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debora-sumopayrollChannel of distribution refers to those people, institutions or merchants who help in the distribution of goods and services. Philips Kotler defines channel of distribution as “a set of independent organizations involved in the process of making a product or service available for use or consumption”.
Channels of distribution bring economy of effort. They help to cover a vast geographical area and also bring efficiency in distribution including transportation and warehousing. Retailers, Wholesalers are the common channels of distribution.
Channels of distribution provide convenience to customer, who can get various items at one store. If there were no channels of distribution, customer would have faced a lot of difficulties.
Functions of Distribution Channels:
Following are the main functions performed by the distribution channels:
5. Product Promotion
7. Risk Taking
Types of Distribution Channels:
Broadly, Channel of distribution is of two types viz., (1) Direct Channel (2) Indirect Channel.
1. Direct Channel or Zero Level Channels
Methods of Direct Channel are:
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company owned retail outlets
2. Indirect Channels
(a) Manufacturer-Retailer-Consumer (One Level Channel)
(b) Manufacturer-Wholesaler-Retailer-Customer (Two level channels)
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three level channels)
Factors Determining Choice of Channels of Distribution:
Following are the main factors which help in determining the channels of distribution:
1. Product Related Factors
2. Company Characteristics
3. Competitive Factors
4. Market Factors
5. Environmental Factor