What Is a Distribution Channel in Business and How Does It Work - Essay Example

Channels of Distribution Prof LeCain Jennifer Reed Friday, September 09, Channels of Distribution A channel of distribution refers to the path used to move services or goods from the manufacturer or the producer to the final consumer or the path used by payments to products and services from the customers up to the producer. The length of a distribution channel differs from one organization to the next owing to the features of the said organization such as geographical coverage, size of the firm, costs of distribution, and organizational policies.

As such, a channel of distribution can be very short. This involves a direct transaction from the seller of the goods or services to the end customer. On the other hand, it may be indirect, i.e. involving a myriad of interconnected intermediaries who facilitate the movements of the products from the producers to the customers such as agents, distributors, wholesalers, and retailers (Dent, 2011). In the case of indirect distribution, each of the intermediaries receives a product at a set price then he moves it to the next at a much higher price until the products reach the final consumers.

In this regard, the price of the product rises considerably as it goes through these channels thereby becoming very expensive and unaffordable by the time it reaches the final consumer. For instance, coffee goes through a long winding channel before reaching the final consumer. It involves the farmers who grow the coffee, the exporter who exports processed coffee from its country of production to overseas, the importer in overseas who orders coffee from coffee producing regions, the distributor of imported coffee such as supermarkets and stores, and finally the retailer who brews the coffee and sells it to the final consumer.

This is where River Side Cafe stands (Kansal & Kapoor, 2003).However, in this case, the producer of the products on sale, i.e. coffee and tea, is the cafe and the customers of the products are the clients who throng into the company premises to taste a cup of pure traditional coffee and tea imported from Mexico. As such, River Side Cafe only considers itself and its customers in setting up its channels of distribution. The main product sold by the cafe is a service. Services are inseparable from their producers.

Therefore, it is unlikely for the cafe to seek out external distributors of their coffee and tea rather than themselves. In addition, quality service delivery comes along with customer experience journeys and experiences that should enable the organization deliver maximum satisfaction to their consumers. The cafe will therefore adopt a direct distribution strategy involving itself and her clients only (Rolnicki, 1998).The reason for adopting a direct distribution strategy is that it provides an opportunity for the cafe to attend directly to the needs and demands of its clients.

This develops a personal relationship between the cafe and its customers. The advantages of these buyer-seller relationships are endless including building customer trust and confidence in a company’s products and services. As such, River Side Cafe ends up developing a strong following of loyal customers who double up as ambassadors of the cafe by referring their friends and families to its premises. Therefore, apart from enabling the cafe deliver effective and efficient services to its customers; this direct distribution strategy enables the cafe to create a reputable brand image that helps in attracting and retaining loyal customers (Kansal & Kapoor, 2003).

ReferencesDent, J. (2011). Distribution Channels: Understanding and Managing Channels to Market. London: Kogan Page Publishers.Kansal, P. & Kapoor, S. (2003). Basics of Distribution Management: A Logistics Approach. New Delhi: PHI Learning Pvt. Ltd. Rolnicki, K. (1998). Managing Channels of Distribution. New York: AMACOM Div American Mgmt Assn.