Last Updated on August 13, 2023 by asifa
Product distribution is the process by which an entity distributes its product throughout the sales process. In simple terms, it refers to the ways in which companies make available a product to their customers at varying stages of the purchasing process. It is also the stage where a customer makes a decision as to whether the product is suitable for them or not. It is a strategic decision and therefore the responsibility of the company distributing the product.
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Distribution Channels
There are four channels through which a product can be distributed, namely retail distribution channels, electronic distribution channels, postal distribution channels and online distribution channels. Retail distribution channels include retail stores, kiosks, web-based venues and shopping cards. Electronic distribution channels include CDs, DVDs, over-the-counter digital media delivery channels, online electronic book distribution and mobile devices such as mobiles, smart phones and portable media players. Nowadays, eCommerce websites use all these methods of distribution. In addition to eCommerce SEO, these are the ideal way to reach consumers. Postal distribution channels include postpaid and prepaid billing addresses and post office chain stores. Online electronic book distribution includes the worldwide web, social media, online gaming and instant messaging.
How to Apply a Product Distribution Strategy
Every small business needs to develop product distribution strategies to ensure maximum flexibility of resources while meeting the objectives of the company. Developing a product distribution strategy involves evaluating customer demands and analyzing market conditions. This will help you to identify appropriate marketing channels for every product. However, before applying a product distribution strategy it is important to assess your budget and resources and to formulate a distribution plan that suits the company’s requirements.
Many companies choose to implement their product distribution strategies on their own. If you wish to sell your products globally then exclusive or selective distribution is the best option for you. Exclusivity implies that your product is only available in your territory and by selling only in your territory you can gain brand loyalty. Selective distribution allows customers to purchase your products at wholesale price while other customers are able to purchase your product at retail price. Exclusive distribution involves buying your product from major manufacturers or distributors who can provide you with quality production facilities.
Developing your product distribution strategies is essential for long term business success. Your customers value your product highly if you offer them freebies and discounts on sales. A customer will be more than happy to buy your product if he is able to get it for free or at discounted rates. Moreover, a free promotion of your product enhances its sales as the word of mouth publicity will increase your customers’ demand for your product. Developing your own product distribution plan requires careful analysis of your market position, consumer behavior and price.
Other product distribution strategies for small retailers include multi level marketing (MLM) and cross docking. Multi level marketing strategy is an efficient distribution channel which enables retailers to promote their products through multiple levels including retail, membership cards, trade shows and company stores. Under this strategy, retailers recruit invitees who join as representatives, give commissions to these retailers and keep track of the retail sales of these invitees. Cross docking involves multi level marketing plus warehousing and distribution facilities with the retailers.
Summary
Developing product distribution strategies based on the product distribution needs of your target market is an important factor for long term success of any business. These strategies must take into consideration the retailers’ geographical area, number of outlets and the type of products they sell. The type of distribution is crucial because different types of retailers have different product distribution strategies.
One intensive distribution channel involves road show participation. On road shows, retailers display their products to target customers. This type of strategy is effective when your product is a new one that nobody else has tried. Your product distribution strategies for such events may differ from those for existing products.
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