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Distribution Systems

Before settling for a distribution system the marketer has too keep in mind various factors affecting distribution system (like marketing decision and relationship issues).

The following distribution designs are available to the marketer for his distribution system:

  • Direct Distribution Systems

  • Indirect Distribution Systems

  • Multi-Channel or Hybrid Distribution Systems
  • Direct Distribution Systems
    • In direct distribution system the marketer reaches the target consumer directly without the use of any intermediary. The distribution chain is small and no other party can take ownership of the product being distributed. The direct distribution system can be further sub-divided on the basis of the methods of communication that takes place during sale between marketer and consumer. These methods are:

    • Direct Marketing Systems
      • In this system the consumer buys the product based on information gained from impersonal contact with the marketer like by visiting the marketer's website or ordering from the marketer's catalog. Or he buys based on information gathered through some personal communication with a customer service personnel who is not a salesperson and can be reached through a toll-free number.

    • Direct Retail System
      • In this type of system the marketer operates his own retail stores. A perfect example of this system is Starbucks.

    • Personal Selling Systems
      • In this system the distribution of the product is carried forward by people whose main responsibility is creating and managing sales (for instance a salesperson). He persuades the buyers into placing an order. This order may not be handled by the salesperson but through websites or toll-free telephone numbers. The sales person plays a vital role here in generating sales.

    • Assisted Marketing System
      • In this form of distribution system the marketer handles the distribution of his product and helps it reach directly to the end user. However he needs assistance from others to spread awareness about his product among the customers. An example of assisted marketing system is e-bay, here the buyers and sellers are brought together for a fee. Agents and brokers can also be included in this category.


  • Indirect Distribution System
    • In indirect distribution system the marketer includes intermediaries or other members in his distribution chain. These resellers make sure the product reaches the end user, while performing their duties they take complete ownership of the product. However the reseller may sell products on a consignment basis wherein the reseller pays for the product only when the product is sold. The resellers may be expected to take up a few responsibilities to help boost the sales of the product.

    Indirect methods include the following:

    • Single-Party Selling System
      • In this system the marketer involves another party to sell and distribute his product to the end user. An example of single-party selling can be when the product is sold through large store-based retail chains or through online retailers. In this case the distribution system is also referred to as trade selling system.

    • Multiple-Party Selling System
      • In multiple-party selling system the distributor involves two or more reseller in the distribution process before the product reaches the end user. This is most likely to happen when a wholesaler buys the product from the manufacturer and then sells it to the retailer.

  • Multi-Channel (Hybrid) Distribution System
    • A marketer is said to be using a multi-channel or hybrid distribution system when he utilizes more than one distribution design. As we have studied earlier in the example of Starbucks, multiple distribution designs are put to use in the distribution of its product. It uses a direct retail system when it sells its products in company-owned stores, a direct marketing system by selling via direct mail and single party selling system is put to use when its products are sold through grocery stores. Apart from these other distribution systems are also put to use.


    Multi-Channel distribution system is advantageous as it expands the distribution system and more customers can be reached. The possible disadvantage again is channel conflict of which the marketer should always be cautious.

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