The distribution of a business product is an important marketing activity that links to the
Place P of the extended marketing mix. How the product gets from the producer to the end
consumer is a critical factor that can impact how many sales a business makes and how
profitable those sales are. Therefore, products must be available for consumers to purchase
in locations that are convenient for them. Like Macy's clothing store, products are available
at the right time, place, and quantities.
Businesses have several options when deciding where customers can buy their products
from; these are known as distribution channels and include
direct selling, retailing, and wholesale.
Direct selling: There are no middlemen, so the business does not have to share a
percentage of its revenue; the sale is only between the manufacturer and the customer.
The good thing about direct selling is that there are no third-party dealings, and the business
has more control and flexibility over distributing its products and services through the
internet, advertisement through direct mail, or door-to-door sales.
Retailing Distribution Channels
is when a manufacturer produces and sells products to retailers in bulk, allowing consumers
to purchase products from a more extensive range of locations. A mall would have a variety
of stores within them. Nike stores, Lids, Macy's, and Dillard, for example.
Wholesaling Distribution Channels
wholesalers who buy large quantities of products from manufacturers aiming to sell to
retailers, i.e., Alibaba.com. Most wholesalers are overseas, and it takes a long time for a
manufacturer to receive their products. When considering geographical location and how it
affects distribution channels, I think of near-shore and off -shore distributors. Most
shoppers don't care where their product comes from as long as they receive it on time, but
for the ones that do location matters. For example, online shoppers vs. brick-and-mortar
shoppers, an online shopper doesn't mind their items shipping from China, but brick-and-
mortar shoppers would prefer that their items, if the need to order them be near-shore.
Off-shore distribution channels have multiple layers of logistics, shipping from the
warehouse to the docks for waterway transportation, to trains for airway transport, and once
they arrive in the US they have to be transported by truck, train, or plane to reach the final
destination and still have to be placed in an Amazon, FedEx, or UPS vehicle to be delivered
to your doorstep.
Near-shore distribution can go from the warehouse to truck, train, or plane, but domestic
distribution is different and does not require customs clearance to get in or out of the
country. Most domestic distribution you can have in 5-7 days or less, but not off-shore 14-
21 days at best. Market positioning and product sales are significantly influenced by
geography. Regardless of a company's market share or product success rate, market
research is crucial before releasing new products/services or better or more advanced
features. The selection of a distribution channel is influenced by the size of the market
geographically, the number of possible customers, and the type of competition. When there
are fewer purchasers in industrial markets, a shorter channel of distribution can be used.
These customers typically buy from producers directly. McDonald's splits their market
according to geography, such as different nations, states, regions, and cities. McDonald's
serves hamburgers, focuses on regional markets, and offers specialized menus. Let's
imagine that due to religious restrictions, McDonald's burgers are prepared with chicken in
India rather of beef. Products that cater to the various requirements and desires of residents
of rural and urban areas use rural and urban segmentation to reach prospective clients. For
instance, a detergent business will advertise its inexpensive detergent product in rural areas
where there is little purchasing power. Products with both a high quality and affordable
price point tend to attract more interest from consumers. Geographical location can be
strategic for access to goods and services. It can affect the selection of the distribution
channel since it determines the time taken for the products and services to reach the market.
When the products are durable then the geographical location of the company cannot have
an impact on the choice of distribution. A distribution channel is is a chain of businesses or
intermediaries through which a good or service passes until it reaches the final buyer or the
end of consumer. An example of how geographical location can affect your selection of
distribution channels is when a farmer is near the market, they will take a shorter
distribution channel than when the target market is located in a different geographical area.
Distribution affects the place or path through which consumers can buy and receive the
product. A distribution channel can be an on site store, a virtual store, a retailer, a
wholesaler, an agent, a telemarketer, or a direct email. Depending on the product depends
on the type of consumers you will attract. Companies will decide on channels by looking at
the customer demographics. Age can be a big determination. Research has shown that Gen
Y looks to telephone communication such as social media and real-time messaging such as
text and chat. But baby boomers, most prefer talking on the phone vs automated services
such as chat, email, or social media. They feel that in an emergency where we need a fast
answer, we pick up the phone to speak with an agent to handle purchasing issues or quick
medical decisions. Gen X may be happy using phone and email and may not be
comfortable with real-time messaging. But if they need a quick resolution and are told that
they will be on hold for longer than 15 minutes, but that chat is available, they will most
likely hang up and switch to the chat.
Depending on the type of business you are in, it is possible to build a picture of the sort of
customers you’ll attract. So, the personality of customers might drive a company’s
preferences for customer service channels. A customer that is an extrovert may be happier
with a phone conversation with a customer service agent because of their outgoing
personality. They will enjoy chitchatting and making a point with confidence. But an
introverted personality may prefer a non-verbal/real-time channel such as chat or email with
a customer service agent. This way they would not need to speak with someone, and they
can avoid the need to think on their feet when on the phone with an agent and can avoid
being put on the spot.
