Distribution Channel Concept

The expression Distribution Channel designates a group of means used to make that the product or service arrives from the producer to the final consumer/user. The distribution channel can be long and include several intermediates as storekeepers, wholesalers, and retailers or short and at the limit don’t exist intermediates between the producer and the consumer.

The distribution channel characteristics have strong implications either of commercial and financial scope, either of strategy and marketing scope. If the company chooses for a longer distribution channel, certainly will arrive to a wider market and with lower investment need but will also lose control over several marketing variables like the sales price to the final consumer, the quality of service associated or even some communication components. On the contrary, if they choose the direct sale, they get full control over the referred marketing variables, but will have a greater difficulty in arriving to a market with the same dimension. There are some ways to conciliate this apparent incompatibility between the control of marketing variables and the market’s dimension to achieve namely through the establishment of strategic agreements with distributors as being, for example, the franchising contracts.              

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.