, or pathway through which goods and services flow or move from producer to consumer. This can be direct (no intermediaries) or indirect (contains one or more intermediaries)

Channel members are:

1. Producer
2. Wholesaler
3. Retailer

DISTRIBUTION CHANNEL FOR CONSUMER AND INDUSTRIAL GOODS

Producer➡consumer 

Producer ➡ wholesaler ➡ retailer ➡ consumer

Produce ➡ retailer ➡ consumer

Producer ➡ business customer

Producer ➡ business industrial distributor ➡ business consumer

Producer ➡ Manufacturer’s representative ➡ Business distributor ➡ Business customer or industrial user

Producer ➡ agent ➡ retailer ➡ consumer.

FUNCTIONS OF DISTRIBUTION CHANNEL.

1. Promoting products. It helps to spread information about a firm’s product.
2. Assist in merchandising.
3. Physical distribution
4. Financing: the financial burden is often shared by channel members through the financing of the flow of goods.
5. Facilitate information gathering.
6. Promote negotiation.
7. Channel members are charged with the responsibility of sorting, allocating and sorting products and services.
8. Provide salesmanship 
9. Encourages risk-taking.
10. Encourages contact.

REQUIREMENTS FOR A GOOD CHANNEL OF DISTRIBUTION.

1. Flexibility of channel chosen.
2. There must be a high degree of interdependence among all parties in the channel for any given product.
3. The channel must be cost-effective, that is it should be worthy of the expected returns or objective of the company.
4. Channel design should begin with the final consumer and backwards to the producer.
5. The channel should provide the company access to a predetermined share of the market.