What is an example of direct distribution?

One of the big questions entrepreneurs face when launching a new consumer product is how to get it to market. Basically, there are two distribution channels to choose from:

1.   Direct – The consumer buys the product from you online, in a store, at a trade show or by mail order.

2.   Indirect – The consumer buys your product from a wholesaler, retailer, dealership or some other intermediary.

Is your product better suited to direct or indirect distribution?

Your first job when choosing your best distribution option is to consider your product. For example, if the item is perishable, you may need to invest in refrigerated storage facilities and trucks to handle its distribution properly. If this is too costly, you might be better off distributing through a wholesaler who already has this equipment. You may want to invest in some market research to better understand your customers and your competitors’ approach to distribution.

If you are still on the fence after looking at your product and market data, your next step is to weigh the options against one another.

The pros and cons of direct distribution

There are several advantages to going direct, especially when you’re just beginning and your market is easily covered. By interacting with your customers directly, you retain a lot of control over your product and its performance.

Direct distribution allows you to:

• collect valuable data on customer buying habits
• distinguish yourself from the competition
• respond to product performance and customer feedback
• get your products to consumers faster
• avoid sharing profits with a third-party distributor
• build relationships with your customers

Despite the positives, direct distribution also has some potential drawbacks.

One of the biggest challenges is the sizeable costs that can come with direct distribution. For example, you may need to purchase trucks, hire drivers and rent storage space. You may also find it harder to reach potential customers without the network an established distributor provides.

The pros and cons of indirect distribution

Going through external sales channels has its own benefits. Indirect distribution allows you to:

• share shipping and storage costs
• make it easier for customers to find your products
• benefit from your third-party’s experience, infrastructure and salesforce
• avoid the complexity of managing distribution logistics

The main challenge with indirect distribution is the distance it puts between you and your customers. By adding an intermediary, you are also increasing the amount of time it takes for your product to reach the buyer.

It’s also harder to establish brand loyalty when you are not interacting directly with your customer. Still, it is a good way of bringing your product to market without burdening yourself with the start-up costs of establishing your own distribution channels.

If you decide to go the indirect route, it’s important to clearly define the terms of your agreement with your partner from the beginning. You should agree on roles and responsibilities, training and customer support, reporting and performance monitoring, among other issues.

There’s been a push in recent years for companies to become more holistic. Instead of siloing departments like marketing, sales, and distribution off from each other, modern companies are prioritizing collaboration. In particular, marketing is becoming an integrated part of every aspect of these businesses. Marketing is making its way into everything from customer support to distribution channels.

That’s why you may have heard about distribution channels A marketing distribution channel is how your marketing strategies are built into your business model. Here’s what you need to know about the distribution strategy, how it works, and how to implement them in your own business.

What Are Distribution Channels?

A distribution channel is a method by which you deliver things to your customers. The importance of distribution channels is simple: Without a distribution channel, you have no way to distribute anything to your audience.

Types of Distribution Channels

The term "distribution channel" has several meanings. It can refer to the distribution of your actual goods and services or your marketing materials. Both types of distribution have some fundamental similarities, though.

There are many channels of distribution, but they can be grouped under three basic types:

• Direct Channels: This channel of distribution involves reaching out to your customers yourself, with no middlemen. You may sell marketing materials personally or offer them digital products without a third party.
• Indirect Channels: This form of distribution involves a third party. You send your marketing materials or goods to a middleman, then deliver them to the right people.
• Dual Distribution: Finally, dual distribution is a combination of direct and indirect distribution. You both directly connect with your customers and work with other parties to spread your materials even further.

Examples of Direct vs. Indirect Distribution Channels

To understand how these channels work, it helps to see examples. Direct distribution is easiest to spot with:

• Online maker stores: Someone who makes their products and sells them directly through their website, or other digital platforms, uses direct distribution. Similarly, if they use email or social media to connect with their audience, they directly distribute their marketing materials.
• Service providers: Service providers by necessity use direct distribution. They need to connect with their customers to provide services. This makes these companies prone to using direct distribution marketing to build relationships with their customers by using cold calls or email.

On the other hand, indirect distribution is most common with:

• Retailers: By definition, retail is an indirect distribution market. The retailer buys products from the wholesaler or manufacturer and then sells them to consumers. Retailers also participate in indirect marketing distribution by advertising products on behalf of manufacturers and wholesalers.
• Influencers: An influencer makes their living by acting as an indirect distribution channel. The influencer may sell products on behalf of the manufacturer or simply market products for them. Either way, they are acting as a third party connecting manufacturers and consumers.

What Are the Channels of Distribution in Marketing?

There are dozens of marketing distribution channels, but they’re not all equally useful. The following channels are some of the most effective for spreading the message about your company.

Email

The most direct form of marketing used by most companies is email. Just about everyone has an email address. More importantly, emails are relatively innocuous — a single email rarely annoys customers. That makes email marketing one of the best channels for remaining in contact with your customers.

Email still needs to be done well to have an impact, of course. Starbucks is known for its excellent email marketing, which heavily relies on offering customers rewards for opening its emails. For example, in the email below, the company provides “stars,” or reward points, for customers who open the email and accept the offer.

Social Media

Social media is another critical direct distribution channel for marketing. You can directly interact with your most interested followers through social media like Facebook, Twitter, and Instagram. You can use social media to encourage organic spread or pay for ads to reach new potential customers. It’s flexible and customizable, so you can make it suit your business.

This Facebook post by Indeed demonstrates how you can make a post on the site and then “sponsor” it to spread to people who don’t already follow your brand. You can do similar forms of digital distribution on Twitter and Instagram, as well.

Search Engines

If you’re like most people, you’ve already used a search engine multiple times today to find information or sites. You may have noticed the results at the top marked as “ad” that otherwise looked just like the rest of the results. These are sponsored results, and you can use them, too.

A Google-sponsored search result is an excellent way to make the most of search engines as an indirect distribution method. You pay Google to display your page for searches that use specific keywords. You only have to pay for the times your ad is shown to customers, so it’s a cost-effective way to put yourself in front of people who are specifically looking for companies like yours.

Content Marketing

Content marketing is the direct way to use search engines to your advantage. With content marketing, you post high-quality, valuable information on your site that has undergone search engine optimization or SEO. Google and other search engines prioritize this kind of content, so it helps you show up higher in search results. Furthermore, good content can help pull your customers back to your site, where they may purchase in the future.

For instance, Caduceus International Publishing uses content marketing that covers topics related to its core product of virtual medical coursework. This content provides value to its audience, improves the site’s SEO, and helps the brand build its reputation for expertise.

Influencers

An influencer is someone who has built an audience and works with brands to advertise to that audience. They have built a reputation for exciting content or good recommendations in their specific niche, and their audience trusts the brands and products they recommend.

Influencers can be famous names, like Alexa Chung or Kylie Jenner, or people who are well-known in their specific niche but not elsewhere. You can connect with influencers and have them act as your channel partner to market your brand to their audience and take advantage of the effort they’ve already put in.

Video Ads

Video ads make up a ubiquitous indirect marketing channel. You can break down video ads into several smaller distribution paths, including social media ads, TV ads, and streaming spots. Each sub-channel needs video ads to be structured a little differently, but the fundamental idea is still the same. You record your ad, then you choose channels or shows during which you want your ad played. You’ll pay the service that plays it either a flat fee or a certain amount for each ad.

Print Advertising

Another indirect marketing channel of distribution is print advertising. This includes things like magazine ads and billboards. Any type of advertising in which you pay someone to print and display physical ads falls under the umbrella of print advertising.

Print advertising is most common in huge businesses or companies with a specific niche. For instance, Nike has the marketing budget to place print ads in magazines like the one below. Other companies that can benefit from print ads include those with trade publications — like sports suppliers — or those that focus entirely on a specific geographic area, like restaurants or car dealerships.

Phone Marketing

Remaining in the physical world, phone marketing or cold calling has a long history as a popular form of direct marketing. In this channel, you reach out to potential leads whose information you have been given to offer them your services. As long as you comply with regulations for cold calling, it’s an excellent way to build a personal relationship with your audience.

Sponsorships

With the sponsorship marketing channel, you agree to support an event or person in exchange for them marketing your product. This indirect channel lets you get your brand in front of a relevant audience, as influencers do, and also allows you to boost your reputation within that community.

NASCAR is known for the sheer number of sponsorships visible in the sport, as you can see with the cars below. However, you can also sponsor charity events, trade shows, and conventions, depending on your company’s specific focus.

Word of Mouth

The last distribution channel is also the hardest to directly control. Good word of mouth is an indirect marketing distribution channel that’s highly effective at winning new customers. When your current clients are pleased with your business, they’ll spread the word.

You can promote word of mouth by offering things like referral bonuses. A referral bonus rewards your best clients for bringing in new customers like them and encourages word of mouth. Google Fi offers an excellent word-of-mouth referral bonus by providing both the referrer and referee $20 credits on their phone bills.

Tips and Tricks for Using Marketing Channels of Distribution Effectively

With so many channels to choose from, it’s easy to feel overwhelmed. However, you don’t need to do everything all at once. Here are a few tips and tricks you can use to find the most efficient distribution channel for your business.

Build Customer Profiles

Marketing is all about reaching the audience you want. But how do you make sure you do that? It can be easy to lose sight of your specific target market if you don’t have a way to keep it clear. The simplest solution is to build customer profiles or personas that explain who you’re targeting.

A customer persona is a simple description of a potential customer, usually just a few paragraphs long. It describes their demographics, their wants, needs, pain points, and personality. Your customer profiles will make it much easier to choose the proper marketing channels from the start — after all, a middle-aged businessman is unlikely to see ads on Instagram but probably cares about trade publications. Your profiles will guide the channels you choose from the start.

Choose the Right Distribution Marketing Channels for Your Business Model

Once you’ve developed your customer profiles, you’ve probably narrowed down the distribution channels significantly. Now you can pick the specific ones you’ll use based on your business model.

Two companies can target the same demographics through entirely different channels, depending on how they’re structured. For instance, Starbucks’ business model makes it easy to perform direct marketing. The company uses email marketing and organic, direct social media to bring in users because it already has a large audience.

A smaller company might rely more heavily on indirect marketing. For example, a brand-new coffee company could use influencer marketing and paid social media ads to connect with pre-built audiences.

You can choose the right channels by considering things like:

• Your current audience
• Your most effective past marketing campaigns
• Your goals for the future
• The way you make your sales

Build Materials for the Channels You Choose

There are so many marketing channels that there is no way you can develop a single piece of material that will work for every single one. Instead, take the time to create custom marketing materials for each channel.

For instance, a video on YouTube and a video on Instagram shouldn’t be the same. The platforms have different length and size requirements and diverse audience expectations. Similarly, the content you’d post as a blog won’t be the same as a LinkedIn post or a whitepaper. When you put in the effort to develop unique content for each platform, you can take advantage of their strengths more effectively.

Develop and Communicate Branding Guidelines

Whether you’re doing direct, indirect, or dual distribution of your marketing materials, you need branding guidelines. You can use these guidelines to ensure that your marketing materials are always consistent, both in-house and with third parties.

You should share your guidelines with your marketing team, influencers, retailers, and anyone else that helps actively market your brand. You can even send out specific marketing materials and content to make sure things remain consistent. The result will be a brand image that’s coherent, approachable, and easy for your audience to remember.

Work With the Distribution Channels That Fit Your Business Objectives

There’s no one-size-fits-all marketing distribution process. The channels you choose will depend on your business, your audience, and your time and resources. Whether you decide to invest in content marketing, social networks, or email, you can get excellent results as long as you make an informed choice and develop content built for the channels you’ve chosen.

Which are two examples of direct distribution channels?

What is direct and indirect distribution with examples?

What companies use direct distribution?

What is an example of distribution?