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What are They, Types & Examples

There were two technologies that came along in the late ’90s that many people believe were the reason for the late ’90s Internet boom. One was MP3’s ability to deliver high quality files, and the other was Java’s ability to deliver high quality applications. The two technologies together redefined the way we experienced the Internet in the 90s.

The number of virtual reality headsets on the market is growing quickly, but what exactly are they, and what are they designed to do? This blog post will cover the different types of virtual reality headsets on the market, their intended uses, and examples of what they look like (and don’t look like) when you use them.

The first real glimpse into the world of virtual reality has been given by Oculus. The Oculus Rift is the first step towards bringing virtual reality into the mainstream. It is a virtual reality headset that connects to your PC via USB and uses a headset and sensors to track your head movements. The virtual reality headset has a 1080p OLED display, and an infrared camera inside to track your head movements, so you can interact with virtual objects.. Read more about what are its types and let us know what you think.word-image-6525 Have you identified the distribution channels your company will use? If not, it’s time. In short, distribution channels determine the path of the goods from the manufacturer to the end user. They therefore have a direct impact on sales. There are many types, formats and levels of distribution channels. The first step is to understand each of them. To help you do this, on this page we discuss the essential points you need to know about sales channels:

  • which distribution channels are available
  • three types of distribution channels
  • three allocation methods
  • Distribution levels
  • main intermediaries
  • how to identify them

What are distribution channels?

word-image-6526 Distribution channels are the path that products take from the first stage of production to sale to the consumer. The main purpose of these channels is to make the products available to the final consumer at the point of sale as quickly as possible. Sales channels have a direct impact on the turnover of a company. So you want to make them as effective as possible.

Three types of distribution channels

There are three ways to ensure that the product reaches the end user.

1. Direct Channels

When using direct channels, the company is fully responsible for delivering the products to the consumer. The goods do not pass through intermediaries before reaching their final destination. This model gives manufacturers full control over the distribution channel. This applies, for example, to B. those involved in catalogue sales. Since only the manufacturer is responsible for the delivery of the product, this channel is usually not suitable for a large number of customers. At the same time, lower prices can be offered since the company does not have to pay commissions to intermediaries.

2. Indirect channels

In indirect channels, the products are not supplied by the sellers but by intermediaries. Who are these intermediaries? They may be, for example, B. wholesalers, retailers, distributors or brokers. In this case, manufacturers do not have full control over distribution channels. The advantage is that you can sell large quantities and appeal to a wide range of consumers. However, the prices of the products are higher because of the commissions paid to the intermediaries.

3. Hybrid channels

Hybrid channels are a mixture of direct and indirect channels. In this model, the manufacturer works with intermediaries but retains control of customer contacts. This is the case, for example, for brands that promote products online but do not ship directly to customers. Instead, they shall appoint authorised distributors.

Three methods for distribution channels

There are three different output methods. Basically, it’s about who will sell your products.

1. Exclusive distribution

In exclusive distribution, intermediaries supply the company’s products to specific retail outlets. This is usually done by a representative. This means that only exclusive outlets will be able to sell these products to consumers. Depending on the quality of the product, this is a good strategy not only for manufacturers, but also for some retail stores or chains.

2. Selective distribution

In selective distribution, the company allows sales to a certain group of intermediaries who are responsible for the sale of the goods to final consumers. An important factor for the success of this strategy is the reputation of the intermediaries, as they have a direct influence on the performance of the company. In this case, the intermediary becomes a true advisor to the consumer, answering his questions and recommending products adapted to his needs.

3. Intensive distribution

In the case of intensive distribution the manufacturer tries to place his product in as many outlets as possible. This method involves the manufacturers themselves, the sales departments and the sales representatives. They are responsible for the distribution of the products to the points of sale. This distribution method is generally used by manufacturers of low-priced products with a high consumption frequency.

Distribution channel levels

In addition to the types and methods of distribution channels, they may also operate at different levels. Their level represents the distance between the producer and the end user.

Level 0 distribution channel

At this level there is a close and direct relationship between the manufacturer and the customer. For the company, the cost of the relationship with the consumer is higher.

Level 1 distribution channel

At the first level, a manufacturer sells products to a distributor, who can sell them to consumers through retailers or wholesalers. The distributor retains some, but not all, of the rights to the product. The distributor is also responsible for the cost of selling and transporting the products to the retail outlets.

Distribution channel layer 2

Level 2 is similar to level 1. The difference is that in this case the distributor only supplies products to retailers who sell to consumers.

Level 3 distribution channel

Level 3 channels are a traditional distribution model. The journey of the product from manufacturer to distributor to retailer to customer. Sales and marketing costs are shared between the parties. The advantage of this model is that it reaches a larger number of consumers. On the other hand, the products have a higher price due to the operating costs of all parties involved.

Nine important intermediaries in distribution channels

Once you’ve established the details of the transaction, it’s time to find out who the main intermediaries are who are delivering the products to the consumer.

1. retailer

Retailers are intermediaries on whom companies often rely. Examples are supermarkets, pharmacies, restaurants and bars. Each of these types of companies has the right to sell. In general, sales prices are higher.

2. Wholesale trade

Wholesalers are intermediaries who purchase goods and resell them to retailers. The wholesalers sell to those who will supply their own stores with products. These intermediaries do not generally sell small batches to final consumers, although there are exceptions, such as B. Supermarkets selling wholesale. The prices are lower because they are sold in large quantities.

3. Distributor

Distributors sell, stock and provide technical support to retailers and wholesalers. Their activities are concentrated in certain regions.

4. Agents

Agents are legal persons responsible for selling the products of a company to final consumers and receiving a commission in return. In this case, the relationship between the intermediaries and the companies is a long one.

5. Broker

Brokers are also hired for sales and receive a commission. The difference between agents and brokers is that brokers have a short-term relationship with the company. This is the case, for example, with real estate agents and insurance brokers.

6. Internet

For those selling technology and software, the Internet itself acts as an intermediary sales channel. The consumer only needs to download the material to access it. E-commerce companies also use the Internet as an intermediary for the distribution of goods.

7. Sales teams

A company may also have its own sales force to sell goods or services. It is also possible to put together multiple teams to sell to different segments and audiences if the company has a wide range of products.

8. Commercial intermediaries

Resellers are companies or individuals that purchase goods from manufacturers or retailers for retail sale to consumers.

9. Catalogue

In catalog sales, as the name suggests, a seller is affiliated with a company and sells their products through a magazine. Sellers in this model also typically receive a commission for their sales. This kind of sale is common in the beauty segment, with brands like Avon and Brazilian Natura.

Reverse distribution channel

You now know the types and methods that products have for reaching customers. But what happens when consumers have to return goods to manufacturers? Consumers should be able to rely on reversal when they receive defective products or have to return clothes or shoes bought online that do not fit. In this case, the consumer is responsible for returning the goods and should contact the manufacturer to find out how to proceed. Consumers can usually find information about returns on the product’s website.

How to identify distribution channels for your product

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You now know the different types of distribution channels and intermediaries. But all this is useless if you don’t know how to choose the right channel for your business. Here are seven key tips to help you make that decision.

1. Benchmarking

First, look at your competitors to find the best practices they use. This type of mapping is called benchmarking. The idea is to figure out how your competitors distribute their products and adopt a similar model.

2. Project Overview

So you’ve studied the best practices on the market and identified the solutions that could be right for your business. That’s great. The next step is to view the created project/channel. Find out if mistakes have been made, how processes can be streamlined and how the project can be adapted to the needs and specifics of the sales type.

3. Costs and benefits

When we talk about distribution channels, one of the most important factors is the cost involved. Always look for the best cost-benefit ratio. It is not enough to have a vague idea of the cost. You should note all the costs and analyze whether the benefits of the chosen channel are worth it.

4. Daily activities

Another important factor is the way the company operates. What are the projects, processes and activities in your company? The distribution channel must be in accordance with all these details. If you don’t, you may face logistical problems that lead to delays in product delivery and ruin your relationship with your customers.

5. Market potential

The choice of a channel should also take into account the market potential of intermediaries. Because if you don’t choose the direct channels, they are also responsible for the sales results. Analyze the participation of intermediaries in the market, their reputation and performance, and then try to choose the most suitable option.

6. Logistics

Consider logistical aspects such as. B :

  • How are the products transported?
  • Is safety guaranteed during the transport of products and/or in storage areas?
  • Where should the goods be stored?
  • What will be the average delivery time?

Taking into account all the logistical steps is crucial to avoid problems with the delivery of goods to the points of sale.

7. Location

Lastly, account must be taken of the place of establishment of the intermediaries, whether they are resellers, retailers, wholesalers or distributors. Finally, your product should be sold in the area where your target market is located, especially if you serve a specific niche market.

Canal management

How do you manage your company’s sales channels? Marketing departments are usually responsible for this. To this end, key performance indicators (KPIs) should be monitored. Conduct regular reviews of reports containing metrics and indicators related to the sales process. For example, track sales performance by analyzing the effectiveness of each channel used by the company. Also conduct customer satisfaction surveys, especially if customers are not satisfied with the choice and availability of products or if sales are lower than expected.

Examples of distribution channels

word-image-6528 Before we start reading, let’s look at two examples of large companies?

TCCC distribution channels

The world’s largest soft drink producer uses different distribution channels with franchisees, distributors and retailers. For example, soft drinks reach different retailers through distributors. These include bars, restaurants and supermarkets selling directly to final consumers.

Natura’s distribution channels

The Natura cosmetics brand mainly uses catalogue sales, although there are now points of sale. The company has a network of consultants who sell products to consumers through magazines that feature the products.

Distribution channels Conclusion

Are you ready to identify and manage sales channels for your business? Follow the steps I mentioned in this article, from benchmarking to outlet analysis. Consider the cost-benefit ratio of each channel. And whatever you decide, always monitor metrics and measurements. This analysis allows you to examine the effectiveness of the sales channel in order to continuously optimize it. Do you like the tips in this article? Please leave a comment with your opinion or questions. word-image-2328

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In the past year, the Internet of Things has seen a bit of a resurgence, with a slew of new devices, inputs, and services available to consumers. Whether it’s smart chatbots, Bluetooth beacons, or solar-powered speakers, the internet of things is making our lives more intelligent. But what exactly is the internet of things? The introduction of IoT devices into our lives has the potential to create a world of connected devices and gadgets, all of which are communicating with one another and communicating with us. But how and why is this happening?. Read more about what are the types of democracy and let us know what you think.

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