Distribution is perhaps one of the most important four components of a marketing mix. Distribution is the method of creating a product or service accessible to the public or company user who wants it. This could be done directly by either the manufacturer or distributor or by using multiple intermediaries or distributors. Distribution can have a direct effect on sales, productivity and brand name recognition.
There are two main types of distribution channels direct and indirect. Direct channels come from suppliers directly to the customer and are usually sold in bulk. Indirect channels come from a number of providers to the distributor and are not sold in large numbers, but tend to be more cost effective and have a broader range of products or services to offer. Distribution channels can either be operated internally by individual manufacturers or can be contracted out to third parties.
Some distribution channels include direct mail, telemarketing, retail selling, door-to-door leaflet drop, newspaper advertising, radio advertising, television advertising, catalogs, trade shows and seasonal sale programs. In most instances, these distribution channels are operated on a for-profit basis; however they can also be operated for public benefit. The major benefits of using for-profit distribution channels include: direct contact with potential customers, lower over-head than for-profit operations, lower advertising costs, less waste or destruction of customer goods and a higher perceived value to customers than for-profit operations.
Distribution channels can also be broken down into two different types depending on how the products or services are supplied direct and indirect. Direct distribution means that the manufacturer delivers the goods directly to the end user, usually taking packing and delivery responsibilities himself. Indirect distribution channels involve middlemen such as wholesalers or distribution houses who purchase products from the manufacturer and deliver them to the end users. Distributors can either specialize in a particular type of distribution (such as in mail order businesses) or operate in any number of different types of distribution. For example, distributors who sell directly to retail customers can operate either on a cash-only basis or a credit-based basis.
Distribution channels can also be broken down into various forms depending on the method of distribution supported. For example, there are three different types of direct sales channels: franchised distribution, value-added channels and exclusive distribution. Franchised distribution involves manufacturer-established channels which offer nationwide reach at relatively low unit costs. Value-added channels involve manufacturer-authorized distribution networks. Exclusive distribution involves manufacturer-sanctioned channels which only offer a product to established customers in a particular geography.
Distribution channels have an even greater impact on the success of a marketing campaign, especially in terms of its appeal to a particular market segment. It is often said that a business needs to target its audience before and after a marketing campaign has been launched. Distribution channels are therefore a very important part of any advertising campaign, as they allow retailers to identify with their customer base and create brand loyalty. In order for a company to effectively market through these channels, it is important for marketers to identify the type of consumer they are trying to attract. They should study the preferences of their target customers, the factors influencing their purchasing decisions and study their buying behavior to know what best appeals to them.