We had written about market research in our previous blog and we continue with the same topic yet again. But in this blog, we will be discussing the distribution methods and how it complements your product and service and results in being a boon to your bottom line.
Distribution is the last step in a business, whether it is retail, wholesale or business-to-consumer, where the products or services reach the customer and it has a profound effect on the business itself.
Let us assume that you have a great product or a business idea that you have conceived, correctly positioned it for your target customers, and also developed your packaging and pricing successfully. The only step between you and your customer is the distribution of your product or service. Having roped in a selection of distribution channels and sales representation is the final hurdle for successful marketing.
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Distribution, unlike other marketing tactics and strategies, is not flexible. Once distribution and sales decisions are made, it becomes difficult to change them. It is always sensible to choose distribution channels that offer:
- Greatest ease and lowest costs of entry against the competition
- Least financial risk and commitment to the trade
- Sufficient volume potential to reach short-term business goals
- Pricing levels to provide acceptable company revenues and profit margins
There are various distribution channels in the offering such as:
- Retail outlets – Owned by your company or by an independent merchant
- Wholesale outlets – Outlets of your own or those of independent distributors or brokers
- SalesForce – remunerated by salary, commission, or both
- Telemarketing – functioning through a contracting firm
- Direct Mail – catalog or flyers
- Internet marketing – selling your products online
- TV & Cable – Direct marketing and home shopping channels
Evaluate competitor’s products & Distribution methods:
Knowing and analyzing your competitor’s (Direct and indirect) distribution methods is crucial. Small businesses lack resources to effectively compete, therefore focus on competitors from whom you can reasonably expect to take a market share.
It is recommended to make a list of competitors in your marketing area that could compete directly with your competitors for the same list of potential customers. Divide the list of competitors into different distribution channels for effective distribution. Now that you have analyzed the distribution methods used by your direct competitors, assess your business’s strengths, weakness along with external environment opportunities and threats.
SWOT Analysis for a competitive strategy:
With SWOT analysis you can formulate many aspects of your business strategy. SWOT is an acronym for Strength, Weakness, Opportunity, and Threat. The strength and weakness part of the analysis looks at internal company factors that influence to compete effectively. While opportunity and threat hover around external factors such as competitors and the external environment, that affects the company’s ability to compete effectively.
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Match distribution to goals and resources:
Companies should focus on limited resources when it comes to distribution and sales force options. A list of all possible distribution channels and accompanying salesforce options should be matched against the firm’s marketing objective.
Evaluate costs to determine cost-efficient methods:
Every distribution channel and sales force option has a specific cost involved in every sector. This is therefore that the financial resources and cost-effectiveness are important in considering distribution and sales force options.
Prioritizing distribution options is crucial:
It is vital to prioritize distribution channels and sales force options as the smallest business have several years of growth and evolution behind them. All companies can’t take advantage of all possible channels that match the marketing strategy it wants to achieve.
Prioritizing the orderly development and pounce upon each distribution channel in the order of easiest entry and least competitive resistance is wise and it works well too, financial considerations aside.
Geographical proximity, ability, and availability of various distribution channels, marketing experience by channel, availability of experienced sales execs, competitive strengths by channel, manufacturing capabilities, product life cycles are the other factors that need to be considered as well.
In conclusion, we would say the distribution channel is pretty much a slice of the overall marketing pie. It is how businesses get their products and services to consumers.