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Types of Distribution Channels - Explained - YouTube
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today we are going to talk about
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distribution channel so what is a
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distribution channel basically let's
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take some product which is manufactured
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and reached to the consumer but this
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transaction is not direct there is a
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path that is traveled by the product and
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all those divisions which fall in
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between this path are called channels
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there might be some companies who offer
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services instead of products these
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services also have to pass through
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channels before reaching their end
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consumers as we know marketing
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constitutes four ps that is product
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place price and promotion and thus
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channels fall under p for place here we
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have to decide from which location our
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product can be sold and how it can be
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sold now what are the uses of channels
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firstly it has to see logistics which
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defines how to carry products from one
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place to another second comes finance
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which defines where and how the money is
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being spent the third one is after sales
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services which are also a part of
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channels because whenever our product
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needs to be repaired we never visit
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companies directly but we approach
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service stations
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there are two types of channels direct
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and indirect direct channels are those
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that allow a manufacturer or service
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provider to directly deal with its end
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consumers for example an apple store in
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america sells its product directly to
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consumers the customer care assistants
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are employees of apple therefore they
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can know what is the feedback of their
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consumers what they think about apple
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products at what price certain products
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are being sold which location is selling
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the most products etc indirect channels
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are those where you sell your products
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or services to agents distributors
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brokers and retailers so that they can
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distribute products for you through this
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channel intermediaries become aware of
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consumers needs the feedback provided by
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intermediaries must be considered by you
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you cannot rely on their feedback
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because they might or might not be
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telling the truth this risk happens
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because they are not just focusing on
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your product but selling other companies
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products as well
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here lies the drawback of indirect
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channels where intermediaries might fail
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to understand your consumer's base
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whereas direct channels know what is the
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exact need of consumers and how to cater
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those needs manufacturers focus on
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delivering specific needs to consumers
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rather than just earning profit for the
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company now let's talk about benefits
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benefits of direct channels one the
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biggest advantage of direct channels is
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that you can understand your consumer
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very well too
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quality control is in your hand for
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industries such as food and nutrition
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when products reach the market the boxes
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get opened and are adulterated before
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reaching the final customer and such
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industries direct channels become
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imperative the drawback of this channel
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is that it is not competent to open
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stores at the desired time and locations
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due to its limited investment as this
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can abruptly increase the company's
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fixed cost
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here comes the role of indirect channels
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these channels are molded from the need
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of reaching a maximum number of
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consumers by getting presents at
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possible locations the company thinks it
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is easy to pay some margin to
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intermediaries and instead get marketed
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even in unreachable locations the
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benefits of indirect channels are one it
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covers larger areas two a minimal amount
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can be invested to gain profit three
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target untapped markets also the
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intermediaries from where they are
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selling products or services have the
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behavioral knowledge of customers of
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that location which can help your
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company to customize your products or
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services accordingly
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now you must be thinking about through
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which channel you must sell your product
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or service for an answer to this
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question you have to follow a simple
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exercise within which you'll have to
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make a matrix in this matrix primarily
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you must test whether the chosen channel
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is suitable for your consumers or not
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furthermore you must check product
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positioning here you have to see by
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choosing a certain channel if your
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product is improving or degrading its
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position for example peppermint and
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chocolates are sold on airports or giant
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stores for some targeted audiences due
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to its premium pricing if the same
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chocolate is sold at small retail
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outlets then positioning of that
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chocolate would degrade
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next comes organization where you have
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to check with your capability of
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managing all those intermediaries who
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are selling your product or service last
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and most important thing is finance you
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have to check whether after investing a
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certain amount you are able to make a
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desirable profit or not
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after making this matrix compare all
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channels with above discussed parameters
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you will consequently get the answer to
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the question it is not necessary that
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you must select only one channel it may
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be the case that initially you have
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decided to sell through an online
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channel and after a few years when your
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company has grown you decide to sell
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through a distributor channel
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i hope this video helps you out if you
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have any questions comment down below
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your questions help me deliver better
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content for you so thank you guys so
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much for watching subscribe to this
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channel it will help me to grow and give
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this video a thumbs up if you liked it
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and i see you guys in the next video
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