They are, essentially, the fundamental building blocks of good marketing. Marketers have more distribution channels than ever to consider, with their target audiences spread out across various digital platforms.
Each one needs to be accounted for in business models and marketing strategies to reach audiences and drive revenue in the digital age. Where are people going to find your products and services? Where can they purchase them? Where are they going to use them? How are you going to manage inventory? E-commerce, digital distribution and other internet-age developments have made these questions far more complicated.
Businesses might operate brick-and-mortar shops as well as online stores. Digital-only services may be downloaded directly from the provider or distributed through a value-added reseller. Twenty years ago, customers would need to travel to a physical store to buy games or use a mail-order service. The rise of e-commerce markets like Amazon added another major distribution channel to account for.
With faster networks, gamers can cut out the middleman — and physical media entirely — by downloading video games through distribution services like Steam. Brick-and-mortar stores, e-commerce retailers and online shops still remain viable distribution channels, and video game companies need to factor in all of them to reach the widest audience.
Distribution channels are the methods by which companies deliver products and services to customers and end users.
Some businesses sell directly to their customers, while others might use a retailer or wholesaler to serve as an intermediary.
Companies may also use agents or brokers to facilitate the movement of products to distributors that sell those wares to the customer. Why so many choices? Consider a clothing manufacturer: It might have its own brand stores, but those would be expensive to expand to achieve optimal market penetration. In this way, the company can maximize its revenue potential without overextending resources by exclusively maintaining its own storefronts. There are several approaches brands can take to distribute their goods, products and services — especially now that digital channels stand shoulder to shoulder with traditional, physical outlets.
A direct sales business model eliminates any intermediary in the distribution process, leaving the brand to sell products to customers on its own. Arguably the most visible example of a direct sales approach comes courtesy of Apple. In many cases, customers need to go through the brand itself to buy software, devices and other products.
Apple manages its own physical shops and digital stores where it prefers to sell its wares. It does have a presence in third-party brick-and-mortar retail outlets, but the company tries to direct potential and returning customers to its branded stores. A more rigid example of direct sales would be a business that creates products and goods on-site and sells to the customers in the same location.
For instance, bakeries employ a strict, direct sales business model, assuming their goods can only be found in their stores. By cutting intermediaries out of the equation, brands have the financial flexibility to set lower prices to entice customers and gain a competitive advantage.
Businesses that are able to adequately control distribution costs and still reach their target audience can find an optimal level of profitability.
Brands can also tightly control the customer experience when they sell directly. They can build stores — both physical and digital — that directly align with their core values and messages. Going back to the Apple example, every aspect of the in-store experience — from the layout to the lighting to the furniture to the music — is meticulously designed to make customers feel a certain way.
The stores are extensions of the brand. This content has been distributed via CDN Newswire press release distribution service. For press release enquires please mail us at contact cdnnewswire. Is there a problem with this press release? Contact the source provider Comtex at editorial comtex. Will you outlive your savings? Often companies undervalue distribution channels as they think that a good product or service will automatically create its distribution.
While this might happen, it is more of a utopia than reality. A traditional distribution strategy looks at the classic 4 Ps product, promotion, price, and placement. Those are the key ingredients to grow the revenues of a business, quickly and sustainably.
Thus, a distribution strategy starts from:. Without an appropriate strategy of distribution, it is hard to have a successful and sustainable business model. At a higher level, distribution channels can be broken down, in direct channels, and indirect channels.
This primarily depends on how long is a chain between who makes the product and the final consumer. The number of steps it takes will make the distribution channel direct or indirect. Where in a direct distribution strategy a producer can access the consumer, in an indirect distribution strategy , the producer will meet its consumer demands via third-parties wholesalers or retailers.
Thus, a direct approach makes the value chain shorter and at the same time allows more control by the producer on how the final customer experiences the product or service offered. At the same time, a direct to consumer strategy is quite expensive and not always effective enough to allow proper distribution. Therefore, companies often use a mixture of direct and indirect distribution strategies, which determine their marketing mix. Between the direct-to-consumer and entirely indirect distribution strategy where the producer sells to a wholesaler , there are several indirect variations, based on how many steps it takes to reach the final consumer and how long is the value chain.
For instance, in the scenarios in which a producer sells to a wholesaler, the wholesaler sells to retailers, who reach the final consumers.
However, in some other cases, the distribution channels might be shorter. Think of the Costco business model , where the company purchases a selected variety of goods in bulk from producers. Yet instead of reselling that to retailers, Costco itself acts as a retailer, by leveraging on its membership-based business model and selling those items in bulk quantity directly to consumers, who appreciate the convenience of its prices together with the selection of high-quality products.
In other cases yet, the distribution channels strategy might be even shorter. Related : What Is a Business Model? It is easy to confuse and mix up the definition of distribution channels with the supply chain even though the distribution channels and strategies might sometimes cross with the supply chain.
The distribution strategy concerns primarily on bringing the product in front of customers, and especially customers that are willing and ready to buy it. Therefore, in some cases, bringing a product in front of the right people might be a matter for the supply chain. For instance, in the Luxottica business model , vertical integration means the ability to control the full customer experience and to choose also the location of the retail stores.
Thus, this is a case in which supply chain management also becomes a distribution strategy. It is critical to maintaining a clear difference between supply chain and distribution channel strategy. While the supply chain comprises all the planning, manufacturing, and logistics activities that make the product go from the purchase of raw materials, transformation in a final product that might get delivered to the final customer Zara business model leverages on supply chain management as a distribution strategy.
In short, where supply chain management concerns itself with integrating supply and demand, a distribution strategy involves itself primarily about the demand chain. To have a deep understanding of the difference between the supply chain and distribution strategy it is important to consider three main aspects. Contents Referral program Search engine optimization Content and social media marketing Advertising Word of mouth.
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