Channels of product distribution are the routes that a product takes from the maker to the final user.
Efficient distribution channels are crucial for successful product management because they influence how items are delivered, advertised, and eventually reach their intended audience.
Channel management, or product/service distribution as it is known in marketing, is one of the strategic pillars that can unlock a competitive advantage for pan-African entrepreneurs, as it is based on relationships within the ecosystem in which the enterprise operates.
Coca-Cola is one of the global brands that has mastered the art of effective and efficient distribution, ensuring that there is a bottle or can of coke available in every part of the world when needed for consumption.
This strategic fit was not attained through chance but rather deliberately. We therefore take a deep dive into some of the advantages of distribution management in successfully anchoring the pan African enterprises forward.
Distribution channels facilitate access to various marketplaces and consumer segments, enabling market penetration and expansion.
Employing multiple channels allows companies to increase their market share, reach a broader audience, and explore new geographical territories.
Product/service accessibility for consumers critically depends on distribution channels, significantly influencing their convenience.
Whether through physical stores, online platforms, or a combination, these channels enhance customer convenience and cater to diverse purchasing preferences.
Strategic cooperation: Building solid relationships with distributors, retailers, and other intermediaries is vital.
Such alliances ensure that products are optimally positioned and supported by cooperative marketing efforts, thus contributing to effective channel management.
Distribution pathways offer means for insightful market analysis.
Direct connections between intermediaries and end consumers provide product managers with feedback, trends, and data that can inform decisions and product strategies.
The management of channels affects consumers’ perceptions of a brand. Customer loyalty and brand representation in retail environments are significantly enhanced by the way products are displayed and the overall brand experience.
Distribution methods ensure that products are consistently available to consumers, addressing visibility concerns.
Product availability and market presence rely on the effective management of inventory levels, shelf space, and online visibility.
Maintaining various distribution channels enables companies to adapt to market changes swiftly.
Multiple outlets allow businesses to respond to shifts in customer behaviour or market trends.
This promotes effective item circulation, thereby optimising the supply chain. This facilitates efficient inventory management, reduces lead times, and controls distribution costs.
Channels also facilitate after-sales support and additional services, thereby enhancing the overall customer experience.
Positive interactions with customers foster brand loyalty and encourage repeat business. Varied distribution methods mitigate risks associated with external factors.
Maintaining alternative channels strengthens the company’s resilience, even if one channel faces disruptions.
The several layers or intermediaries involved in getting a product from the manufacturer to the final consumer are referred to as the levels of the channels of product distribution.
The distribution chain is comprised of several levels, each of which represents a step. Product managers are responsible for determining the distribution strategy that will be most effective for their products and the market in which they operate.
The following is a list of the standard three levels of distribution channels:
Zero-level channel (direct marketing): In a zero-level channel, also known as direct marketing, the product is sold directly to the end user without intermediaries.
This type of marketing is typically made possible through direct sales reps, company-owned shopfronts, or online sales. Dell sells customised PCs to individual customers and consumers through its web platform.
One-level channel: In a one-level channel, the product travels from the manufacturer to a retailer and then to the consumer.
This consists of the three stages of the distribution chain: manufacturer, retailer, and consumer.
This concept is frequently used by small retailers or smaller firms that make their purchases directly from manufacturers. For example, an SME store buys apparel from a local manufacturer and then sells it to end users in the community.
Two-level channel: In a two-level channel, the product goes through a wholesaler before reaching the retailer and, finally, the consumer.
This is referred to as the manufacturer-to-wholesaler-to-retailer-to-consumer progression.
When manufacturers sell their products in large quantities to wholesalers, the wholesalers subsequently distribute the products to retailers.
When a book publisher sells books to a wholesaler, the wholesaler subsequently distributes those books to a number of different bookshops.
The three-level channel, which consists of the manufacturer, an agent or broker, a wholesaler, a retailer, and a consumer, is characterised by introducing an additional intermediary, such as an agent or broker, between the wholesaler and the wholesaler.
This intermediary may assist with the distribution process, including discussions, contracts, and other issues.
An international trade broker who facilitates distributing speciality food products from a foreign manufacturer to wholesalers and retailers globally.
Four-level channel: In a four-level channel, a distributor stands between the wholesaler and the retailer.
This means that the manufacturer, the agent or broker, the distributor, the retailer, and the consumer were all involved in the distribution process.
The distributor is responsible for a variety of tasks, including managing the flow of commodities, handling transportation, and storing the goods.
A regional distributor is responsible for distributing electronic goods manufactured by a certain manufacturer to merchants located in particular geographic areas.
An example of a five-level channel is the manufacturer, the agent or broker, the distributor, the dealer, the retailer, and the consumer.
In a five-level channel, there are many intermediaries between the producer and the retailer. These intermediaries include agents, distributors, and dealers on the retail side of the chain.
This structure may be more complicated, and it is frequently observed in distribution networks that are either multinational or highly specialised.
An automobile manufacturer that operates globally and distributes its vehicles to customers through agents, regional distributors, dealerships, and ultimately to general consumers.
In conclusion, optimising sales, guaranteeing customer pleasure, and adjusting to the changing tastes of the target market all depend on a knowledge of and ability to control product distribution channels properly in product management.
A well-designed distribution plan can significantly enhance a product’s market success.
Until then, think, eat, sleep, and dream about branding!
- *Dr Farai Chigora is a businessman and academic. He is a Senior Lecturer at the Africa University’s College of Management and Business Sciences. Also a global business modelling practitioner. His doctoral research focused on Business Administration (Destination Marketing and Branding Major, Ukzn, SA). He is into agribusiness and consults for many companies in Zimbabwe and Africa. He writes in his personal capacity and can be contacted for feedback and business at fariechigora@gmail.com, www.fachip.co.zw, WhatsApp mobile: +263772886871.*Dr Tabani Moyo is an extra-ordinary researcher with the University of North West, South Africa’s Social Transformation School. He holds a Doctorate in Business Administration (Research focus on new media and corporate reputation management, UKZN), chartered marketer, fellow CIM, communications and reputation management expert based in Harare. He can be contacted at moyojz@gmail.com @TabaniMoyo (X)