Making Channel Decisions
Long-term commitments with other
firms are often engaged in making distribution channel decisions. The primary
step in determining the best distribution channel to use, a firm needs to evaluate
their customers and recognise their needs. Besides, a firm should discuss and
conclude the channel objectives whether it is beneficial to them or not.
Moreover, a firm must work out on allocating tasks and processes equally.
Importance of Distribution Channel
Kotler defines distribution channel as “A set of independent organisations involved in the
process of making a product or service available for use or consumption by the
consumer or business user”
distribution channel is vital to make chosen products available when, where and
in the qualities that clients want them. For instance, products are made only
upon client’s order and it will be sent to client’s doorstep or to the retail
store by courier services once the product is done.
it is essential that a distribution channel provides quantity of distribution
functions that boost the efficiency of products’ flow from manufacturers to the
client. For example, a firm will have a specific department that will be held
accountable for taking clients’ order and delivering goods to them.
Another importance of
distribution channel is the transportation and storage of products. For instance,
the head of the department and the managers should make sure that the
transportations for delivering goods are sufficient to ensure the process of delivering
Moreover, it is also important
that a distribution channel implement a number of functions that make the
purchase procedures easier for clients and manufacturers. For example, online websites nowadays are linked to
the bank’s page to make transactions easier for clients.
Reasons for Transitions of Distribution
The main reason why Dell changes its distribution channel
is because Dell wants to cut down operation cost by cutting out retail
Besides, Dell was facing loss of communication control. Along
with the profits gained, the message being received by clients is also in the
hands of middle person. There is a risk of wrong information being conveyed to
the clients relating product features and advantages which can lead to
disappointments. By enriching customer value, Dell wants to build up the margin.
Moreover, Dell has lost its product importance. When a
product is passed over to a middle person, the products’ importance is out of
Dell’s hand at that instant. The middle person may have motivations to promote another
product first at the expense of others.