1.1 DEFINITIONS AND CONCEPT OF CHANNEL
DISTRIBUTION:
It is the design of the necessary arrangements to transfer ownership of a product and transport it from where it is made to where it is finally consumed.
Bibliography: MKT Foundations, William J. Stanton. 1st Edition
It is a system that physically moves products from where they are produced to the place where they can be taken and used.
Bibliography: Basic strategies of MKT, Robert W. Frye 1st Edition
CHANNEL DEFINITION:
Conduit through which products move from their point of production to consumers.
Bibliography: MKT Glossary, Virgilio Torres M. Mc. Graw Hill
They are groups of individuals and organizations that direct the flow of products to consumers.
Bibliography: Marketing, William M. Pride
A series of interdependent organizations involved in the process of getting the product to the consumer or end user.
BASIC ELEMENTS IN THE DEFINITION OF A DISTRIBUTION CHANNEL:
Links; Media; Trajectory; Placement; Displacement; Intermediaries; Final consumer; Product / Service.
1.2 CHANNEL CLASSIFICATION
Consumer goods distribution channel. It is to get perishable products through various distribution channels into the hands of consumers easily and quickly. Example: Farmers can get their products through a supply center or through sales agents.
Distribution channel for industrial goods. It is when you have various channels to reach organizations that incorporate products into their manufacturing process or operations. Example: Companies that manufacture parts for the production of a car, provide them to assembly companies to carry out their production.
Service distribution channel. The nature of the services gives rise to special needs in their distribution. And they can be given in two ways:
• One is that the service is applied to the plaintiff at the time it occurs. Example: A person requesting a massage service; This is applied at the same time that it occurs.
• Another way may be for the complainant to receive the service until he wants to use it. Example: When a person makes a hotel reservation, it could be said that the service is already purchased and produced. But it will be used until the plaintiff decides.
"The distribution channel is made up of a group of related intermediaries."
Companies need the support of a distribution channel that facilitates the arrival of products faster and as close as possible to the hands of the applicants.
1.3 LEVELS OF INTERMEDIARIES
Each product requires special handling by the distribution channel so that it reaches the consumer in good condition. Example: Fish needs to reach the point of sale quickly, therefore it is better to use a quick distribution channel so that the product does not lose its color, freshness and flavor.
The chosen channel affects the other elements of the MKT mix.
Each company will have to identify alternatives to reach its target markets, ranging from direct sales to the use of channels with one, two, three or more levels of intermediaries.
Levels of intermediaries are understood as the number of intermediaries that will intervene in the transportation of products to the consumer.
Producer - Consumer. It is the shortest level, the items are sold directly from the manufacturer to the consumer.
Producer - Retailer - Consumer. At this level an intermediary (retailer) buys the products from the manufacturer to later sell them to the final consumer.
Producer - Wholesaler - Retailer - Consumer. This channel is the most feasible and traditional, the wholesaler buys the products from the manufacturer, later the wholesaler can sell them either wholesale or retail, in case it is wholesale, retailers buy the products in those stores to finally sell them to the consumer.
Producer - Agent - Wholesaler - Retailer - Consumer. Manufacturers turn to agents, who in turn use wholesalers who sell to large chain stores or small stores.
INDUSTRIAL GOODS PRODUCERS:
Producer - User. Represents direct distribution, highest income entry. In this distribution time, for example, aircraft or machinery manufacturers prefer direct sales.
Producer - Industrial Distributor - User. At this level, producers of small parts or construction materials sell their products to a distributor so that they reach users faster.
Producer - Agent - User. This level is used in factories that do not have a sales department and they have to find an agent to help place their product on the market, distribute it and make the contacts so that it is exposed and reaches the consumer.
PRODUCERS OF SERVICES:
Producer - Consumer. Due to their nature that the services are not tangible, they often require personal contact with the client that requires advice on the service we offer (lawyers, doctors, teachers, transportation, aesthetics).
Producer - Agent - Consumer. Although in most cases of services the contact is direct, it can have its exceptions, a sales agent in an example on this level since they are responsible for carrying out the transaction between the service manufacturer and consumers.
1.4 TYPES OF FLOWS
Channel flow is the movement of products and services through the distribution network between 2 or more channel participants.
Physical flow. It is the most visible of all, since it is the actual transportation of the product from one place to another.
Property flow. Some channel participants do not own the product. A person in order to distribute the product does not necessarily have to be the manufacturer, but someone who is tasked with distributing the product like the agents who transfer the products to a wholesaler or retailer.
Financial flow. It is necessary to carry out the movements of money or credit so that a product reaches a certain place. This flow goes from the user to the manufacturer.
Information flow. It is the most important, since if there is no communication between all the elements of the channel, there will not be good coordination, but there will be poor distribution. If there is a bad transfer of information, the distribution system can be blocked.
Risk flow. It is the least convenient to exist since it increases the chances of uncertainty. It is a factor that cannot be defined but must be predicted.
Promotion flow. This is where information is collected about the benefits that a product offers the consumer. This is influenced by the factors that will help the product to be known and to be accepted by the consumer.
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