9 Different Types of Distribution Channels – Marketing Techniques to Reach Your Customers

Key Points

• Apple’s direct sales approach allows them to maintain control over product distribution and customer experience, cutting out the middleman and potentially lowering prices.
• Intensive distribution, like Jif peanut butter, helps increase brand recognition and customer loyalty by saturating the market with the product.
• Selective distribution, often used by luxury brands, allows for more control over the sales process and a consistent level of service across locations.
• Dual distribution, such as smartphone manufacturers partnering with wireless carriers, helps brands reach more consumers by offering products through multiple channels.

Distribution marketing strategies are all about making sure your goods and services are easily within the reach of your target audience. These strategies embody one of the four P’s of marketing; namely, “place.” It involves a variety of techniques such as selling directly to customers or utilizing intermediaries like retailers, wholesalers, agents, or brokers for indirect distribution.

When it comes to running your business successfully, it is important that you do not put all your eggs in one basket. For instance, if you are a clothing manufacturer relying only on your own branded stores, know that it is not enough to maximize profits.

If you really want to make it work and reach a wider audience, you need to spread your wings and distribute through various retail outlets. This approach of using multiple channels is a real game-changer for businesses. It helps them make the most of their resources without spreading themselves too thin.

It just goes to show how important it is to have a flexible distribution strategy in this ever-changing market. And, if you are ready to take the plunge, it is important to learn about the different types of distribution channels available.

1. Direct Sales

When it comes to direct sales, you need to maintain a no-nonsense approach. This business model cuts out the middleman and puts the brand in charge of selling their products straight to the customer. That means flying solo without any middleman to carry the torch and push the product.

An Example to Consider

Apple’s direct sales approach is as clear as day, and it is the elephant in the room when it comes to sales strategies. In a lot of instances, patrons have to deal with various issues to purchase software, devices, and other wares.

Apple runs the show with its own brick-and-mortar shops and online marketplaces, where it likes to peddle its goods. This company definitely has its foot in the door of third-party brick-and-mortar retail outlets, but it prefers to steer potential and returning customers toward its own branded stores.

Reasons to Choose Direct Sales

There are a number of benefits associated with direct sales, such as cutting out the middleman, getting down to brass tacks, and keeping it real with your customers. The business can make all the decisions while dealing with customers directly, which can lead to improved customer satisfaction.

With direct sales, businesses can have a tight grip on the reins of product distribution and customer experience, leaving no room for error. And, of course, businesses avoid throwing money down the drain by cutting out the middleman and doing things in-house. This way, they can bring down their prices to get a leg up on the competition.

2. Retailer

Selling through retail is the preferred distribution channel for consumer brands, as they rely on third-party outlets to get their products out there. All these stores are the middlemen between the customers and the products. They are the go-to places for shoppers.  

Examples to Consider

Supermarkets such as Walmart and Tesco, big-box stores like Target, convenience stores such as 7-Eleven, and department stores like Macy’s are all important intermediaries between brands and consumers. These retail outlets are the preferred destinations for customers looking for a wide variety of products.

However, it is important to note that not all retail distribution strategies are the same and may differ in their approach.

Certain brands prioritize achieving widespread market penetration by ensuring their products are accessible in as many retail outlets as possible. The objective of this approach is to enhance the brand’s visibility and accessibility, making it convenient for consumers to locate and buy its products.

Factors Affecting Retail Channels

The selection of a retail distribution strategy ultimately depends on several factors, such as the brand’s positioning, target audience, and product attributes. To determine the most appropriate retail approach for their brand and product offering, brands must carefully consider their objectives, target market, and consumer preferences.

3. Independent Distributors

Retailers rely on independent distributors to provide them with inventory. A distributor is a typical cog in the marketing distribution wheel. However, using a third-party distributor has many advantages. For instance, they can leverage their relationships with retailers to increase product sales.

These relationships are invaluable to distributors because they allow them to target the most receptive buyers. Another big benefit of this distribution channel is the convenient product storage. It means distributors’ in-house stockrooms eliminate the need for companies to build and staff their own warehouses.

Here, distributors are typically encouraged to sell things they have purchased and stored in their own warehouses because they have an economic interest in doing so.

4. Intensive Distribution

Consumers are likely well-versed in this type of retail distribution, where products are peddled through every nook and cranny.

An Example to Consider

Take Jif, for example, which relies on intensive distribution channels. Jif has really spread its wings and is one of the big names in the peanut butter game. And that is why it is so easy to find this brand anywhere in the United States, be it a mom-and-pop shop or a big-box store.

Benefits of Choosing Intensive Distribution

There are many real benefits to utilizing intensive distribution, such as casting a wide net to reach a larger audience, finding potential customers, and saturating the market with your product. Additionally, it can lead to increased brand recognition and customer loyalty, as well as improved profits by selling large quantities of goods.

In business, familiarity breeds contentment among consumers. When it comes to gaining trust, intensive distribution is the way to go as it keeps the products at the forefront of the consumers’ minds.

The substitution benefit is a real game-changer for companies. When you have so many products to sell, it is easier to have them listed everywhere. And this attracts a lot of new customers.

Factors to Consider

However, you need to bear in mind that this distribution channel may not be the best choice if you are dealing with niche products with limited appeal. You have to be very careful here and stick to a more focused approach that speaks directly to your intended audience.

Keep in mind that cheaper alternatives will always find it easier to steal the show, especially when the target audience does not have a discerning eye for quality.

5. Selective Distribution

Companies that choose to sell through shops do not always aim for maximum exposure and rely on selective distribution.

When it comes to the presentation and sale of their wares, luxury labels can be picky. You cannot just go to any department store and pick up a Hermes bag, can you?

Companies with a strong emphasis on in-store branding often strictly control everything from the placement of displays to how salespeople talk about and demonstrate their items to customers.

Benefits to Consider

One of the best things about using this approach is that you have to deal with fewer distribution channels. This allows you more say over aspects of the sales process, including product displays and sales pitches. It means your customers can expect the same level of service at every location.

An Important Consideration

When different brands and goods cannot be substituted for one another, selective distribution makes sense. It is worth mentioning that selective distribution has a wider audience than exclusive distribution because more people see the merchandise.

Customers have high standards and will go to great lengths to purchase the products they want from the stores they frequent.

6. Exclusive Distribution

While businesses can employ middlemen and retail locations of their choosing with selective distribution tactics, they can also go the exclusive distribution route.

In this distribution channel, businesses work with just one wholesaler or retailer to serve a given market. The goal is to preserve brand value by limiting supply and providing the impression that the brand is special and highly sought after by a select few.

Benefits of Exclusive Distribution

Exclusive distribution has many advantages, with exclusivity being the most notable. Exclusive distribution deals can lend an air of exclusivity to products, which in turn boosts demand. That is exactly the reason why some high-end accessories have a single global distributor.

Moreover, when dealing with only one channel, businesses have better command over the distribution of their products. They might establish stringent regulations for the third-party distributor so that their clients have the greatest possible experience.

7. Dual Distribution

Rather than relying just on wholesalers and merchants to move their wares, many companies today also keep physical locations devoted to selling only their brand name products. That is what exactly dual distribution is all about.

An Example to Consider

The Apple model is one example of dual distribution; however, it is closer to the direct-to-customer model, as discussed earlier.

Examples of products that benefit from this strategy include smartphones, whose producers offer their wares via traditional retail outlets, telecommunications providers, internet marketplaces, and their own websites.

Benefits of Dual Distribution

Brands may reach more consumers with more options when they use dual distribution. Since users cannot use smartphones without wireless service, it makes perfect sense for smartphone makers to team up with these companies.

It only makes sense to sell smartphones in wireless carriers’ retail outlets, where many customers will also be looking to sign up for service.

8. Wholesaler

Wholesalers, like retailers, function as middlemen by purchasing items from producers and reselling them to consumers at a markup. Scale and target market are the main differentiators between various ways of doing business.

Examples to Consider

Anyone who has shopped at a warehouse club like Costco or Sam’s Club knows that these stores buy in bulk from suppliers and sell it with a profit.   

But is it a promising distribution channel for your business? Well, distributing through a wholesaler is an option to think about if your products are suitable for bulk sales, as many supermarket items are.

Benefits of Wholesalers

The truth is that the use of wholesalers has many advantages, as well. Since they deal in such massive numbers, they are able to sell items at significantly lower prices than stores, which attracts a lot of customers.

Moreover, wholesalers help firms move products more quickly and efficiently since they buy and sell in large quantities. Therefore, businesses can benefit from their extensive supply knowledge and industry contacts.

Consider, also, that producers can sidestep the hassles of direct customer service and distribution. There is no physical location to oversee, no employees to hire, and no products to stock.

After products have changed hands, the previous owner is no longer responsible for fixing any problems, and that is one of the most notable benefits of using wholesalers.

9. Channel Partners or Value-Added Resellers

Unlike distributors, who sell to retailers, resellers sell directly to end users. Unlike distributors, who must stock things, resellers can simply sell them through their websites.

Each sale results in a percentage commission for them. Then, they coordinate the shipping of the ordered goods from the vendor or producer straight to the end user.

Examples to Consider

A software reseller also providing support and training services is an example of distribution with value-added services. That is why the use of distribution channels is common among business-to-business (B2B) vendors.

It means that rather than selling to consumers directly, they rely on intermediary businesses, or “channel partners,” who subsequently resell their products to end users.

Benefits of Resellers

The use of resellers has many advantages. For instance, resellers can offer better prices than distributors because they put considerably less effort into marketing their products.

Similarly, partnering with a well-known reseller can boost exposure for a company’s products. For instance, an indie band might use a major distributor to get their new record in front of more people.

What makes this model unique from the other types we looked at before? Value-added resellers (VARs) provide value to a product by tailoring it to the needs of a certain customer base.

The manufacturer supplies the framework, and the VAR adds its own special sauce to make its products stand out from the crowd. Working with this channel allows businesses to concentrate on developing a product with solid core functionality while another business takes care of tailoring it to certain markets.

For instance, a vendor of accounting software may license its platform to VARs in fields as varied as healthcare, education, and retail. After that, each reseller can decide how to best present the solution to their clientele and the end user.

Finding Distribution Channel for Your Product

With so many options, it can be difficult to choose which channel is best for your company’s needs. However, you can consider a few factors in order to decide which distribution channel might work for your company.

For instance, it is always a good idea to survey the competitive landscape first. Is there anything your rivals are up to? The nature of the commodities you sell may dictate a specific distribution route. But if you look hard enough, you can find some unexplored avenues to help you fill a void in the market.

Similarly, you should think about conducting a price comparison. Starting out, money may be one of your most pressing concerns. Choose your entry points carefully, keeping in mind both your long-term goals and the resources you have at the moment.

And, finally, before picking a distribution channel, take your time to predict what will happen next in your business. The good thing is that choosing one channel to launch on does not bind you to it indefinitely. Instead, take the time to map out your company’s future success.

Think about the various paths you could take as you plan your short- and long-term objectives. Just bear in mind that it is okay to take more time to decide which distribution channels suits you the most instead of picking a couple mindlessly, which is only a waste of time.

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