Today, the distribution system and distribution channels are an integral part of the development strategy of any company, allow it to expand its sales markets, increase its customer base, and increase the competitiveness of its products. In this regard, when building the company's strategy, it is necessary to consider this system.
The product distribution system in marketing is a set of processes for the movement of goods, including such elements as: placing orders, warehousing, control over the quantity of goods in stock, transportation. At the same time, the company can use both internal services and engage third-party organizations to build a product distribution system.
Product distribution channels are an important part of a company's marketing policy. The success of its products on the market, and, of course, the revenues of the company itself, depend on which channels the company chooses for itself.
So, let's analyze in detail the essence and types of distribution channels.
Channels of distribution of goods are the ways in which the physical movement of goods from the manufacturer to the final consumer takes place. The final consumer of the goods means the person using the goods to satisfy their own needs. On the other hand, distribution channels are also ways, methods of delivering goods to consumers. Also, under this term we can mean a set of individuals and legal entities that are intermediaries in goods distribution.
Depending on their complexity and structure, distribution channels can be divided into 3 main types: direct, indirect and mixed.
In the case of using direct channels of distribution of goods, the goods directly come from the manufacturer to the final consumer. In such a scheme, no intermediaries are involved. That is, the chain of motion of the goods is as simple as possible and looks like this: the manufacturer is the final consumer. When using the direct channel of goods distribution, all functions of the movement of goods and their sale are undertaken by the manufacturer himself.
Direct distribution channels are usually used in the sale of goods such as sophisticated technological equipment, or in the manufacture of products or the provision of services for a specific order.
The next type of distribution channels is more common - these are indirect channels. In this case, the manufacturer relieves some of the functions of delivering goods to end consumers. The pattern of movement of goods is complicated. A new element is added to it - the intermediary (s), that is, the chain is as follows: producer - intermediary (s) - the final consumer. The intermediaries are dealers, distributors, agents, retail intermediaries. The manufacturer, of course, loses direct contact with the consumer of his goods, but the use of such a channel gives an obvious advantage - the expansion of the sales market and greater sales efficiency. Thanks to their connections and the scope of their activities, wholesale and retail intermediaries ensure the wide availability of goods and bring them to target markets. The manufacturer, although it loses part of its profit in favor of intermediaries, nevertheless remains a winner, as it saves its own resources and time. The market for his goods is expanding to such a scale that would not be available to the manufacturer if he acted on the market alone.
The last type of distribution channels - mixed - combines the elements of the first two channels.
An important condition for the efficiency of the used channels of distribution is the minimum cost to the seller and the timely delivery of goods to the market. As a result, you can achieve good performance.