Monday, June 29, 2015

Distribution strategy

Distribution channels are the means by which goods are distributed from the manufacturer to the end user. The American Management Association calls the channels of distribution ‘organization network of agencies and institutions which in combination perform all the activities required to link producers with users to accomplish the marketing task’.

Some companies own their own means of distribution some only deal directly with the most important customers but many companies rely on other companies to perform distribution services for them.

There are many strategic options for the structure of a marketing channel.  A good distribution strategy is essential for success because once a firm selects a channel and makes commitment to it, distribution often becomes highly inflexible due to long-term contracts, sizeable investments and commitments among channel members.
Huggies diaper for intensive distribution channels
The key objective in building an effective distribution strategy is to build a supply chain to the markets. In international marketing, distribution channels are diverse and may vary from one country to another country and even within countries, there may be different modes and systems required to reach the products to the final consumers.

There are three basic structural options for distribution in terms of the amount of market coverage and level of exclusively between vendor and retailer:
*Exclusive distributions – Work with a single intermediary for product that requires special resources or positioning. Examples: BMW car, Rolex watch

*Selective distribution – Work closely with selected intermediaries who meet certain criteria: typically used for shopping goods and some specialty goods. Example: Clothing, Hewlett Packard printers

*Intensive distribution – achieve mass-market selling, goods must be available everywhere. Example: Pepsi-Cola, Frito-Lay, Huggies diaper
Distribution strategy 

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