Distribution Channel Designs for Consumer Products
In the case of consumer products, channel design is about determining the most effective means of delivering products from the manufacturer to the end consumer. Here are some common consumer product channel design strategies:
a. Direct to Consumer (DTC)
Using direct-to-consumer (DTC) marketing, companies are selling directly to consumers through their own online platforms, bypassing intermediaries. E-commerce has led to a rise in direct-to-consumer marketing. Customers can enjoy a more personalized experience, collect better information, and position their brand in a way that is more controlled.
b. Retailers
Consumer products are widely distributed through retail channels. Manufacturers may partner with a variety of retailers, including department stores, specialty stores, supermarkets, or online marketplaces. Target markets, product categories, and objectives for market coverage determine which retailers to choose.
c. Wholesalers and Distributors:
Manufacturers can reach a broader customer base by using wholesalers or distributors. They buy products from manufacturers in bulk and sell them to retailers or other resellers. In addition to offering economies of scale, wholesalers can help manufacturers reach smaller retailers or geographically dispersed markets.
d. Franchising:
Some consumer product companies use franchising as a channel strategy. They establish a network of franchisees which operate retail outlets under the company’s brand and follow standardized business practices.
As a result of franchising, companies are able to expand rapidly and gain knowledge of local markets.