A distribution channel is the conduit that each company chooses to bring its products to the consumer in the most complete, efficient and economical way possible.
What is distribution?
It is the marketing variable that allows the production system to be in contact with the consumption system in an appropriate way; In other words, the mission of distribution is to make the product available to consumers in the appropriate quantity, place and time, and with the necessary services. The fulfillment of this objective justifies the existence of an intermediation system between the producing company (production) and the consumer (consumption), which will be called the commercial distribution system. (Parreño and Ruiz, p.149)
Distribution channel definitions
Channel of distribution is the system of relationships established to guide the movement of a product (Longenecker, Moore and Palich, p.388)
It is the route through which products circulate from their creation at origin to their consumption or use at the final destination. It is formed by the set of people or organizations that facilitate the circulation of the product until it reaches the consumer's hands. (Escribano, p.160)
The distribution channel is made up of the trajectory that a good or service must follow from its point of origin or production to its consumption, and, in addition, by the set of people and / or entities that allow the performance of the tasks corresponding to along that path. (Miquel and Parra, p.57)
The distribution channel is called the path followed in the process of marketing a product from the manufacturer to the industrial user or end consumer. Stern and El-Ansary (1992) define it as "the set of interdependent functions and organizations, involved in the process of making a good or service available to its users or consumers." In other words, the distribution channel is the mechanism by which distribution, as an economic function, takes shape and is adapted to the needs and characteristics of each economic sector. (Sainz de Vicuña, p.34)
The way the manufacturer uses to bring its products to the consumer is the distribution channel. We could define it as the path that products travel to reach the end user. This makes the marketing exchange process easier. (López-Pinto, p.219)
They called distribution channels lines through which the distribution function is performed, and is known as intermediaries to the basic elements of the channel. Distribution channels are like the arteries through which products circulate, from the manufacturer or manufactured industry to the final consumer. These routes are made up of companies or entities independent of the manufacturers that market, sell or help sell the products manufactured or supplied by others, helping the producing company to have due access to the markets. (Rivera and de Garcillán, p.328)
Classification of distribution channels
They can be classified according to length, trading technology and their form of organization (Miquel y Parra, p.58-76)
According to the length of the distribution channel
- Direct channel: consists of only two entities, manufacturer and final consumer. Often used in the service sector, banking for example. Short channel: consists of three levels, manufacturers, retailer and final consumer. Often used when it comes to the sector where the offer is concentrated both at the manufacturer and the retailer level, when the retailer is a large company and the number of manufacturers is not very high. Large surfaces for example. Long Channel - Consists of four or more tiers, manufacturer, wholesaler, retailer, and consumers. They tend to exist in sectors where supply and demand are highly fragmented.
According to the trading technology
- Traditional channels: those that have not incorporated advanced technologies in carrying out exchange operations. Automated channels: they are those that use technology as a basic means in exchange relations, such as ATMs. Audiovisual channels: they are those that combine different media, television as a disseminator-informant medium, the telephone as a means of contact with the buyer and a transport company to carry out the physical transfer of the products. A current paradigm is the telemarketing. Electronic channels: they are those in which the telephone and computing are combined, basically through the Internet.
According to its form of organization
- Independent channels: are those in which there are no organized relationships between their components. Managed Channels - Features two original features.
- One or more member institutions of the channel have, thanks to their size or their particular competencies, a power that allows them to influence the decisions of other members of the channel.These institutions take advantage of this power to develop their programs, ensuring the coordination of the activities of the different members of the channel. They can use either positive incitement, rewarding channel members who follow their instructions, or negative incitement, penalizing those who do not apply them.
The following video provides a clear explanation of what distribution channels are and their relevance to organizations.
Bibliography
- Longenecker, Justin C.; Moore, Carlos and Palich, Leslie E. Small Business Administration, Cengage Learning Editores, 2009 López-Pinto, Bernardo, et al. The pillars of marketing, Polytechnic University of Catalonia, 2010 Miquel Peris, Salvador y Parra, Francisca. Commercial distribution, ESIC Editorial, 2008 Parreño Selva, Josefa and Ruiz Conde, Enar. Marketing Management: commercial variables, Editorial Club Universitario, 2013. Rivera Camino, Jaime and de Garcillán López Rúa, Mencía. Marketing direction. Fundamentals and applications, ESIC Editorial, 2012Sainz de Vicuña Ancín, José María. Commercial distribution: strategic options, ESIC Editorial, 2001.
