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I am addressing the strategic importance of distribution channels in marketing by exploring how these channels help businesses meet their marketing and sales objectives. A marketing channel is defined as the means by which the physical flow of goods and services are distributed to consumers and users. A marketing channel is critical to large and small businesses because they use these distribution channels to meet their marketing and business objectives by providing and delivering products and/or services that generate profit and increase their customer base.
While some businesses can handle all factors and aspects of its own distribution, others require some level of distribution partnership. Choosing the right distribution channel to move products or services to the end user is a long-term strategic decision and varies according to the product, service and market. When choosing a distribution strategy, a marketer must determine what value a channel member adds to the firm’s products and/or service.
A well-chosen channel is necessary because it constitutes a significant competitive advantage and is designed to save on cost, improve and increase efficiency, provide routinization of transactions, provide a larger customer base, and allows businesses to focus on other aspects of the organization. It is important that the channel also provide businesses with strategic promotion, brand strategy, and provide convenience for customers while bridging the gap between the assortment of goods and services generated by producers and those in demand from consumers.
Poorly chosen channels can have long-term consequences and can ultimately lead to a superior product or services failure in the market. Having access to good distribution is fundamental to good marketing. Within the distribution channel is the ability to use intermediaries to strategically market a product or service. Business operators need to be able to deliver their products and/or services to the right consumers, at the right time, and at the lowest cost.
The intermediaries who assist businesses in performing this task consist of distributors, agents, retailers, franchisees, wholesalers and/or a sales force to market and sell their products and/or services. Some critical details to consider when choosing an intermediary include available resources of the distributor, market coverage, sales forecast, cost, profitability, control, reputation, competition, and contracts. When dealing with intermediaries, deciding etween blanket coverage or selective distribution, vertical systems or multi-channel networks, strategic alliances or solo sales forces, are all factors that require strong strategic thinking on the part of the organization. In addition, decisions about levels of stock, minimum order quantities, delivery methods, delivery frequency, customer service, and warehouse locations have major implications on customer retention and profit.
In conclusion, distribution channeling is all about getting your product/service to the appropriate target, on time, with special consideration for profit and effectiveness. The overall goal in business is to obtain profit. That goal is obtained by strategically planning a successful way to distribute products and services through effective marketing and placement. It is important for businesses to find a partner whose distribution practices coincide well with their business needs.
Successful marketing does not end when a business has developed a product/service and has found its appropriate target audience. Channels change throughout a product’s life cycle. Changing lifestyles, aspirations and expectations along with the overwhelming available marketing platforms, offer new opportunities of using distribution to create a competitive edge. Businesses have to continue to strategically utilize various creative methods of distribution to meet the needs of their end users. This means understanding the various marketing channels through which products and/or services can be moved.