In order to start a conversation about global marketing channels, it is important to first establish what they actually are.
Marketing channels refer to “the entire ecosystem required for getting products (tangible goods and intangible services) from the point of production to the point of consumption.”
Distribution channels fall within this description, but they are more specific, focusing on the “intermediaries through which the product passes until it reaches the end customer.” Here’s a quick little video explaining the types of distribution channels and factors for consideration for each of the different types:
To summarize, the three types of distribution channels are:
- Direct to the Consumer
- This is typical for items with lower volume sales. It can be done through stores or shops owned by the manufacturer, as well as through online purchasing.
- To the Consumer via Retailers
- This is when larger retailers purchase goods from the manufacturers, allowing manufacturers to focus more on production rather than the sales of their products.
- To the Consumer via Wholesalers & Retailers
- This is when wholesalers make purchases from manufacturers in bulk, which are then resold in smaller quantities to other retailers (typically smaller businesses).
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Take Apple, Inc. for example. Apple is known to be one of the most famous global brands, and despite having big name competitors such as Samsung, Dell, Sony, and Microsoft, it has maintained its significant presence in the market, continually capitalizing on the growing technology industry with its innovative products.
Apple has four main channels of distribution: most notably, perhaps, are the Apple Stores located in 25 countries all over the world. Second is Apple’s robust website, allowing for a strong online presence where customers can directly purchase products and get their questions answered. These first two channels of distribution would fall under the first category listed above, direct to the consumer, as there are no third parties involved. Often times this makes customers more comfortable with their purchases, as they are confident in the products they are receiving and the high quality brand name from which they are purchasing. However, not all Apple users prefer these methods, and as such, Apple has two more distribution channels, both of which would be considered the second method: distribution to the consumer via retailers.
Apple’s third distribution channel is through separate retailers such as Best Buy and Walmart, allowing the brand to further increase its presence in IT sales and sell in bulk to other companies. One of the main reasons this option is appealing to customers is because of the customer service; Apple Stores are notorious for long wait times, hectic lines, etc. However, third party retailers rarely experience that environment in stores, and it is almost always easier to get one-on-one help. Lastly, for its fourth distribution channel, Apple has agreements with telecommunications companies such as Verizon and AT&T, which allows customers loyal to these entities to maintain their service packages while using Apple products. Purchasing from these outside retailers is also often preferable if customers are looking to purchase older models of Apple products, as Apple Stores and the corresponding website often only hold the latest technologies they have to offer.
Through this we can see that various types of distribution channels often serve specific purposes, and companies must be deliberate in choosing channels that are most appealing to their targeted consumer base. Apple has managed to do this time and time again, and as a result it has remained competitive throughout the developed world, often leading the market in doing so.