Digital Marketing Ecommerce

Distribution Channels in Marketing: What Are They and How Important Are They?

  • There are no suggestions because the search field is empty.

By Marina Sala, on 31 October 2022

There are many ways for your products to reach the end consumer, and all of them are included in what are known as marketing distribution channels. In this article, we will tell you everything you need to know about these channels so that you can choose the one that best suits your business.

* Learn 40 effective strategies to optimize your ecommerce with our free,  comprehensive ebook! 

Distribution Channels in Marketing What Are They and How Important Are They

What Are Distribution Channels in Marketing?

Marketing distribution channels are the different ways a brand can choose to get its product to customers. Your priority in choosing one of these marketing distribution channels is to make it as efficient and cost-effective as possible.

These marketing distribution channels are not abstract entities. They consist of companies whose function is to analyze the market and promote products, while also negotiating with potential customers.

There are three main figures in this chain:

  • Producers: those who manufacture the product. When a brand comes up with a product, it is not the brand itself that makes the idea a reality. It usually entrusts production to another specialized company.

  • Wholesalers: also called wholesale distributors, these companies are intermediaries between producers and retailers. They buy and sell the product wholesale to other wholesalers or retailers. Both producers and wholesalers have no contact with the final consumer.

  • Retailers: these are the businesses that buy products from wholesalers and then offer them to the public. They can work both online and physically.

However, these entities are not static, because depending on the type of distribution channel chosen by the brand, some may disappear. We’ll talk about this later in the section "What types of distribution channels can we find?".

It’s important to bear in mind that marketing distribution channels not only serve as mere intermediaries between the brand and the public. Thanks to them, products are available in the right place, in the right quantity, and at the right time. In addition, these intermediary companies are also in charge of activities such as distribution and logistics, taking care of product transportation, storage, and assembly.

Why Distribution Channels in Marketing Are Important

The greatest value of marketing distribution channels lies in their power to help brands' products reach more people. Thanks to these intermediaries, companies can see their sales increase and their brand become bigger and bigger.

As a general rule, companies or producers do not have the knowledge or the tools to form their own distribution networks, so they must rely on intermediaries, who have already formed a wide network of contacts and have a greater potential for reach.

What Types of Marketing Distribution Channels Are There?

As mentioned, a company can choose between different marketing or distribution channels. In total, there are 5 possible channels.

Exclusive Distribution Channel

In addition to the producer or manufacturer, the only intermediary in the chain is the retailer, who sells the product to the end customer. It is a very efficient and quite economical method of sale, as there are not many intermediaries involved in the process. It is widely used in sectors such as fashion, furniture, and automobiles.

Compared to other marketing distribution channels, it has several advantages, such as better control of supplies and rapid product management.

Intensive Distribution Channel

Unlike the previous channel, the company uses a large number of wholesalers and retailers to promote its product.

Targeted Channel

It is similar to the previous one, but in this selective marketing distribution channel, the company carefully chooses the wholesalers it wants to work with.

Products such as toys, food or medicines are usually distributed through this type of channel.

Direct Channel

In this case, the producer or manufacturer delivers the product directly to consumers, with no intermediary involved. Brand retail stores, mail order, or cold call sales are some of the ways that businesses with a direct distribution channel reach their audience.

Due to the absence of intermediaries, it is one of the most economical marketing distribution channels. However, it is not very viable when marketing a large variety or quantity of goods.

How to Choose the Best Distribution Channels in Marketing

At this point, you may be wondering what is the best marketing or advertising distribution channel. To do so, the best thing to do is to analyze the current situation.

Selective distribution channels, for example, are used by brands that want intermediaries to be prepared to promote the brand.

Exclusive or indirect distribution channels, on the other hand, are used by companies that market a product that requires a specialized sales process or specific physical facilities. For this type of brand, it is more beneficial to choose the resellers or retailers themselves, as the brand can better control their activity. This type of distribution is very common when the company intends to sell its products as luxury or exclusive goods.

Intensive distribution, on the other hand, is usually used when the goods being marketed are not of high value but are in high demand by consumers. This type of distribution should be chosen in order to be found in as many stores as possible.

Keep in mind that the fewer intermediaries you have, the more control you have over your product. However, this may not always be your best option. Always evaluate all markets and analyze the intermediary companies you want to work with.

The 40 Best Strategies to Optimize Your Ecommerce

Marina Sala