√ Definition of Distribution Channels, Functions, Benefits, Levels, Forms and Kinds
Definition of Distribution Channels, Functions, Benefits, Levels, Shapes and Kinds – In this discussion we will explain about Distribution Channels. Which includes the definition of distribution channels, functions of distribution channels, benefits of distribution channels, levels of distribution channels, forms of distribution channels, various distribution channels.
Definition of Distribution Channels, Functions, Benefits, Levels, Shapes and Kinds
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Definition of Distribution Channels
Distribution channels/marketing channels/trade channels/distribution channels are a series of channels or routes used to distribute goods products or goods from producers to consumers, in the form of goods transfer services or transfer of ownership rights to obtain profit. Distribution channels usually include elements of producers, consumers, as well as intermediaries whose function is to transfer ownership of goods. Intermediaries are also part of the distribution channel even though they do not have ownership rights to the goods.
Distribution channels are so important that they are maintained and maintained properly. Because distribution channels are a series of channels that carry products from producers to consumers, if the distribution channels are not effective and efficient then each product that will eventually reach the consumer's hands will experience problems, which in turn will harm the producers themselves and consumers, of course (Srawono: 2011:61)
Distribution Channel Function
According to Lamb (2001) the distribution channel has a crucial function for the company, its functions are described as follows:
Transaction Function
The transaction function is a function that includes how the company associates and communicates its products with potential customers. This function makes them aware of the products offered and also explains the advantages and benefits of these products.
Logistics Function
The logistics function is a function that includes the transportation and sorting of goods, including storage, maintenance and protection of goods. This function is very important so that the goods carried arrive on time and are not damaged or rot quickly.
Facility Function
Facility functions include research and financing, research is the process of gathering information about the number of channel members and other customers. Financing is making sure that the channel members have enough money to facilitate the flow of goods through the distribution channel to the final consumer.
Benefits of Distribution Channels
The benefits of distribution are:
- For producers, it is helpful to distribute goods and services produced by producers to consumers so that they can maintain production continuity
- For consumers, it makes it easier to buy the goods or services needed
- The increase in the use value of an item, because the goods that have piled up with producers without being distributed will not be able to feel the benefits and uses of them by the community.
- Maintaining price stability, because goods that accumulate somewhere can lower prices, while in areas where there is a shortage, prices tend to rise.
Levels and Forms of Distribution Channels
There are levels in the distribution channel proposed by Laksana (2008: 124), namely:
- Zero level channel or direct marketing channel (Zero Level Channel), producers sell directly to consumers
- A one-level channel has one sales intermediary. In the consumer market, this intermediary is also a retailer, while the industrial market is a live distributor and industrial coating
- A two-level channel has two sales intermediaries. In the consumer market they are wholesalers or wholesalers and become retailers (retailers), while in the industrial market they can become a live dealer and dealer industry.
- The three-level channel has three sales intermediaries, namely wholesalers and contractors (jobber), retailer (retailer) is a contractor who is often in the middle between wholesalers and retailer.
According to Gitosudarmo (1999) there are three groups in marketing that have a role in the distribution channel in their activities, namely:
Intermediary Trader
Intermediary traders (merchant middleman) are wholesalers or retail traders who buy an item or service by that, had owned or had the right to the ownership of the goods and then sold it return. Even though they help producers, they are an independent institution, so they are not controlled by producers
Intermediary Agent
Intermediary agents (middleman agents) are agents, brokers, manufactures, representatives, commissioner traders, salesmen and others who are looking for consumers who then negotiate on behalf of producers for a good or service distributed. The difference with intermediary traders is in the right to ownership of goods or services where the intermediary agent does not have the right to own the goods.
Service Institution
Service agencies (facilitators) are independent institutions. These institutions are of a nature to assist distribution but they do not have the right to own goods or to negotiate the purchase and sale of a particular good or service. Examples are financial institutions, travel and freight agencies and warehousing companies.
Various Distribution Channels
The kinds or types of distribution channels for goods and services are as follows:
- Producers ==>> Consumers (Usually Services). Example: Restaurant, workshop, salon, barbershop
- Producers ==>> Retailers ==>> Consumers. Example: Newspaper, ice cream, bread
- Producer ==>> Wholesaler ==>> Retailer ==>> Consumer. Example: Instant noodles, rice, vegetables, packaged drinks
- Manufacturers ==>> Agents ==>> Wholesalers ==>> Retailers ==>> Consumers. Example: Imported goods
- Manufacturer ==>> Industry (Manufacturer). Example: Egg noodle factory sells its products to chicken noodle traders
- Manufacturer ==>> Wholesaler ==>> Industry (Manufacturer). Example: A distribution buys heavy machinery from abroad.
Thus has been explained about Definition of Distribution Channels, Functions, Benefits, Levels, Shapes and Kinds, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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