Once a brand has become a product a company must configure a distribution system. In order for one to create a distribution system one has to research the different types of distribution channels and define the channels as well as define and research the organization of the channels; then one should analyze the target markets needs in distribution, then one can determine which channel members to use as well as how many to use in order to create a distribution system.
Overview of Distribution Channels
There are different distribution channels in which a company can use. The first channel up for discussion is a direct channel; a direct channel is strictly from the business to consumer meaning there is no intermediary or middle man getting product to the consumer (Kerin, Hartley, Rudelius, 2013). An example of a direct channel would be purchasing Jenny Craig’s healthy meals direct from the company and having the product shipped to the consumer’s home. Another channel of distribution is indirect; an indirect channel of distribution is just the opposite of not having a middle man. Indirect channel of distribution is where there is an intermediary or middle man getting products to consumers; this makes distribution more cost effective for both parties (Kerin, Hartley, Rudelius, 2013). An example of an indirect channel is Cover Girl make up. Cover Girl is sold to a wholesaler and then distributed from the wholesaler to a retailer and then purchased by the consumer. As well as distribution channels there are several channel organizations companies can choose from. One channel organization is conventional; conventional has three levels of organization which entails the producer, the wholesaler, and the retailer; in this type of distribution organization it calls for all parties to protect their own best interests. Which can lead to retailers against wholesalers, and wholesalers try to top the producers (Entrepreneur Media, Inc., 20130. Another organizational channel is vertical; vertical organization is designed to achieve cost cutting and maximum marketing impact by professionally managing and centrally coordinating the market channels (Kerin, Hartley, Rudelius, 2013). There are three main types of vertical organization; corporate which a combination of successful production stages and distribution under a single ownership (Kerin, Hartley, Rudelius, 2013). Contractual vertical marketing system is where the producer and distribution firm integrate their efforts with a contract to obtain greater functional econnmies and marketing impact rather than trying to achieve it alone (Kerin, Hartley, Rudelius, 2013). Franchise vertical marketing system is where a contractual agreement is in motion between a franchisor and franchisee that allows the franchisee to operate under an established name with a set of rules (Kerin, Hartley, Rudelius, 2013). Conflict with vertical organization is when a channel member bypasses another channel member to sell direct (Kerin, Hartley, Rudelius, 2013). The third channel of organization is horizontal; horizontal organization is where two companies with different capabilities combine in order to minimize cost and maximize sales (Web Finance, Inc., 2013). Conflict of this channel occurs between intermediaries at the same level in the marketing channel (Kerin, Hartley, Rudelius, 2013). The final channel organization is multichannel marketing systems; multichannel marketing systems is the “blending of different delivery and communication channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online” (Kerin, Hartley, Rudelius, 2013).
Analyze Target Market’s Needs in Distribution Channels
According to consumers’ needs for a nutritional supplement is to keep from aging and to seek other preventative health through nutritional supplements rather than