Classification of Distribution Channels: Client, Industrial and Service
Industrial channels are shorter than client channels as a result of there are a small range of business customers, and that they are geographically targeted at many locations. Industrial product is usually advanced in nature, and also the buying method is long.
Manufacturers and industrial customers interact extensively throughout the shopping for method, and even afterward, as most industrial products need to be routinely serviced. Consumer channels are usually longer because a large variety of geographically distributed customers need to be reached.
The consumers buy in small quantities. The information required to hit a sale decision is restricted as a result of the products are not very refined.
Manufacturers could reach out to customers either directly, i.e., while not using distribution channels, or by using one or more distribution channel members.
Manufacturer to consumer:
Direct marketing includes use of private selling, direct mail, telephone selling and internet. Avon cosmetics, Tupperware, aqua guard and Amazon is doing engaged customer in direct marketing.
The company contacts customers directly through salespersons, mail, telephone, or web and makes sales. The products are sent on to customers by the manufacturers.
Manufacturer to retailer to consumer:
Retailers have grown in size. Growth in distributor size implies that it’s become economic for manufacturers to provide on to retailers instead of through wholesalers.
Supermarket chains and company retailers exercise considerable power over manufacturers because of their huge buying capabilities. Wal-Mart uses its huge retail sales to pressurize manufacturers to supply products at frequent intervals on to their store at concessional prices.
Manufacturer to wholesaler to retailer to consumer:
For small retailers with restricted order quantities the use of wholesalers makes economic sense. Wholesalers buy in bulk from producers and sell smaller quantities to numerous retailers.
But massive retailers in some markets have the ability to buy directly from manufacturers and so cut out the wholesalers.
These big retailers are also able to sell at a cheaper rate to consumers than retailers who buy from the wholesaler. Wholesalers dominate where retail oligopolies or monopolies are not dominant.
Manufacturer -> wholesaler -> retailer -> consumers:
A company uses this channel once it enters foreign markets. It doesn’t have enough sales to warrant the fixing of a sales and distribution infrastructure, and so, it delegates the task of selling its product to an agent who doesn’t take title to the products. The agent contacts wholesalers within the foreign market and receives commission on sales.
Companies need to sell to larger range of consumers, and therefore are increasingly using multiple channels to distribute their products.
Companies have realized that all customers of a product don’t purchase from a similar retail merchant.
Industrial channels are usually shorter than consumer channels. Direct selling is prevalent because of closer relationship between the manufacturer and the client, also as due to the character of the product sold.
Manufacturer to industrial customers:
This is a common channel for expensive industrial product like heavy equipments and machines. There has to be shut relationship between the manufacturer and the client, because the product affects the operations of the buyer.
The seller should participate in several activities like installation, commissioning, quality control and maintenance jointly with the buyer. The seller is chargeable for several aspects of the operations of the product long when the product is sold-out.
The nature of the product needs a continuing relationship between the seller and the buyer.
Manufacturer to agent to industrial customer:
A company that sells industrial products will employ the services of an agent who could sell a range of products from several producers on a commission basis. Such a meeting spreads selling costs and is helpful to firms who don’t have the resources to set up their own sales and distribution operation.
The arrangement permits the seller to achieve a large range of consumers while not having to take a position during a sales team. But the company does not have much control over the agent, who does not devote the same amount of time and attention as a company’s dedicated sales team.
Manufacturer to distributor to industrial customer:
The company has each internal and field sales staff. Internal staff deals with customer and distributor generated enquiries and order placing, order follow-up and checking inventory levels. Outside sales staff is proactive.
They notice new customers, get product specifications, distribute catalogues and gather market information. They additionally visit distributors to deal with their issues and keep them motivated to sell the company’s products. Distributors enable customers to buy small quantities locally.
Manufacturer to agent to distributor to industrial customers:
The manufacturer employs associate agent instead of a dedicated sales department to serve distributors chiefly because it’s less expensive to do therefore.
The agent could sell the products of many suppliers to an industrial distributor, who further sells it to the business user. This type of channel could also be needed once business customers need goods quickly, and when an industrial distributor can provide storage facilities.
Distribution channel for services: It can be direct or through an agent. Since stocks aren’t held, the role of wholesalers, retailers or industrial distributors doesn’t apply.
Distributions Channel for Services
Service supplier to client or industrial customer:
Close relationship between service supplier and customer means service offer has to be direct, for example, healthcare.
The service supplier operates many retailers to reach out to the ultimate client or to the commercial client. Several service suppliers like banks, stores, service centers operate via this distribution channel.
Service supplier to agent to client or industrial customer:
Agents are used once the service supplier is geographically away from customers and once it’s not economical for the supplier to establish its own native sales team.
For instance, several financial institutions are using this distribution channel to cross sell their services to customers by using a information of existing or potential customers.
Service supplier via net to client or industrial customer:
Increasingly, services like music, software package solutions and money info are being distributed via the net. This marketing is booming just in case of product which might be downloaded. It’s a really helpful channel for info product. Nowadays, e-tickets became extremely popular.