Fundamentals of Business

Distribution channels may not be restricted to physical products alone

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. Links now exist between airlines, hotels and car rental services.

As the following example shows


In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

There is a difference between selling directly and selling through intermediaries. Selling directly you interact directly with the customer.

Selling through intermediaries, you interact with the intermediary enterprises buyers who are their for their enterprise’s interest on behalf of the end user, it is paramount to understand the difference between industrial/institutional buyers and buying for trade or retail.
Most of these people are well trained employees with expertise in their chosen categories. They are aware of the best sellers the market as a whole.
Buying for trade
The buyers are looking for enough mark up. They can be tough depending on their buying power.