Place/Distribution/Transportation

CHANNELS OF DISTRIBUTION

A channel of distribution is the route or path followed by a product as it moves from the producer to the consumer/final user.

TYPES OF DISTRIBUTION CHANNELS USED

They are mainly classified into two main categories i.e.

  • Direct/zero channel.
  • Indirect channel.

 

1) DIRECT MARKETING/ZERO CHANNEL (PRODUCER-CONSUMER)

This is the distribution system where no intermediary is used and the company sells the product directly to the consumer.

 

REASONS FOR GROWTH OF DIRECT/ZERO MARKETING

  • High cost of driving, traffic congestion and packing headaches. Have made people prefer goods to be directly delivered to their homes.
  • Lack of enough/inadequate/insufficient time.
  • The market is now comprised of high market nitches (narrowly defined groups),each with different preferences.
  • Long queues at counters.
  • Electronic communication is growing and products can now be sold through the internet.

 

ADVANTAGES OF DIRECT MARKETING

  • Home shopping is convenient.
  • Saves time
  • Customers can do comparative shopping by browsing the internet.
  • Customers benefit by learning about available products without meeting a sales person.
  • It can be timed to reach customers at the right moment e.g. at home.

MAJOR CHANNELS FOR DIRECT MARKETING

  • Direct mail.
  • Tele marketing-calling through telephone.
  • Kiosk marketing-this is placing machines in busy places such as airports and bus stops where customers can get specific goods e.g. stamps, sweets and soft drinks a good example is the automatic vending machines.
  • Internet.

 

2. INDIRECT CHANNELS.

  • One level channel e.g. producer-retailer-consumer.
  • Two level channel e.g. producer-wholesaler-retailer-consumer.

Producer-agent/broker-retailer-consumer

  • Three level channel e.g. producer-agent/broker-wholesaler-retailer-consumer.

Producer-wholesaler- jobber-retailer-consumer



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