Key Terms
Final consumer
The end user of a good or service. That's the person buying the product, not a business buying it for resale.
Distribution
How a company makes its market offering accessible for purchase.
Transactional
Buying, selling, and temporary risk-bearing. Risk transfers when ownership transfers.
Logistical
Handling, packing, inventorying, transporting, warehousing, and ensuring product security.
Facilitating
Financing (payment over time) and information sharing (consumer feedback, purchase trends, shopping behavior).
Direct channel
Manufacturer sells directly to consumer
Indirect channel
One or more intermediaries involved. The more complex the product or the larger the market, the more indirect layers ten
Conventional system
Each channel member operates independently, each maximizing its own profit. Creates conflict.
Vertical Marketing System (VMS)
Channel members work as one unified group toward a shared customer-centric goal. Less conflict, more value.
Horizontal marketing system
Unrelated companies partnering in shared space Indirect channel: one or more intermediaries between producer and consume
Multichannel distribution system
One company, multiple channels to reach customers (physical store + website + third-party retailers).
Omnichannel marketing system
Multichannel plus seamless integration. Consumers can buy online, pick up in-store, return anywhere.
Target market coverage
Resources and capabilities to reach target consumers Time to ship: length of time from order placed to order received Tr
Information
Some buyers need education before they'll purchase. In- store demonstrations or knowledgeable staff create value here.
Convenience
If buyers won't travel far or won't jump through hoops, your channel needs to be where they already are.