Types of Distribution Channels Marketing ( Distribution Channel ) – A product that has been manufactured require paths to market so that it can reach consumers. Consumers who want to be achieved are likely to be spread over a very wide geographical area. Therefore, producers need help from various marketing intermediaries such as wholesalers or retailers to make their products reach their final consumers.
This intermediary will function as a “channel” to reach consumers targeted by producers, while the way the product reaches the final consumer is called a distribution channel. The number of intermediaries involved in this distribution channel is usually called the Marketing Distribution Channel Level and can be classified into 2 main categories.
Types of Marketing Distribution Channels
In general, distribution channels can be divided into two types of channels, namely direct distribution channels and indirect distribution channels. Indirect distribution channels can then be further divided into one level, two level and three level channels based on the number of intermediaries between producers and customers.
1. Direct Distribution Channels
Producer – Consumer
Direct Distribution Channels or sometimes also called Zero Level Channels are distribution channels that do not have an intermediate level. Within this framework, producers sell their merchandise directly to customers without using an intermediary at all. An example of a zero level channel is a factory outlet store. Many service providers such as holiday companies also market directly to consumers without using traditional retail intermediaries such as travel agents.
2. Indirect Distribution Channels
When producers involve intermediaries or middle people to sell their products to end customers, the distribution channels used are called indirect channels. Indirect channels can be classified into three types, namely:
2.1. Channel One Level ( One Level Channel )
Manufacturers – Retailers – Consumers
Line one shows an intermediary level of sales that the retailers ( retailers ). Retailers buy products from manufacturers and then sell them to customers. The one-level distribution channel works best for producers engaged in groceries such as clothing, shoes, household furniture, toys and others.
2.2. Channel Two Levels ( Two Level Channel )
Manufacturers – Wholesalers – Retailers – Consumers
Large traders or wholesalers buy products in bulk from producers, then divide them into small packages and sell them to retailers who end up selling these products to end customers or consumers. Durable, standardized and rather inexpensive items generally use two-level distribution channels.
2.3. Channel Three Levels ( Three Level Channel )
Manufacturers – Agents – Wholesalers – Retailers – Customers
A three-level distribution channel involves agents in addition to wholesalers and retailers who assist in product sales. These agents are useful when a product needs to move quickly to the market immediately after an order is placed. They are given the task to handle the distribution of products in certain regions or districts in return for a certain percentage commission. These agents can be categorized as super stockist as well as carrier and forwarding agents. Both of these agents keep stock on behalf of the company.
Super stockists buy stock from manufacturers and sell it to wholesalers and retailers in their area. Whereas carrier and forwarding agents work on commission and provide warehouse and shipping expertise for processing orders and long-distance shipments. Manufacturers choose a three-level marketing channel when the user base is spread across the country and product demand is very high.