Distribution channels

Distribution channels are a sequence of commercial intermediaries. The commercial intermediary is the figure that puts the producer in contact with the final buyer. Commercial intermediaries may take physical possession of the goods to be sold, as is the case for wholesalers or retail retailers, or conduct negotiations, as is the case for commercial agents.
The main function of distribution channels is to fill gaps between the producer and the consumer: they can be geographical, temporal and technological gaps.  Geographical gaps  relate to the place of production of goods and the place of consumption. The temporal gaps instead are those that are created between the productive cycle of a company and the time of consumption of the good. It can happen, for example, that months elapse between a passage and the other of the cycle of the product and this time must be distributed within the distribution channel. The technological gap is instead what is created between the large amount of goods produced by the company and the small amount required by the consumer. In this case, the distribution channel has the task of controlling the flow of goods to meet demand. But let’s analyze how distribution channels can be composed.

The direct distribution channel

The distribution channel may be direct or indirect. The direct intervention involves only two figures: the producer and the consumer or buyer.  Insurance agencies and manufacturers of industrial goods are an example. In many cases in this system, in addition to the physical good you sell an extra service, such as assistance, warranty or training. By choosing this type the manufacturer ensures a more direct control of the commercial transaction. But building a direct distribution channel requires more resources and more time.

The short indirect distribution channel

The indirect distribution channel, however, provides for the action of several intermediaries in the path that brings the good from the producer to the consumer. This type ensures less control over the process and prices, but relieves the manufacturer from the task of creating commercial relations with small realities. The indirect distribution channel may be short or long, depending on the number of intermediaries. An example of a short channel is the one that involves the GDO (Large Organized Distribution), the Purchasing Groups or the dealerships: the producer sells to these realities that then reach the consumers. The GDO is the one, for example, that collects supermarkets, hypermarkets and department stores. The Purchasing Groups, on the other hand, are smaller and local distribution companies, very popular in recent years. These companies guarantee the manufacturer to reach a high number of customers, but leave the manufacturer little room for manoeuvre on the selling price.

The long indirect distribution channel

In the long indirect distribution channel, however, more intermediaries intervene. The most classic example is the wholesaler: the manufacturer sells to the wholesaler, who supplies the retailer who sells to the consumer. Also in this case the control of the producer on the entire process is weak, but the wholesaler assures the arrival of the goods also in the smaller shops and therefore the possibility to penetrate more capillary in the market. This is a form of distribution widely used in the agri-food sector or in the flower sector, for example. Sometimes the indirect distribution channel also includes commercial agents who, divided by areas of expertise, are responsible for collecting orders from wholesalers and returning them to the manufacturer. Recently to these forms of distribution has been added direct marketing, whose most popular example is definitely e-commerce.

E-commerce

In recent years more and more companies are experimenting with a new distribution channel, e-commerce, often in association with traditional sales methods. Direct marketing, of which e-commerce is an example, puts in direct communication consumer and manufacturer. The latter thus finds himself in charge of all the tasks incumbent on the various figures in the distribution channel. E-commerce, however, allows you to create a direct and loyal relationship with the customer, which in this way feels the producer closest and available. The e-commerce channels can be divided into indirect, when the consumer buys a physical good that will then be shipped and used later, and direct, when instead to be sold are non-physical goods, which can be immediately used.
Some companies have also decided to diversify their strategies, selling on e-commerce products that do not sell in physical stores, so as to give an aura of exclusivity to e-commerce.

Conclusions

Choosing or creating a distribution channel, as we said, is not a simple decision and must be considered in depth: a distribution that does not arrive anywhere and not in good time is harmful for the product. At the same time the chosen distribution channel is also a signal of the identity of the company and its mission.

L'articolo Distribution network and its importance proviene da Cecilia Rabassi.

Chocolate producers are renewed: the bean to bar

To make up for the lack of quality chocolate, the producers have decided to return to the source, taking care of the entire chocolate production process, “from bean to bar” which means from cocoa bean to bar. So the same chocolate companies take charge of the choice of the variety to be grown, leaving space also for the research and recovery of lesser known and older varieties. Once the quality has been chosen, the time of the harvest of the pods, the fermentation, the drying, the roasting and finally the grinding follow carefully. Now the precious cocoa is ready to become chocolate. Then go to conching and tempering, up to modeling, in which the shape to be given to the chocolate is decided. The last step is that of wrapping or packaging which has a fundamental role in the success of the product, as I told you in this article. Attention to details in all these production phases is obviously essential for the success of a product. But the manufacturers have decided to do much more.

Sustainability in the production of chocolate

In their searching for a quality product, the chocolate producers have also decided to take care of the environment, creating and promoting eco-sustainable projects and helping local cocoa farmers. A raw material grown without damaging the soil and carefully will be destined to give a higher quality product. Similar projects are also the ideal opportunity to give new life to the land confiscated from the mafias and drug traffickers or to bring to life areas that have never been cultivated. We are therefore at a time when humanity and the environment return to the center of attention of chocolate producers: the same consumer is respected in his opinions and in his legitimate request for transparency in all production phases. But how has the taste of chocolate changed and how have consumers changed?

How the taste of chocolate has changed in recent years

To tell you about the change in the taste of chocolate, I have to go and dig up the memories in my mind. As we said, tasting is a deep and personal sensorial experience and therefore it is only from a subjective point of view that I can give you an idea. I remember that when I was a child I loved eating Easter egg decorated with dark chocolate flowers.

I was waiting for Easter to eat that delicious egg, to savor all the taste of extra dark chocolate. Today, however, chocolate is completely different. The taste of consumers has refined, there are many types of dark chocolates and the legendary dessert of the most beautiful moments has become a small gift that we make and we love to do to friends and loved ones.

It is strange to see how the culture and knowledge of a product, whose main material, cocoa beans, comes from distant countries, has come so far. Over the years, consumers have become more attentive: they increasingly love to discover and taste different aromatic chocolates, with cocoa percentages ranging from 65% to 90 – 95%. And then they go in search of chocolates composed of cocoa beans with different origins: so they discover single-origin chocolate (made with raw material from a single one), blend (composed of seeds that come from different countries) and combine them with liqueurs, spirits , sweet wines, red wines, tea.

To give life to the great aromatic charge that the quality dark chocolate releases in our mouth and that gives us great satisfaction, it took years of work by men and women, who studied the genetic qualities of cocoa, even those that had been lost over time, and have recovered them in nurseries and agricultural universities, located mainly in tropical countries, and then replanted to obtain better quality.

L'articolo Chocolate: latest trends proviene da Cecilia Rabassi.

The importance of packaging in a marketing strategy

As we said, packaging has now become an essential element in a product’s marketing strategy. The packaging, in fact, must be not only a means but a real pleasant experience for the consumer whether he buys it for himself or for a gift. It must be the first step of a pleasure process that the product must provoke in those who buy it. For example, in recent years, the phenomenon of “unboxing” is spreading on social media: users recover when they receive a package and open it. This attention to the packaging and the first contact with it has led numerous companies to reassess the weight given to packaging.

A packaging talking to the consumer

Packaging therefore transforms itself from a mere vehicle of the product into a talking element. Numerous companies are studying methods to apply new technologies to packaging, so as to make them more interactive. The industry sectors most attentive to the theme of packaging are agri-food, cosmetics and the personal care sector in general, or those in which the product without a container has no consistency and personality. An industry that produces fruit products, for example, has applied a QR code on its packaging which, if read from a smartphone, tells the story and origin of the fruit: how and where it was grown, how it was processed and how which way it came to the buyer. This not only brings the product closer to the consumer but also creates a relationship of trust and transparency much sought after by those who buy in 2020.

Personalization in packaging

Another new packaging trend of recent years, which was born with the aim of bringing the product and the consumer closer, is that of personalization. Projects such as the Coca Cola campaign, which created bottles with personal names to invite you to consume the product with the person named, or the Kitkat initiative, which allowed you to customize the packs of the well-known snack with your photo or an image of your choice, their philosophy is to privilege human relationships, in which the product is only a means, which makes them possible and closer. Thus we move from a vertical brand-consumer relationship to a horizontal community dimension, aided by the product. Furthermore, the theme of packaging customization also opposes the sense of approval that very often affects the younger generations, that of the Millennials and that of the Gen Z (born from 1997 onwards): in a world of elements that are all the same, the possibility of making a product you use unique and yours is bound to have a good grip.

The packaging for Millennials: the keyword is sustainability

However, as we said, Millennials are revolutionizing the world of packaging in another direction too, that of transparency. According to some studies, new consumers choose products to buy very carefully, more than previous generations did. They rely on brands that reflect their values, that manage to communicate their philosophy and their mission and that use eco-sustainable materials and packaging with few polluting emissions in their packaging. For example, if they have to buy coffee, they prefer the one in a recyclable cardboard box and not a plastic one, which tells its own story and possibly promotes humanitarian projects aimed at supporting the economy of the producing countries: the new generations they are no longer willing to turn a blind eye to the production processes of the big brands, but are more informed and aware.

Ok, the packaging but don’t forget the quality of the product

That’s why 2020 packaging must be a central element in a marketing strategy: it must be able to tell a story and convince the buyer of the good intentions of the brand. Let’s not forget, however, that the quality of the product must respect the standards proposed by the packaging: especially if it is a question of food products, tasting must meet expectations and complete the pleasure experience begins with the view of the packaging. The goal must always be to leave the consumer with a beautiful memory of the whole experience.

L'articolo Packaging 2020 trends: care, consistency, sustainability proviene da Cecilia Rabassi.