Direct Distribution and Indirect system
Explain the difference between a direct distribution system and an indirect distribution system. You are the marketing manager for an internationally recognized American brand of high-quality footwear that is currently selling its products to Australian consumers using a traditional channel system but achieving poor exposure, low market penetration, and poor profits. Assume you continue to favor an indirect distribution system consisting of the alternatives of a traditional channel system, a corporate system, an administered system, or a contractual system. Explain what kind of indirect distribution system you would like to set up to improve your poor performance, stating your reasons.
Direct and indirect distribution systems are two different distribution systems used for the distribution of products by businesses. Direct distribution channels are used when the manufacturer has to deal through an overseas or other far away channel so the dealing can be done without any intermediary. It is also employed in order to maintain greater control over the market. It is used to actively exploit the market. It is the shortest and simplest distribution channel available. Moreover, it is possible for the manufacturer to provide more reasonable and lower prices than possible through an intermediary channel or retailer. Sometimes direct distribution channel is the only channel because the use of intermediaries may cause an increase in prices, which can make the business lose customers. Direct distribution, however, is very time-consuming and can be expensive. It is also difficult to manage (Onkvisit & Shaw, 2008).
Indirect distribution channels involve some intermediary between the manufacturer and the consumer (Capon & Hulbert, 2008). These intermediaries can be franchises, retail stores, and other indirect channels. In indirect distribution, manufacturers use other sales intermediaries for marketing and selling their products. An indirect distribution channel is simple and inexpensive. The manufacturer is relieved of the duty to physically transport and move goods. Producers also use indirect channels of communication because the customers are often familiar with certain retailers and transporters. It can also be used to sell small products through large retailers. This makes it easier for producers to reach their target consumers (Onkvisit & Shaw, 2008).