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A distribution channel is a method of getting a product to its consumer. These channels are part of a company's marketing mix, each business' unique combination of product, price, promotion, and place. Distribution affects the place or path through which consumers can buy and receive the product. A channel of distribution may be an on-site store, a virtual store, a retailer, a wholesaler, an agent, a telemarketer, or direct mail.
Direct mail works on a large scale. Materials advertising the product and presenting an offer usually target a specific audience most likely to purchase the item. The marketing materials inform and compel the target audience to take immediate action and respond at once by mailing in the order form. The reward for the urgent response is often a discount price or added value such as free gifts.
Telemarketing is also a distribution channel that works to get a target customer's direct response to an offer. Unlike direct mail that may reach a national audience, telemarketing is often done on a local or regional basis. It is most often used for small businesses that offer services rather than products. For example, painting contractors may telephone potential customers in the area with a special offer to try to get new business.
Buying a house is a good example of a distribution channel that requires an agent. A real estate agent markets the product, which in this case is the home for sale. Interested consumers must contact the agent. Insurance is another common product distributed through an agent. While it wouldn't make sense to distribute inexpensive, short-term, mass-produced products such as breakfast cereal this way, it does work well for big ticket, unique items.
Wholesalers and retailers are ways that manufacturers get their products to a specific group of people. A wholesaler markets items to business owners, who will in turn sell the products to consumers. Retailers sell products directly to consumers. These channels may change when businesses grow; sometimes, a retailer will become a wholesaler and vice versa, and many companies do both retailing and wholesaling.
An online store may have a national or even international distribution channel, while on-site stores tend to have a local customer base. In some cases, on-site stores also have an online, or e-commerce, component of their marketing mix. Local consumers can read information about products on a company's website before shopping in person on-site, or they can choose to order items online and have them shipped just as national or international customers do.