Distribution Channels & Logistics

The other three parts of the marketing mix are product management, pricing, and promotion.

Traditionally, distribution has been seen as dealing with logistics: how to get the product or service to the customer. It must answer questions such as:

Should the product be sold through a retailer?
Should the product distribution be through wholesale?
Should multi-level marketing channels be used?
How long should the channel be (how many members)?
Where should the product or service be available?
When should the product or service be available?
Should distribution be exclusive, selective or intensive?
Who should control the channel (referred to as the channel
Should electronic methods of distribution be used?
Are there physical distribution and logistical issues to deal with?
What will it cost to keep an inventory of products on store shelves and in channel warehouses (referred to as filling the pipeline)?

Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

A number of alternate 'channels' of distribution may be available:

• Selling direct, such as via mail order, Internet and telephone sales

• Agent, who typically sells direct on behalf of the producer

• Distributor (also called wholesaler), who sells to retailers

• Retailer (also called dealer or reseller), who sells to end customers

• Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors.

Distribution channels can thus have a number of levels. Kotler defined the simplest level, that of direct contact with no intermediaries involved, as the 'zero-level' channel.