Definition: A distribution channel in marketing is a delivery system made up of individual mediators and businesses that facilitate the supply of goods and services from the producer to the final consumer.
What Does Distribution Channel Mean?
What is the definition of distribution channel? This delivery system connects the end user of a product to the producer of it. It consists of a network of businesses and individuals that deliver a product or service to the final consumer.
In marketing, distribution forms part of every key marketing strategy. Management regularly plans ways to increase the business’ network of distributors like wholesalers and retailers.
Although there are many different types of distribution chains, three are the most popular: wholesale, retail, and direct.
There are some products the law prohibits direct sales to consumers or end users. Producers are therefore required to first be sold to wholesalers, then wholesalers sell to retailers, and retailers sell them to end users.
Another form of channel is where producers can sell directly to retailers where they in turn sell to end-users.
The shortest distribution channel, however, occurs when a business sells directly to its customers.
Example
Let’s look at an example of each channel.
An example of the longest form of distribution, where products must go through wholesalers and retailers, exists in the winery industry. Wine consumers typically have to purchase their wine from a retailer that gets the product from a wholesaler who in turn gets the product for the winery.
An example of selling to the end user through a retailer is what Walmart does with Samsung TVs and other home appliances. Samsung makes the products and sells them the Walmart that in turn sells them to consumers.
The final example where producers can sell directly to end customers is a fairly modern phenomenon. Apple, Sony, HTC, and Samsung all produce smart phones that are sold directly to customers on their websites.
Businesses use the channel best suited for the type of products or service they offer.
Summary Definition
Define Distribution Channels: Distribution channel is a means of delivering products to customers.
