Importance of Distribution channels is growing day by day with increased awareness and trust about eCommerce. Distribution or Marketing channels are an important part of any organization to deliver their products and services to consumer properly.
This is a set of interdependent organizations or parties involved in the process of making a product or service available for consumption or use by consumer or end-users.
Importance of Distribution Channels or Marketing Channels
Attention
Little attention of companies to their distribution channels may damage results (such as profit, brand, no. of customers etc. )
Imaginative distribution systems
Companies can use imaginative distribution systems to take competitive advantage.
Example: Dell, FedEx, Amazon.com, Flipkart.com etc. Dell is the best example of a revolution in the Distribution channel.
Dell is selling its products directly to the consumer rather than through a retailer.
Difficult to Replace
Companies can change their products, advertising and Pricing easily but not their distribution channels.
It’s not an easy task to change distribution cannel, franchisees, dealers and retailers.
Value Addition
Distribution Channel Members can provide greater efficiency in making the availability of goods to the target markets through their Contacts, Specialization, experience and scale of operation.
This can add value to the product or service each level of distribution.
Reduces no. of Channel
TransactionsMarketing intermediaries or channel members helps to reduce the number of channel transactions.
Example: Manufacturer without distributor: Channel Transactions: 5X5=25
Manufacturer with Distributor: Channel Transactions: 5+5=10
Information
Gathering and distributing information (Marketing Research and intelligence information)
Promotion
Communication to the consumer regarding product information and offers through advertising and promotion.
Financial support
Offering financial support eg. Purchase on credit, exchange options, purchase using payment plans
Other
- Financing, Physical Distribution and Risk Taking.
- Reduces Distribution cost and time
The above points reflect the importance of the distribution channel or marketing channels for both businesses as well as customers.