Marketing Aptitude: Channels of distribution (COD)
In the modern marketing environment, the channel of distribution is the path through which goods and services travel from producer to consumers or payments for those products travel from consumer to producer. These channels are also known as marketing channels or marketing distribution channels. The distribution channel may be direct, from the producer directly to the consumer or may include several interconnected intermediaries along the way such as wholesalers, distributors, agents and retailers, etc. Each intermediary receives the item at one pricing point and movies it to the next higher pricing point until it reaches the final consumer.
The word “Channel” has its origin in the French word for canal. The term “Channel of distribution” has been defined by many eminent scholars as under:
- Phillip Kotler: – “Every producer seeks to link together the set of marketing intermediaries that must fulfill the firm’s objectives. This set of marketing intermediaries is called the marketing channel or trade channel or channel distribution.
- W. Cundiff and R.R Still: – “It is a path traced in the direct or indirect transfer of title to a product as it moves from a producer to ultimate consumers.”
- American Marketing Association: – “It is the structure of intra company organization units and extra company agents and dealers, wholesale and retail, through which a commodity, product or service is marketed.”
- William J. Stanton: – “A channel of distribution (sometimes also called trade channel) for a product is the route taken by the title to the goods as they move from the producer to the ultimate customer or industrial users.”
- Phillip Kotler defines marketing or trade channels as “a set of independent organizations involved in the process of making a product or service available for use or consumption.”
- Stanton: “A distribution channel consists of set of people and firms involved in the transfer of title to a product as the product moves from producers to ultimate consumer or business user.”
- Beckmen and others: “The course taken in the transfer of the title to a commodity constitutes its channel of distribution. It is the route taken by the title to a product in its passage from its first owner, the agricultural producer, or manufacturer, as the case may be, to the last owner, the ultimate consumer or the business user.”
- Richard M. Clewelt: “A channel is the pipe line through which a product flows on its way to the consumer. The manufacturer puts his product into the pipe line or marketing channel and various marketing people move it along to the consumer at the other end of the channel.”
- John A. Howard: – “Marketing channels are the combination of agencies through which the seller, who is often though not necessarily the manufacturer, markets his products to the ultimate user.”
- Thus, the term “Channel of distribution” implies a path way taken by goods as they flow from the point of production to the point of ultimate consumption.
Importance of Channel of Distribution (COD)
The channels of distribution indicate routes or pathways through which goods and services flow from producers to the consumers or industrial users. It is very important to both the producer and the consumer because consumers are scattered in many places while producer is situated in one place. There is a big gap between the producer and the consumer. Here, the channel of distribution plays an important role by bridging the gap between the producer and the consumer.
To attain this objective, the middle man plays an important role in the consumer-oriented market. They are specialist in concentration, equalization and dispersion. They collect the outputs of various products, subdivide the products according to the needs of the consumers and gather this -in the assortment wanted and disperse this assortment to the consumers. The success of channels of distribution (COD) is completely depends on the middlemen as they create time and possession utility. The channel of distribution helps in making products available at the right time in the right place and in the right quantity.
Thus, we can say that the channel of distribution is the connecting link between the producer and the consumer to sell the products and maximizing the profit and satisfying the customers (or consumers).