Marketing Distribution Channel
Ross (2021) defined a distribution channel as “a chain of businesses or intermediaries through which a good or service passes until it reaches the final buyer or the end consumer.” Distribution channels consist of producers, wholesalers, distribution centers, retailers, and online marketplaces such as Amazon or Alibaba (Ross, 2021).
Distribution channels can be divided into a direct marketing channel and an indirect marketing channel. In consonance with University of Minnesota Libraries Publishing (2015), the direct marketing channel is the simplest marketing channel that only comprises a manufacturer and a customer. This marketing channel connects the manufacturers to their end customers without any intermediary. Contrarily, the indirect marketing channel requires at least one or more wholesalers, distributors, agents, or retailers that will act as an intermediary that facilitates the end customers to buy the products (University of Minnesota Libraries Publishing, 2015).
Possibility of Direct Marketing for Some Products
Business Development Bank of Canada (2020) stated that, although direct marketing grants the manufacturers to maintain the control of products better compared to indirect marketing, it might be not cost-effective for some manufacturers to directly sell their products to their customers. They might need to provide their own logistics team, trucks, hire drivers, even rent a warehouse to store the goods (Ross, 2021). Most manufacturers prefer to produce in bulk to reduce the production cost, thus it might be impossible for them to sell in smaller quantities. In this case, the wholesalers or distributors help the manufacturers by repackaging and selling the products in smaller quantities so that it will be more convenient for the end customers to purchase the products.
Some big manufacturers such as the Coca-Cola company won’t use direct marketing channels simply because selling their product directly is not profitable for them since they need to invest more time and effort to do the direct selling (University of Minnesota Libraries Publishing, 2015).
However, direct marketing channels are possible for some products that can be sold online with the help of the internet or social media. Online websites, Twitter, Facebook, and Instagram allows companies to directly communicate and sell their product to their customers (University of Minnesota Libraries Publishing, 2015). For example, most of the airlines sell their ticket online and avoid any agent or middleman to control the price so that they can compete with other airlines (MBA Skool Team, 2014).
Value of Middlemen
According to University of Minnesota Libraries Publishing (2015), middlemen can add value to products sales and marketing success by reducing the manufacturer’s burden in distribution to individual customers. The middlemen bring all parties with a common interest in concluding a transaction. Not only that, the manufacturers can utilize the middlemen as a sales force that might reduce the marketing cost significantly. In addition, middlemen also can act as customer service especially if the product is complex and difficult to install such as a photocopy machine (University of Minnesota Libraries Publishing, 2015).
Middlemen might add more value to the business by interacting with customers, collecting the payment, and helping manufacturers in collecting customers’ data. By doing so, middlemen play an important role to help manufacturers adjusting their products based on the market condition. Furthermore, middlemen usually settle the payment in advance, this supplies more operational cost to the manufacturers for the next production (University of Minnesota Libraries Publishing, 2015). Lastly, middlemen help the manufacturers to stabilize the price to be more competitive with others.
Conclusion
Manufacturers must determine the best channels by considering the pro and cons of each channel. A direct marketing channel might reduce the middlemen’s cost and allows the manufacturers to gain more control of their product compared to an indirect marketing channel. However, manufacturers also should not underestimate the middlemen as they can add value to product sales and marketing success by decreasing costs of distribution and adding an element of customer service.
References
Business Development Bank of Canada. (2020, September 12). Pros and cons of direct and indirect product distribution. BDC.ca. https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/how-bring-new-product-market
MBA Skool Team. (2014, December 31). Direct marketing channel definition | Marketing dictionary | MBA skool-study.learn.share. MBA Skool-Study.Learn.Share. https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/12014-direct-marketing-channel.html
Principles of marketing. (2015). University of Minnesota Libraries Publishing.
Ross, S. (2021, July 29). Direct vs. indirect distribution channel: What’s the difference? Investopedia. https://www.investopedia.com/ask/answers/052115/what-difference-between-direct-and-indirect-distribution-channel.asp
Note:
This article is written based on University of The People Marketing Management (BUS 5112) written assignment by Fristy Tania in October 2021
