Importance of Distribution Channels

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 / 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.

e.g. Dell, FedEx, Amazon.com, Flipkart.com etc.

Dell is the best example of revolution in Distribution channel. Dell is selling its products directly to the consumer rather than through retailer. 

Difficult to Replace

Companies can change their products, advertising and Pricing easily but not their distribution channels. Its not an easy task to change distribution cannel, franchisees, dealers and retailers.

Value Addition

Distribution Channel Members can provide greater efficiency in making 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 Transactions

Marketing intermediaries or channel members helps to reduce the number of channel transactions.

eg. 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 optons, purchase using payment plans

Other

Financing, Physical Distribution and Risk Taking.

Reduces Distribution cost and time

The above points reflects the importance of distribution channel.