The distribution Channels allows companies be more competitive, searching how to reduce costs and helping consumers to acquire on an easy way their product. A company that has good distribution channel has a relevant competitive advantage in the market. Distribution channels have advantages and disadvantages that are going to be described along this essay.
It is important to take into account that it exist two channels of distribution; industrial and consumer channels. The purpose to mention this is because this two canals if there are very good strategic organized, generates aggregate value to the product, and a result the satisfaction of the consumer and overcoming its expectations about the product.
If through the entire channel it is added value by each integrant, the product will be a competitive and top good or service. The book also mentions that the management that it’s in charge of the distribution has to be monitoring the environment.
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The reason of that is that the market environment is always changing, if this environment is efficient monitored, the company can be a step forward so this changes can’t be able to affect the strategic performance.
To be continued, also the book mentions some advantages because of the participation of intermediaries in the channel which are: the specialization and division of labor, the reduction of discrepancies of quantity and assortment of merchandise, there is a less distance with the target market, facilitates the purchase process, there is a significant reduction of contacts, facilitates scale economies and as we mentioned on the paragraph before there is a collaboration in the generation of aggregate value of time, place and form.
To end with, it is relevant knowing that retailers and wholesalers (intermediaries) contribute in reducing the gaps between producers and consumers, in quality of place and moment. On the other hand, there are several disadvantages that must be taken into account. To start with, according to the book the distribution channels are also social systems, because of this reason the channel has to face with ome problems like: internal conflicts between members of the channel and also between the same members of the organization, another problem is power, this can be a double-edged sword, power has to be applied in the right moment, if not it could generate internal and external conflicts. When it is mentioned power it is important to know that the book talks about 5 types which are: rewarding, coercive, formally legalized, referent and expert.
The third problem that can appear is roles, this is an important factor that if is not specified along the canal and inside the organization, then there may be several problems like for example decreasing the quality of the product, service, incoherence between consumers, distributers and producers.
To finish with, the last social problem that can leap up is the communication process, if there is not good communication it would be very difficult to achieve the objectives that where purpose at the beginning. There are also some disadvantages because of the participation of the intermediaries in the channels which are: loss of control and management of the merchandise, loss of the information and loss of sales force.
To conclude, it is important to take these disadvantages into account, because this problems that rise up in the distribution channel can be controlled with a good strategy, an efficient coordination of the inputs through all the channel, also creating specific and clear objectives, which can cover all participating members of the channel, making this link between needs and performance satisfying both consumers and each individual that participates giving value to the product.