The three types of distribution channels are wholesalers, retailers, and direct-to-consumer sales. Wholesalers are intermediary businesses that purchase bulk quantities of product from a manufacturer and then resell them to either retailers or—on some occasions—to the end consumers themselves.
Retailers are generally the customers of the wholesalers and offer high-touch customer service to the end customers. Lastly, direct-to-consumer sales occur when the manufacturer sells directly to the end customer, such as when the sale is made directly through an e-commerce platform.
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Your Practice. Popular Courses. Business Essentials Guide to Mergers and Acquisitions. Business Business Essentials. What Is a Distribution Channel? Key Takeaways A distribution channel represents a chain of businesses or intermediaries through which the final buyer purchases a good or service. Distribution channels include wholesalers, retailers, distributors, and the Internet.
In a direct distribution channel, the manufacturer sells directly to the consumer. Indirect channels involve multiple intermediaries before the product ends up in the hands of the consumer. Possession has given them a strong benefit. You can improve the value of possession by offering business customers financing options, for example by leasing products rather than outright purchase.
Based in the United Kingdom, Ian Linton has been a professional writer since He holds a Bachelor of Arts in history and economics from Bristol University. By Ian Linton Updated March 07, For example, home delivered food, mobile services, stores with lots of locations, and so on — all provide the consumer value through the ease of availability. Possession utility means that the product is relatively easy to acquire. For example, an expensive piece of furniture might be made more easily available through a low interest financing deal.
Or a bank may simplify the steps needed to obtain a loan. The average consumer would likely prefer to buy a completed computer because it provides them with form utility. Related: What Is Usability? Time utility is the idea that a product is accessible to customers whenever they need them.
It is based off the idea of supply and demand , meaning that a company that offers time utility is always able to provide consumers with the amount of products they need whenever they need them. When a product has time utility, customers can be confident that they can easily buy it without having to wait. Companies that incorporate time utility into their marketing strategy emphasize their reliable supply chain and ability to adapt to seasonal changes in demand.
For example, a company that offers a two-day delivery guarantee can emphasize this aspect of their business to promote time utility to their customers.
Consumers can appreciate this time utility and associate the company with fast service because they know that they can have a product within two days if they need it. Place utility means that a customer can purchase products in locations that are convenient to them. The more widely available a product is to your target consumer, the more place utility you can provide.
Utility-based marketing that focuses on place involves selecting the distribution channels that your target customers use the most. When customers know that they can access a product in a location they already frequent, they gain value by not having to change their daily habits to access a product.
For example, a company that sells car air fresheners could incorporate place utility into its marketing plan by purchasing shelf space at the front of all of the auto shops and car washes in a particular area. The company's target audience of car-owners already frequent these locations, so they can appreciate the value of being able to purchase air fresheners while completing other tasks related to car maintenance.
Related: Guide to Distribution Channels. Possession utility is the idea that customers can gain value from a product simply by owning it. Once a customer has a product in their possession, they gain value by being able to use it in any way they want.
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