What is Distribution Strategy?
A distribution strategy is a strategy to make a product or service available to its target customers via its supply chain. The distribution strategy is the overall approach to making the offering available. It starts with inputs from marketing campaigns and the target audience. The company has the option to decide whether to distribute the product or service via its own channels. Or, it can partner with other companies that do so.
Some companies have the option of using existing retail chains or their own stores to sell their products. You can combine both. Online exclusive channels are used by many companies to sell their products and services.
Importance of Distribution Strategy
Distribution Strategy is exactly the strategy that’s being used by companies must ensure that the product/service is available to all customers with minimal or optimal distribution costs.
While great distribution strategies will maximize your revenues and profits, a poorly planned distribution strategy can cause losses but also assist your competitors in gaining the market opportunity that you have created.
Three Types of Distribution Strategies
There are three major distribution strategies.
1. Exclusive Distribution
More control is possible when you have exclusive stories to tell about products. This is especially true for specialty, luxury, and niche goods.
2. Intensive Distribution
Maximizing sales channels to maximize profits. This is a good strategy for mass-produced goods that must reach maximum potential customers. The manufacturing costs are also higher than normal goods.
3. Selective Distribution
This involves carefully selecting multiple channels and partners. This is a more mixed approach that must be carefully planned to ensure optimal distribution of the product/service.
These are the most popular distribution strategies, but they may not be applicable to all products or companies.
To maximize sales, many companies combine offline and online strategies. Apple iPhone.
There are many distribution channels that can be used in many cases.
- Manufacturer -> End customer
- Manufacture-> Agent-> End customer
- Manufacturer -> Retailer -> End Customer
- Manufacturer -> Wholesaler -> Retailer -> End Customer
- Manufacturer -> Reseller -> Retailer -> End Customer
- Manufacturer -> franchisor -> Franchisee -> End customer
The distribution strategy should be optimized according to market conditions through demand analysis and supply analyses. This will ensure that it keeps up with current market situations and does the job it was intended to do. Make products reach potential customers. If a company does not have a distribution strategy, push or pull marketing strategies will not work.
Factors affecting Distribution Strategy
The following parameters are also important in determining the distribution strategy:
1. Location of Business
This is an important aspect of deciding on the distribution strategy. If the business’s location is near a railway line or port, distribution is possible. This way, we can trust that distribution channel and also save money.
2. Target Market Location
Now distribution is done from the manufacturer/distributor/retailer to the end customer. Distribution strategies should include similar products if the end customer is in a specific location. Professionals are the target market. The product should be easily accessible near their offices, or within their offices through partnerships to ensure that they have access to the product when they need it.
3. Attaining the Target Market
A product’s ultimate goal is to reach the target audience. The distribution strategy must ensure that the product is available to the customers who are looking for it. During summers e.g. A beverage company would ensure that the product is available in sufficient quantities in all retail outlets during summers.
Properly keeping inventory at the right locations is an important factor in deciding the distribution strategy. Inventory management and warehouse storage are two examples.
5. Transportation and logistics
The distribution strategy is incomplete without transportation. Proper transportation is essential for the product to reach its target market on time and with the right quality. e.g. If a company sells frozen food, it must ensure that logistics and transportation are taken care of through temperature maintenance and cold storage.
Distribution Strategy Example
Take, for example, a soft drinks manufacturer that produces glass bottles. A company must ensure that the location of its manufacturing facility is convenient for water supply. After production, the bottles can be filled quickly and then transported to the next destination. Glass bottles are fragile, so it is important to ensure that they are transported in sturdy packaging. The same applies to warehousing.
Another aspect of distribution is channel selection. Do you want the product to be available to all retail outlets or do you prefer a partnership with an exclusive partner? Distribution strategy must be able to distinguish between intensive and exclusive strategies.