A distribution channel is the path through which goods and services are transported from the producer to consumer and how the payment gets to the producer or seller. Distribution channels can also be known as marketing distribution channels or marketing channels. In marketing, goods and services can be distributed using two main types of channels that include direct and indirect distribution channels.
According to Richardson and Gosnay (2010) direct distribution is achieved when goods or services leaves the producer and goes directly to the customer without the involvement of a middleman. For instance, a barber ...view middle of the document...
Selective distribution encompasses a manufacturer putting into work some degree of a number of means in a geological area to sell products. This channel has an advantage in that the manufacturer can select the most suitable or in other words, best performing outlets and concentrate on the product. Selective distribution works best when the customers have a preference of a particular price or brand and will look out for the outlets that supply the products on their own. For that reason, the manufacturer gain more control and an ultimate market coverage at a lesser cost compared to intensive distribution. Exclusive distribution, on the other hand, focuses on one retailer, distributor or wholesaler in a particular terrestrial area (Ferrel & Hartline, 2008). This type of distribution is commonly used in goods and products that pursue a high prominent copy. Distinctive instances are major domestic appliances, automobiles and designer ware. After gaining limited supply rights, the producer anticipates to have full rheostat over the intermediary’s price, credit inventory, promotion and services policies.
Having that information in mind, it is easier for a particular company to select the best distribution channel to put into consideration. In the first approach of our case study, being the manufacturer, I would make use of indirect distribution channel. Reason being, since currently the company does not have a sales force and do not have a branded name in the market place, it would require well known reseller(s) or a major distributor(s) as a feasible option. When this is done, it will allow the product to enter the market place rapidly and latently at an optimized targeted cost of $250. Secondly, the product is relatively straightforward, in other words, the features are fairly well understood since it is a new product in the market. For that reason, indirect distribution will be a logical choice. In addition, customer segregation would be important. Since resellers are usually selling other vendors products, it would be appropriate to be focused and selective on whom the reseller/partner would be. The reseller(s) will therefore, select customer type and the value proposition since the product is intended to be a very prestigious product that movie stars and model will use.
Using exclusive distribution approach, in addition, would be appropriate. There are a number of reasons behind that choice. First, this approach, as observed earlier targets on a particular geographical area and seeks a high prestigious image therefore, its rights are typically granted by manufacturers. The reason behind this, from the manufacturer’s point of view, is costs and control. Furthermore, the distributor, in this case, is not allowed to sell products made by another manufacturer. Additionally, it is easier for a manufacturer to control the way the product is presented to the consumer, since there are fewer distributors to manage. This could be control of...