Determining the Distribution Channels - Admission/Application Essay Example

A system can be designed by the company to ensure effective distribution. After analyzing the targeted market’s needs and expectations, and not to forget the company’s targets, the best suited distribution channel will be determined for the company. Distribution Channels It’s the product’s route to the market that controls the sales of that product. The weaker the routes are the lower is the sales. These routes can also be called the distribution channels. The various distribution channels include wholesalers, distributors, dealers, brokers, aggregators and retailers (Dent, 2008).

Among the basic aspects that determine the desired distribution channels, so that the organization can achieve its targeted sales, are the nature and type of the product, the cost effectiveness against the expected sales of that product and the last but not the least consumer satisfaction. They determine the targeted market and the distribution channel that will be suited for that product and its maximum sales. Thus it can be seen that having the right distribution channel is very vital. For example, for a higher quality product it is implied that the product will be carrying higher retail prices too, thus the targeted market is the higher part of the society. . There are basic two levels of the distribution channels; direct and indirect.

Direct distribution channels are run by the producer himself/herself. This is the oldest concept when it comes to the distribution of the product, where the producer will be responsible of the sales through the organization’s own sales force and own retail shops. For example, this idea is best for high end fashion designers, who have personal relations with their clientele and they provide their products to their customers through their own means. On the other hand indirect distribution channels are managed through distributors, wholesalers or retailers.

The company supplies its products to any of these entities and they thus provide it to the end consumer. For example simple household supplies may first be sold to the wholesaler, who can in return sell it to the retailer and from there the end consumer can buy it (Paul et al, 2008). Distributional channels have lately developed into proper systems. They can be extinguished into four main systems, conventional, horizontal, vertical and multichannel systems. Conventional system is the one where every entity that is part of that distribution system, for example wholesalers, producers and retailers, is independent of each other and thus responsible for its own generation of profit even if it is at the expense of the other party or at the expense of the system as a whole.

The horizontal system is the one where two or more companies, which are considered to be at the same level in the market, enter a joint venture to explore new marketing and distribution opportunities by combining their resources. On the other hand in the vertical system the