The tools or ingredients or the variables mixed together by the marketers to interact with a specific market are known as Marketing Mix. It is the essence of any marketing endeavour and is the main building block of the marketing efforts of an organisation. The concept of marketing says that on the side there is the producer or marketer and on the other side there is the customer. The organisation wants to have a transaction with the customers and to do so it has to first develop or produce a product or service, design it, pack it, price it, name it, label it, promote it, and distribute it. Every one of these decisions is the core of a marketing mix, which consists of four elements; viz., Product, Price, Place, and Promotion. Show
Place/Physical DistributionIt is essential to make the product or service available to the customer at the right place and at the right time, then only the customer would be able to purchase the product or service. Place is an element of marketing and is a process of transferring goods from the place of production to the place of consumption. Therefore, Place Mix is an important decision and is related to the physical distribution of the goods and services to the customers. The decisions under place mix include deciding the market for distribution, the channel of distribution, etc. Hence, the place mix consists of Channels of Distribution and Physical Movement of Goods. The two different channels of distribution are direct channel and indirect channel. And the components of physical distribution include order processing, transportation, warehousing, and inventory. A set of middlemen or intermediaries who help an organisation in the flow of goods and services from the manufacturers to the consumers are known as Channels of Distribution. The intermediaries along with the help in the physical movement of goods, also help in the movement or title or transfer of ownership. The two types of channels of distribution or distribution level are Direct Channel and Indirect Channel. Types of Distribution Channels/Level1. Direct Channel (Zero Level)As the name suggests, a direct channel or zero level is a distribution level through which an organisation directly sells its products to the customers with the involvement of any intermediary. For example, jewellers use direct channels, Apple sells its products directly to the customers through its stores, Amazon sells directly to the consumers, etc. Some of the most common types of direct channels of distribution are Direct sales by appointing salesmen, through Internet, teleshopping, mail order house, etc. 2. Indirect ChannelsWhen a middleman or intermediary is involved in the distribution process, it means the organisation is using Indirect Channels of Distribution. The indirect channels of distribution can be classified into three categories; viz., One Level Channel, Two Level Channel, and Three Level Channel. i) One-Level ChannelOne level channel means that there is only one intermediary involved between the manufacturer and the customer to sell the goods. This intermediary is known as a retailer. In simple terms, under one level channel, the organisations supply their products to the retailers who sell them to the customers directly. For example, goods like clothes, shoes, accessories, etc., are sold by companies with the help of a retailer. ii) Two-Level ChannelA most commonly used channel of distribution that involves two intermediaries for the sale of products is known as Two Level Channel. The intermediaries involved are wholesalers and retailers. The producer sells their products to wholesalers in bulk quantity, who sells them to small retailers, who ultimately supply the products to the customers. This channel is generally used to sell convenient goods like soaps, milk, milk products, soft drinks, etc. For example, Hindustan Unilever Limited sells its goods like detergent, tea leaves, etc., through wholesalers and retailers. iii) Three-Level ChannelThree level channel means that there are three intermediaries involved between the manufacturer and the customer for the sale of products. The three intermediaries involved are Agent Distribution, Wholesalers, and Retailers. It is usually used when the goods are distributed across the country and for that different distributors are appointed for different areas. For example, wholesalers purchase goods from different distributors, like North India Distributors and then pass the goods to the retailers, who ultimately sell the goods to customers.
In order to create a Distribution Channel, a company needs to consider the advantages and disadvantages. Distribution channels are also known as Distribution Channels in Marketing. Distribution channels are also very important for companies because it provides them with increased costs and reach or little control over pricing. Distribution channels can be two-level, three-level, flexible, or multi-level. Different Distribution Channels offer different advantages. A Distribution Channel is a means of delivering goods and services, messages, information to customers in your marketing strategy. Distribution channels are often the marketing strategy that allows you to reach the most customers, depending on how your distribution channel operates. Popular categories of distribution channelsThere are total 6 types of distribution channels are commonly applied around the world: Direct distribution channel, 1-level distribution channel, 2-level distribution channel, 3-level distribution channel, modern distribution channel, multi-level distribution channel. You can easily memorize those types of channels by looking at the below diagram: Direct Distribution Channel is a distribution channel that does not involve intermediaries. Advantages The advantages of a direct distribution channel are that it can provide lower prices and the customer has more choice. Disavantages The disadvantages of a direct distribution channel is the lack of oppurtunity to reach customers who may require intermediaries. Each Distribution Channel has its own advantages and disadvantages, you need to figure out what Distribution Channel will work best for your marketing strategy. A one-level distribution channel is where the company does not sells their products directly to consumers. Instead, the company sells their product to retailers, then the retailers sells the goods to consumers. Advantages The company does not have to spend money on opening stores, hiring employees to sells their products to consumers. Disadvantages The disadvantages of one-level distribution channels are that the retailers set the prices and the company does not have much control in marketing their products to customers. Distribution channels are often the most effective way of reaching your target customers, so it is important to understand what Distribution Channel will work best for your marketing strategy. A two level distribution channel is where the company sells their products to wholesalers who then sell the products to retailers and finally, the retailer sells the goods to consumers. Advantages A two-level distribution channel can help a company sell their products within a larger area than a one-level channel can do. It will help the company reach a larger amount of customers. Disadvantages The disadvantage with two-level distribution channel is that because it has more intermediaries, there can be barriers to entry. One example of a barrier to entry is if the price of the product is too high then customers may not buy the product. A three-level distribution channel is similar to a two-level channel. How ever, agents and brokers will represent the company to contact and make deals with wholsalers. After sales are made between the company and wholesales, the agents and brokers can earn a commission. Then, the wholesalers will sell their goods to retailers, and the goods will be distributed to final consumers by the retailers. Advantages The company does not have to invest too much on advertising and saleforces, thank to agents and brokers. Disadvantages The comapny have a little control on the prices charged to final consumers. Some agents & brokers can make deals with harm the long-run welfare of the company. A flexible distribution channel is a channel in which the company can both sell their products directly to final consumers and by intermediaries (agents & brokers, wholesalers, retailers). One example of a flexible distribution channel would be Microsoft softwares. To get softwares such as Microsoft Windows, Office... customers can purchase those products directly on Microsoft websites. In addition, they can purchase them through some intermediaries (software stores, laptop stores, Amazon, Ebay...). Advantages:
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A multi-level distribution channel is a channel that has a set of suppliers and retailers who are involved in the selling of goods or services. Distribution can be from one level to another, meaning that the supplier will sell products to retailers and then retailers will sell it. Once a sale is made, the retailer can earn a commission based on the sale. A typical example of multi-level distribution could be Amway. The company now has a vast distribution channel throughout the world. Many of the company resellers are also consumers. ConclusionThe Distribution Channel is the way that the company delivers their products to customers. Distribution Channels in Marketing mainly refers to the way in which companies deliver their products to consumers, whether that channel is a direct channel or an indirect one. There are many advantages and disadvantages of Distribution Channels for companies like increased costs, greater reach, or little control over pricing. Distribution Channels also refer to how goods are delivered by various intermediaries such as agents, brokers, wholesalers and retailers. It is important to consider what Distribution Channel will work best with your marketing strategy and know its advantages and disadvantages. |