Distribution (business)

Distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user that needs it. This can be done directly by the producer or service provider, or using indirect channels with intermediaries.

The other three parts of the marketing mix are product, pricing, and promotion.

Distribution of products takes place by means of channels to become available on markets, in stores or in webshops. Channels are sets of interdependent organizer (called intermediaries) involved in making the product available for consumption to end-user. This is mostly done by merchants or distributors, or in international context by importers. These parties mostly buy and resell products and have temporarily ownership. Agents and brokers are intermediaries that act on behalf of the producer but do not take title to the products

A firm can design any number of channels they require. Channels can be distinguished by the number of intermediaries between producer and consumer. If there are no intermediaries then you can talk of direct marketing. A level one channel has a single intermediary. This flow is typically from manufacturer to retailer to consumer.

A producer can choose how to how many channels he will sell. This creates three types of distribution:

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-force who typically call on larger customers with agents who cover the smaller customers and prospects. In addition, online retailing or e-commerce is leading to disintermediation. Retailing via smartphone or m-commerce is also a growing area.

The firm's marketing department needs to design the most suitable channels for the firm's products, then select appropriate channel members or intermediaries. The firm needs to train staff of intermediaries and motivate the intermediary to sell the firm's products. The firm should monitor the channel's performance over time and modify the channel to enhance performance.

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