Within the classic 4P’s of marketing are the product, promotion, price, and placement. Placement is also considered as the distribution channel for a business. Both B2B and B2C small businesses sell through either one main distribution channel or multiple channels. The distribution channels will differ from one company to the next but may encompass any of the following: retail, distributor/ wholesaler, dealer, sales team, online, and numerous other channels.
In further defining this the distribution channel is a series of intermediaries or businesses that a service or products pass through before reaching the end consumer. The distribution channel or ‘chain’ is also the way in which payments get made to the original vendor from the end consumer. Each distribution channel is different, some are long and depend on multiple intermediaries, while other chains are short and go directly from the business to the consumer. Every small business is unique in the distribution channels that it utilizes.
Direct vs. Indirect Distribution
There are a number of distribution channel options incorporating either indirect or direct distribution. Direct distribution is either provided or owned by the company.
Examples of direct distribution include distribution centers, value-added resellers (VARs), retail outlets, franchising, and a sales team. In the case of independent distribution, this means that the associated are not company controlled or owned. Independent sales agents, retailers, distributors, franchisers, and value-added resellers (VARs) all fall under the independent distribution category.
Marketing channels, or marketing distribution channels, are terms that are interchangeable as distribution channels. Choosing a marketing distribution channel can make or break a business. Many key factors should be taken into consideration when looking at different distribution channels. Items to be considered are if an indirect or direct channel is needed. In the case of a perishable product than a direct and faster method of delivery must be used.
Marketing plans work hand in hand with a distribution plan. If you start with a marketing plan before putting in place the distribution plan, it’s like putting the cart before the horse. Changes will come throughout a product’s lifecycle if adaptations are made then a small business can stay on top.
Ultimately, it’s the distribution channels that dictate what the overall marketing strategy should be. With the marketplace continually evolving there are many opportunities for getting products and services to the consumer. Thoroughly understanding the marketing channels that are utilized is of the utmost importance to a business’s success.
It’s important to evaluate what marketing and distribution channels that competitors are using before putting everything into place or making a significant change within a current distribution channel. The channel mix may vary and can change as time goes on, what may work today may not be the most effective five years from now. One example of the shift that some companies may make in the distribution channel is through driverless cars and drones to deliver products.
It may be difficult to compete with more prominent brands for a piece of the pie, but being innovative in the marketing and distribution channels can set a small business apart from the competition.
A small business should be strategic in getting the product to the consumer in the most efficient manner with the least number of steps involved. There is no one-size-fits-all solution, so every business should carefully research and evaluate the best channels to effectively get the best marketing and distribution channel in place. Having a well thought out small business distribution strategy in place allows for the small business to maximize profits and gain the competitive advantage.
The views expressed herein are those of Megan Rutherford, as of the date above and are subject to change. This publication is for informational purposes only and should not be construed as a recommendation for any specific insurance product or service. Information has been collected from sources believed to be reliable, but has not been verified for accuracy. These views and opinions do not necessarily represent those of Bryn Mawr Trust, its directors, officers, affiliates, and/or any/all of the contributors to this site. It does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not endorse any third-party companies, products, or services described herein and assume no liability for your use of this information.