What is the Definition of Distribution Channel?

Definition Knowing

A distribution channel refers to the points of sale or distribution to other locations of the products or services marketed.

The distribution channels are important because they fulfill the function of product circulation. In this way, without the appropriate distribution channels, the good that is intended to be sold will not reach the consumer efficiently.

That is why it is essential in any strategic plan, whether business or marketing, to define distribution channels according to the characteristics of the product or service.

A distribution channel is one of the paths to the consumer of the commercial distribution system. It is also referred to as the intermediation system between production and consumption.

A distribution channel is known, in turn, as a marketing, product distribution and sales channel.

Characteristics of a distribution channel

A distribution channel must consider the characteristics of the product or service that is intended to be sold. The most important feature of a distribution channel is its ability to reach the final consumer in the most efficient way by maximizing sales.

Distribution channels are an important part of the final phase of business plans or marketing plans, as they are the means by which the results will finally be measured.

Types of distribution channels

The main forms of classification of distribution channels are divided into the extension of the chain or length, the technology used for sales dynamics and the organization of the system.

Extension or length

The number of links between the manufacturer and the final consumer determines what type of distribution channel corresponds to and its specific characteristics. The longer the chain, the resources needed are greater but in return, the profits may be greater.

  • Direct distribution channel: from the manufacturer to the consumer, for example, the small food producers that sell in the markets.
  • Short distribution channel: from the manufacturer, the retailer, the consumer, for example, the product chains that work with long distance logistics.
  • Long distribution channel: from the manufacturer, wholesaler, retailer, consumer, for example, large supermarkets and retail or retaildistribution stores .
  • Dual distribution channel: manufacturer to the agent exclusive to the wholesaler, to the retailer to the consumer, for example, products with authorized agents such as Apple.

Sales Technology

The technology used to purchase the products defines different types of distribution channels.

  • Traditional distribution channels: physical stores
  • Automated distribution channels: product vending machinesor vending machines
  • Audiovisual distribution channels: home delivery of food
  • Electronic distribution channels: Internet shopping

Organization

The way in which distribution channels are organized can alter the dynamics of the distribution chain.

  • Independent distribution channels: decisions are made by the distribution unit without relying on hierarchies.
  • Managed distribution channels: decisions are made by the distribution chain administrator.
  • Integrated distribution channels: they work integrated into a strategic plan that can be horizontal integration, many channels in a small area or vertical integration, many branches in more remote and hierarchical areas.
  • Associated distribution channels: they are all part of a generally international network where there are large associates and branches where they manage other distribution channels under their charge.

Marketing Distribution Channel

A distribution channel in marketing is a way of circulation of the product from its manufacturer to its consumer. A good marketing plan must define which distribution channels will reach the final consumer more directly, immediately and efficiently.

In this sense, distribution channels are an integral part of any business plan and should study the nature of the product to be sold, the profile of the consumer and the logistics involved in a certain distribution chain and its viability.

In marketing, distribution channels usually cover traditional types of distribution, but in the case of services, technological distribution channels are the most used.