Table of Contents
- 1 The manufacturing business needs to use an effective distribution strategy to reach its target buyers.
- 2 Supercharge Your Marketing Operations
- 3 What does distribution mean?
- 4 What is digital distribution?
- 5 Distribution Strategy and It’s Strategic Role
- 6 Distribution Functions
- 7 Marketing Automation Guide
- 8 Physical Distribution
- 9 Direct Distribution by Manufacturers
- 10 Product Characteristics
- 11 Financial and Control Considerations and Your Distribution Strategy
- 12 Wrap Up about Distribution Strategy
- 13 General FAQ’s
- 14 Turn an Idea into a Steady Revenue Stream
The manufacturing business needs to use an effective distribution strategy to reach its target buyers.
Your distribution strategy must be defined in get your products or services to market. This could be a simple SaaS downloadable app to creating an airplane out of Seattle, WA. The distribution strategy can help manage complexity.
The channel of distribution is a network of organizations that connect the producer with the end-users of goods or services.
The distribution strategy in marketing pertains to the product or service available to the target customers through its supply chain. The distribution strategy for marketing is often called the place. The place is one of the marketing 4P’s.
4 Ps of Marketing (Product Mix) The four Ps of Marketing (Product, Price, Place & Promotion) is also known as the ‘Product Mix’. A product mix is a crucial tool in determining a product’s offering to the customer.
A SaaS company will use a digital distribution strategy where its digital content distribution strategy may be direct or through affiliates.
An effective and efficient distribution channel provides its members with an important strategic edge over competing channels. Your distribution strategy determines how a company reaches its target markets.
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What does distribution mean?
A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the final buyer or the end consumer. Distribution channels can include wholesalers, retailers, distributors, and even the Internet. This included sales channels and marketing channels of distribution too.
What is digital distribution?
Digital distribution is the delivery or distribution of digital media content such as audio, video, e-books, video games, and other software.
The distribution strategy of Apple is different from the distribution strategy of Coca-Cola. And the distribution strategy of Starbucks is different than both.
These types of distribution strategy could be understood, but I suggest you research their distribution strategy and how they might apply to your situation.
Remember to document the workflow and costs. Your distribution strategy is in the marketing plan. It makes it easier to share and keep organized.
Your strategies for distribution needs to part of your marketing plan and metrics set. If you decide to use channel partners you will soon be asking how to improve distribution strategy and supporting them too.
Deciding between distribution to end-users through a company sales organization or the use of independent channel intermediaries requires the evaluation of various strategic issues. In some instances, a combination of distribution channels may be used.
Many manufacturers sell directly by using a company sales force. However, other manufacturers use marketing intermediaries to produce all or part of the required distribution functions.
Designing an effective distribution strategy requires a penetrating analysis of the available alternatives in order to select the most appropriate channel network.
If a business chooses intermediaries or suppliers in a helter-skelter way, distribution becomes fragmented. Established channels are sometimes difficult to enter. Channel analysis is important to businesses in a wide range of industries.
Channel distribution may include the following:
- Developing and managing the channel
- Gaining entry into a particular channel
The strategic role of your distribution channels in your marketing strategy is discussed in this post.
Distribution Strategy and It’s Strategic Role
An effective distribution network creates a strong competitive advantage for a business. Ethan Allen, John Deere, and Snap-on tools have one common feature in their marketing strategy. Each has a well-developed distribution channel that contributes to the company’s performance.
Ethan Allen has a selected network of independent retail dealers. John Deere has a strong worldwide group of farm equipment dealers.
Snap-on Tools independent dealers in a van provide a close link with customers. They get supplier feedback to guide product improvement, assist customers in tool selection, and expand sales every year.
A channel of distribution is a network of organizations and functions connecting the producer to the end-users. The distribution channel consists of interdependent and interrelated institutions.
For example, hospitals, ambulance services, physicians, test laboratories, insurance companies, and drugstores constitute a channel of distribution for health care services.
The basic channels of distribution for consumer and industrial products are shown in Exhibit 1.
In addition to the primary types of intermediaries shown, a variety of facilitating organizations functions as channel specialists. The specialist includes financial institutions, transportation firms, advertising agencies, and insurance firms.
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Several functions are performed in moving products from producer to end-users. These include the following:
Buying and selling activities by product intermediaries are necessary to reduce the number of transactions for producers and then users.
The functions needed and the organizations to be responsible for each function are major factors in your channel distribution strategy.
When initially selecting a channel of distribution for a new product, the pricing strategy and desired positioning of the product may influence the choice of the channel. Distribution channel strategies can become complicated quickly.
Have you ever heard of Occam’s razor?
Occam’s razor (Latin: novacula Occami) is the problem-solving principle that states, “Entities should not be multiplied without necessity.”
Keep it simple!
Once the channel of distribution design is complete and responsibilities for performing the various marketing functions are assigned.
These decisions established guidelines for pricing, advertising, and personal selling strategies. Intermediaries may also need help in planning their marketing efforts and other supporting activities.
The physical distribution is considered with the movement and storage of supplies, parts, and products between sources of supply, the producer, intermediaries, and then users.
Physical distribution management works toward an effective balance between customer satisfaction and distribution costs. Distribution activities include transportation, inventory management, warehousing, and order processing.
These activities are managed as a coordinated system of interrelated parts. The objective is to design and manage a total system that delivers the levels of customer service desired by management at reasonable costs.
Direct Distribution by Manufacturers
The distribution strategy from a manufacturer’s point of view includes the following. Many of the strategic issues apply to companies at any level in the distribution channel wholesale or retail.
Manufacturers are unique because they have the option of going directly to the end-user through a company sales force or serving and users through marketing intermediaries. Influencing the distribution decision are buyer considerations, product characteristics, and financial and control factors.
Manufacturers have three distribution alternatives:
- Direct channels
- Indirect channels
Increasingly, manufacturers are using multiple channels.
Complex products and services often require close contact between customers in the producer. They may have to provide application assistance, service, and other supporting activities.
And some industries qualified marketing intermediaries may not be available, given the complexity of the product and the requirements of the customer.
Direct contact with the end-user encourages feedback to the manufacturer about a new product’s needs, problems, and other concerns. Manufacturers must consider product characteristics in deciding whether to use a
Financial and Control Considerations and Your Distribution Strategy
Some producers do not have the necessary financial resources to serve there and users. Others are unwilling to make large investments and field sales and service facilities.
Management must decide if resources are available. And, if they are, whether direct sales to end-users represent the best use of the resources.
Cost and benefits must be estimated. The direct distribution gives the manufacturer control over the distribution strategy. Since independent organizations cannot be managed in the same manner as company employees.
A firm’s financial resources and capabilities may also be important. Due to the end-user considerations, product characteristics, and financial and control considerations, producers of business and industrial products are more likely than producers of consumer products to use company distribution to end-users.
This may be accomplished by a network of company sales offices and a field sales force. Or by a vertically integrated distribution system owned by the manufacturer.
A producer may use an independent middleman to avoid consuming financial resources and to gain the benefits of the experience and skills of independent channel organizations.
Wrap Up about Distribution Strategy
Your distribution strategy is critical for success in reaching your end-users. The channel of distribution connects the producer with the end-user of the company’s goods or services.
One or more levels of the channel may link the user and the producer. A strong channel network is an important way of gaining a competitive advantage.
Distribution channels provide access to market targets. The choice between company distribution to end-users and the use of intermediaries is guided by user needs and characteristics, product characteristics, and financial and control considerations.
There are times when indirect distribution requires exclusive distribution for a product line or service.
Give us one or two tips to create a better distribution strategy.
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The distribution channel strategy consists of selecting the type of channels, determining the desired intensity of distribution, designing the channel configuration, and managing the channel on an ongoing basis.
Why is a distribution strategy important?
The distribution channel is crucial because it will determine how you market and distribute your products. Various distribution partners can give you access to markets, financial support, flexibility, and control.
How to build a distribution strategy?
To build your channel strategy, you will be deciding on how many levels of organizations are to be in the channel and the types of intermediaries to be used.
What does digital distribution mean?
Digital distribution also referred to as content delivery, online distribution, or electronic software distribution, is the delivery or distribution of digital media content such as audio, video, software, and video games.