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Distribution Channels
Introduction
Distribution is all about getting your product/service to the right people at the right time with special consideration for profit and effectiveness. Successful marketing does not end when a business has developed a product/service and has found its appropriate target audience with a view to selling it at the 'right price'.
The next issue that needs to be faced is how they are going to distribute and sell this product/service to these people- the consumers.
When a product/service is purchased by a consumer, it may have been bought directly from the business, or it may have been through a number of intermediaries (wholesaler, retailer, etc): these are known as distribution channels.
Small businesses need to acknowledge the different types of distribution channels to utilize sales potential. After reading the article, you may learn that you could increase sales or profit by using a different distribution channel to the one that you currently use.
Distribution channels are influenced largely by the type and size of the business and so some of the channels explained may not be feasible for your particular business.
Consequently, you may take note that these channels could be adopted in the future to accommodate for any changes and to help your business grow.
Intermediaries/Selling Methods
The following explains the different types of intermediaries that are used in the distribution channels.
Very common for small businesses, products/services can be sold directly to the consumer on-site i.e. directly from your shop, office or home by consumers physically coming into the premises to make a purchase. This can be related with, for example, a village baker or a hand made furniture business where the products are made and sold at the same place. This is illustrated by channel number (1) on the diagram.
This type of distribution works only when your target consumers are within the local region and are not based on a wide geographical area.
Also known as a mail shot, this type of marketing can produce sales on a local, national, or even global, scale. Your business would send out, say, flyers, leaflets, brochures or catalogues (often targeted to particular consumers) selling your product/service. Any interested receivers of the mail would make an order through the contact details/order form that would be included.
Although very effective, there is some cost involved but is considerably cheaper compared to other sources of marketing such as advertising. Poorly targeted mail shots can also damage the image of your business, so be sure that you obtain/build appropriate mailing lists before you adopt the idea.
Direct mail can be complied and sent directly from your business, or you can use a professional service to distribute your information: at a much higher expense.
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