What is a Distribution Channel? :: Organizations, Production, Shipping

A distribution channel is organizations joined together in the process of making products available to consumers. An effective distribution channel can help improve company sales while lowering costs. An ineffective distribution strategy can be very costly to a company and might even cause financial troubles. This paper will take a look at the logistics, production and shipping strategies of Colgate-Palmolive. This paper will also discuss the marketing channels and areas the Colgate Company can improve on. Logistics, Production and Shipping Having an effective logistics, production and shipping strategy can give companies an advantage over their competitors. Producing and getting products to customers can be costly. Having an effective strategy can help reduce costs and increase profits. Colgate works closely with suppliers in order to increase quality, cost effectiveness and innovation. The company only chooses to work with suppliers that share the same values as the Colgate-Palmolive company (Colgate, 2011). Over the years Colgate-Palmolive has had to take a look at the number of plants the company had and where those plants were located. The company sells products in over two hundred countries and has plants located in different regions around the world. Since 2004 Colgate reduced the number of plants they operated worldwide (Colgate, 2011). The company started to use contract manufacturing rather than doing its own manufacturing (Trunick, 2011). By making these changes the company has been able to control costs more and become more profitable. Products need to find a way from manufacturing plants to the customers. Colgate uses several ocean containers, truckload shipments and smaller truck shipments (Trunick, 2011). Shipping costs can be very costly. With some plants closing travel miles from the plant to the customer grew. Rising gas prices along with the extra miles caused costs to rise (Trunick, 2011). Marketing Channels According to Berry (2010) â€Å"in its most simplistic form, a marketing channel performs the work of moving goods from producers to consumers.† According to Quelch and Laidler (2011) â€Å"In 1987, traditional food stores sold 75% of oral care products, but by 1992 they accounted for only 43% of toothbrush sales and 47% of toothpaste sales.† The distribution strategy for Colgate is through large retail stores, grocery stores, drug stores, dentists and plastic surgeons. Colgate has been very successful in positioning Colgate products in store locations where they would gain customers attention (Khurana, 2010).