Advantages and disadvantages of distribution channels

What is the difference between a direct and an indirect distribution channel? By Sean Ross Updated February 7, — 8:

Advantages and disadvantages of distribution channels

Advantages of direct distribution method of services 1. Direct channels are owned by the company itself. The major benefit of company-owned channels of distribution is that the company has complete control over its outlets.

This direct control enables the company to maintain consistency in service provision. Control over hiring, training and motivating employees is also a benefit of company owned channels. In direct channels, the skilled workers or professionals develop individual relationships with customers.

Therefore, the customers develop loyalty for the individual service employee or for the company. For example, most men are loyal to certain hairstylists. Direct channels are suited for local service providers such as doctors, dry cleaners, consultants, interior decorators, etc.

Companies are able to obtain direct feedback from customers on their existing needs. Thus, they can also understand how the perceptions of the customers towards offerings are changing. Greater confidentiality can be maintained with information relating to the customer.

Advantages & Disadvantages of Direct Distribution | Bizfluent

For example, maintenance of secrecy of customer accounts is very important in banking services. Direct channels enable the bankers to enjoy the trust and confidence of their customers. Direct channels eliminate the role of middlemen and hence the consequent cost of commission, brokerage etc.

Advantages and disadvantages of distribution channels

This leads to lower distribution costs thereby enhancing the profitability of the organization. As the service provider is in regular and direct contact with customers, two way communication becomes effective. Direct sale is accomplished by the customer going to the service provider hairstylists, tourist information centre or by the provider going to the customer plumbing, house cleaning, building repair etc.

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Thus, many personal as well as business services benefit from direct sale. Personal and business services like beauty parlors, photographic studios, shoe repair shops, funeral service firms, consultancy, services, car rentals etc. Disadvantages of direct distribution In spite of the advantages discussed above, several disadvantages arise out of company-owned channels.

Probably, the largest impediment to most service chains is that the company must bear all the financial risks. While expanding, the company must mobilize all the capital required for store proliferation, advertising, service quality or new service developments.

Companies rarely enjoy expertise in local markets. When companies expand into other unfamiliar regions or other countries, they are not able to adapt their business formats to suit local needs.

In such situations, joint venturing is preferable. When two or more companies want to offer a service and neither has the full financial capability and expertise, they undertake service partnerships.Online Tutor Functions Advantages, Disadvantages of Distribution Channel: We have the best tutors in math in the industry.

Our tutors can break down a complex Functions Advantages, Disadvantages of Distribution Channel problem into its sub parts and explain to you in detail how each step is performed. What are the advantages and disadvantages of direct versus indirect distribution channels?

Discuss and give some examples of brands using one of the two channels or both.

Advantages and disadvantages of distribution channels

Distribution channel plays an important role to have an effective, profitable business. Using a channel of distribution to market your products gives you different options for reaching and serving national or international customers and prospects outside your region.

Channels of distribution include wholesalers, retailers, distributors and the Internet. Just selecting a different channel of distribution. Advantages of direct distribution method of services. 1. Direct channels are owned by the company itself. The major benefit of company-owned channels of distribution is that the company has complete control over its outlets.

This direct control enables the company to maintain consistency in service provision. Control over hiring, training and motivating employees is also a benefit of company owned channels.

Identify a product now offered directly over the internet that used to be available only through a separate retailer. (Indicate the website where you found this product.) Explain the advantages and disadvantages associated with.

The pros and cons of distribution channels show that they can be extremely effective when implemented properly. It is when they are implemented improperly that problems begin to occur.

Consider each of these key points so that the best strategy for sales and consumer interactions can be .

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