Tag: distribution channel

The business concept: Putting it all together

Creating a clear, strong business concept statement – including a customer definition, value proposition and compelling story, product or service definition, and distribution channel – is the first activity in the development of a formal business model. In an earlier blog post, we shared the service definition for Maria’s Mobile Bike Doctors. Now let’s take a look at her completed business concept statement:

Imagine being able to call for help when your bike breaks down, without having to drag it to the nearest bike shop. Maria’s Mobile Bike Doctors speeds to the aid of stranded cyclists who want fast service, a solid repair and a friendly face. Maria’s Mobile Bike Doctors are well-trained bike experts, so cyclists can be sure their repair is safe and lasting. And they’re fast – we can get anywhere in the city in 35 minutes or less. Maria’s Mobile Bike Doctors takes the stress and hassle out of those pesky bike breakdowns – wherever you are.

Why does Maria’s business concept statement work? It works because it 1) Defines her customers (cyclists); 2) shares a value proposition and compelling story (more convenience, speed of service, reasonable prices); 3) describes the service (qualified bike repair people will fix bikes anywhere); and, 4) implies the distribution of the service is direct to the customer.

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The business concept: The distribution channel

Next in our business concept discussion: The distribution channel.

Your small business’ distribution channel is the way your product or service will physically be distributed to the customer. There are two kinds of distribution channels:

  • Direct channel – the product or service is sold directly to the end user.
  • Indirect channel – third-party intermediaries help to move the product from the manufacturer to the end user. Using intermediaries to get products to market is known as market coverage. Thanks to an intermediary’s own contacts and distribution channels, your product may reach a wider market.

What distribution channel should you choose?

Speed and reliability are factors to consider. Today’s customers expect products to be delivered more quickly than before, and they also expect instant access to information. Small business owners will be relying on intermediaries to “deliver” and sell their products to the end user. Some see this as a loss of control, since they have to count on others to make their end users happy.

The ideal distribution channel for your small business is the one that best meets your customers’ expectations about where and how your product or service should be sold. Most services are delivered directly to the customer. However, products usually use intermediaries like wholesalers or retailers.

However you intend to deliver your product and service to your customer, it’s a critical part of your business operations and your business concept. It’ll help you to learn and understand your market, potential suppliers and competitors.

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