Is named distribution channels to the ways that companies use to get a product from its point of origin to the final consumer.
According to authors such as Kotler, the distribution channels also known as marketing channelsare the set of independent organizations that are involved in the process of making a product or service available to the final consumer, or to an industrial user.
The importance of distribution channels It lies mainly in 3 aspects:
- Shortens the distance between the point of origin of products and consumers
- Promotes economies of scale, in which all members of the distribution channel can grow
- They directly influence the pricing of products
How are distribution channels classified?
There are 3 criteria to classify distribution channels.
Length
This parameter counts the number of intermediaries that exist between the product and the final consumer. Under such criteria, there are 3 types of channels:
- Straight. It does not have intermediaries, so the negotiation is done directly between the producer and the consumer. It is frequent in the service sector, that being intangible goods, production and consumption are carried out at the same time. The number of manufacturers and users is small because these are sporadic purchases in which it is necessary to provide information to the consumer before and after their purchase.
- Short. It is made up of 3 levels: manufacturer, retailer and consumer. In this type of channel, the offer is centralized both in the manufacturer and in the retailer and both are in charge of covering the market need.
- Length. It consists of more than 3 levels: manufacturer, wholesaler, retailer and the final consumer. Sometimes the dealer, broker or representative is also counted. Although on the one hand it is thought that the fewer intermediaries there are, the lower the cost of the products, on the other hand it is known that intermediaries are more prepared to communicate with the market than manufacturers.
Trading Technology
According to the use of technology and, consequently, the implementation of new sales methods and techniques, distribution channels are classified as:
- traditional. They do not use technology for sharing activities.
- automated. The exchange relationship with the customer is based on technology. For example, banking services in general, the automation of the parking service through payment card vending machines, among others.
- Audiovisual and electronic. They combine different media to disseminate and distribute their products. They use various advertising media to inform about their product and contact the buyer and a transportation system to take their product to the consumer.
form of organization
The organization and coordination between the elements of a channel increase the profitability of a business and reduce the cost of its operations. So, according to this criterion, the channels are classified as:
- independent. It does not have a formalized structure among the members that compose it, since each member has its own commercial policy, which can cause conflicts between intermediaries and businessmen.
- Administered. In this, the activities between the various agents of the channel are coordinated. It is characterized because: 1) One or more members of the channel can influence the decisions of others, due to their size or their particular skills. 2) Channel leaders develop programs that ensure the coordination of all members, through rewards or penalties.
- Integrated. The members of the channel are regrouped, between those of the same level (horizontal regrouping) or between different levels (vertical regrouping).
- consumer cooperatives. They are self-managed and are considered trading companies, in which the initial capital comes from the consumers that make it up and their main objective is to supply goods or services for the consumption or use of their partners.
- multiple branches. Its participants make retail sales with their own store structure.
With information from the academic article Distribution channels by Ana Lucila Acosta, published by the Andean Area University Foundation.
Editorial Team The editorial team of EMPRENDEDOR.com, which for more than 27 years has worked to promote entrepreneurship.