Distribution Confusion? an effective, no-fail how-to strategy

Updated: Jan 18, 2020

We’ve previously discussed the product, pricing and distribution strategies that make up the marketing mix for your product. In this blog post, we will be discussing the distribution strategy or how you get your product into the hands of the consumer. You may deal with all these activities in-house but more than likely you will have individuals outside of your organisation carrying out these services. To find out more about the type, way, and intensity of the work that needs to be done just keep reading.

Marketing Distribution Activities

There’s quite a lot of work that needs to be considered when it comes to distributing your product to your client. You may not have the expertise to carry these out in-house and so you may hire an external service provider instead. The three main tasks that this external stakeholder might carry out are transactional, logistical and facilitating tasks.

Transactional Activities What do we mean by transactional activities? This might be customer service activities. It might be spruiking your services to your target demographic. It might also be encouraging customers to make orders. It might be negotiating procurement, expediting or financial terms for the distribution of your goods. Lastly, it might also be “assuming the risk of owning stock” (Lamb, Hair, McDaniel, Summers & Gardiner, 2016, p.166.)

Logistical Activities What do we mean by logistical activities? This might be the actual movement of your products from your warehouse to a retail store. It might be the warehousing of your products in their facilities. It might be helping with creating separate groups of products. It might be “breaking a homogenous supply into smaller and smaller lots (‘breaking bulk’)” (Lamb et al., 2016, p.166). Lastly, it might be creating bundles of products that will then be on-sold to retail stores.

Facilitating Activities What do you mean by facilitating activities? This might be assistance with the research and development or revenue raising activities of your organisation if your organisational strengths lean more to the creative side for example.

Marketing Channels

The means by which this work is carried out is called a marketing channel or distribution channel. You will find that consumer goods and industrial goods don’t use that same channels to get their products in their customers' hands. We’ll be focusing on the channels you will be most likely dealing with, those for consumer goods. There are four channels, direct, retailer, wholesaler and agent/broker.

Direct channel This channel goes from the producer (that’s you) to the consumer. That’s it. Simple, right?

Retailer channel This channel goes from the producer to a retailer then to the consumer. Getting a little more complicated.

Wholesale channel This channel goes from the producer to the wholesaler to the retailer and only then gets to the consumer. That’s one more link in the chain.

Agent/broker channel This is the channel with the most middlemen. It goes from the producer to the agent or broker to the wholesaler to the retailer and then and only then does the product get to the consumer.

The channel choice that is best for your product will largely depend on the type, origin and quantity of individual product or product ranges you’re trying to distribute. You may need to consider multiple options depending on your individual circumstances

Level of Distribution Intensity

A factor that will come into play when developing your distribution strategy is the level of distribution intensity. The are three levels of distribution intensity and all three are designed with specific objectives in mind. These are the intensive, selective and exclusive. So, how do they differ?

Intensive This is the level of distribution intensity you want if you want your product everywhere at once. This is perfect if you want “maximum market coverage” (Lamb et al., 2016, p. 171). Think ➡️ Coca-Cola

Selective This is the level of distribution intensity you want if you want your product in some places but not all places. This is perfect if you want your customer to have to do a little work to seek out your product (Lamb et al., 2016, p. 172). Think ➡️ Nikon cameras

Exclusive This is the level of distribution intensity you want if you want to imply that your products are a speciality item (Lamb et al., 2016, p.171). This is perfect if you want your customer to really hunt for your product. Think ➡️ Lotus cars

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References: Lamb, C.W. Hair, J.F. McDaniel, C. Summers, J. and Gardiner, M. 2016, MKTG3 3rd Asia Pacific Edition, Cengage Learning Australia Pty Ltd, South Melbourne

This was the last blog post regarding the marketing mix and the related strategies it's made up of. We’ve discussed the distribution activities, channels and the level of intensity in these and hopefully have clarified any misunderstanding you might have had regarding these. Armed with this information you may have a better idea of the goals, objectives, strategy, and actions you will need to take when distributing your product to your customers.

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