Distribution channels refer to the various pathways through which a product moves from the manufacturer to the end-user. It is a crucial aspect of product management as it determines how widely and effectively a product can reach its target audience.
Direct Distribution Channel: This is a distribution channel where the manufacturer directly sells the product to the end-user without the involvement of intermediaries. Examples of direct distribution channels include online sales, company-owned retail stores, and door-to-door sales.
Indirect Distribution Channel: This is a distribution channel where intermediaries are involved in the sale of the product. Examples of intermediaries include wholesalers, distributors, and retailers. Indirect distribution channels are further classified into two types:
1. One-level channel: This is a distribution channel where the manufacturer sells the product to a retailer who then sells it to the end-user.
2. Two-level channel: This is a distribution channel where the manufacturer sells the product to a distributor who then sells it to a retailer who finally sells it to the end-user.
Multi-Channel Distribution: This is a distribution strategy where a manufacturer uses multiple distribution channels to reach its target audience. For example, a manufacturer may use both direct and indirect distribution channels to sell its products.
Channel Conflict: This refers to the disagreement or competition between different channels that are used to sell a product. Channel conflict can arise when a manufacturer uses multiple distribution channels, and one channel feels disadvantaged compared to another.
Channel Management: This refers to the process of managing and optimizing the distribution channels used to sell a product. Effective channel management ensures that the product reaches its target audience in the most efficient and cost-effective way possible.