Distribution Decisions
Distribution decisions refer to the strategic choices made by a company regarding how its products or services will be delivered to customers. This includes decisions about the channels of distribution, such as direct sales, wholesalers, retailers, or e-commerce platforms, as well as considerations about inventory management, logistics, and transportation. Effective distribution decisions are crucial for reaching target markets and ensuring customer satisfaction.
7 Key excerpts on "Distribution Decisions"
- Bonita M. Kolb(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...9 Distributing the product to the consumer This chapter will answer the following questions Why are intermediaries fundamental to the distribution process? What is the channel selection process, and why is it critical to business success? How should the organization choose a retail intermediary? How does the organization negotiate a retail distribution arrangement? When are online marketplaces an appropriate choice for distribution? The chapter in a few words Distribution is the process of getting the product from the producer to the consumer. Distribution can involve selling the product directly to a consumer or indirectly through the use of an intermediary. While tangible products can be shipped to a distant consumer, service products present a distribution challenge as these are produced and consumed at the same time. E-commerce is a means of distribution that connects the producer to the consumer electronically. It can be used as the only means of distribution or as one choice among many. The choice of channel used to distribute the products should be based on what is most convenient to the consumer. The decision as to whether the product should be distributed intensively, selectively, or exclusively will be based on the cost and differentiation of the product. The organization may control the distribution channel by selling on their website or in their store. Whatever distribution choice is made, the issue of logistics, which is the physical packaging and shipping of the product, remains. The choice of using retail distribution has the advantages of sharing the marketing responsibility, exposing the product to more consumers, and lessening financial risk. Retailers differ based on the type of product sold, the level of service, and the product price. The retailer must be chosen to match the organization’s distribution level of intensity...
eBook - ePub- Paul Reynolds, Geoff Lancaste(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...Consumer goods manufacturers tend to use a network of marketing intermediaries because of the dispersion and large numbers of potential customers. Again, there are exceptions (e.g. Avon Cosmetics, which sells direct to homes through agents). Most often manufacturers will sell to wholesalers, who in turn break bulk, add on a mark-up and sell to retailers. However, with the increased size and power of the large food multiples, manufacturers sell direct to them and they perform their own wholesaling function. Whether selling through retail chains, or wholesalers then retailers, the important point is that the manufacturer relies on these middlemen for ultimate marketing success, as it is these intermediaries who have the responsibility of taking the product to the ultimate consumer. 9.3 The nature of distribution Distribution arrangements tend to be long term in nature. Because of this time horizon, channel decisions are usually classed as strategic, rather than tactical or operational ones. There are two reasons for treating channel decisions in this way: Key point Distribution arrangements tend to be long term in nature. 1 Channel decisions have a direct effect on the rest of the firm’s marketing activities. For example, the selection of target markets is affected by, and in turn affects, channel design and choice. Similarly, decisions about individual marketing mix elements (e.g. pricing) must reflect a company’s channel choice. 2 Once established, a company’s channel system may be difficult to change, at least in the short term. Although distribution channels are not impervious to change and new channels emerge as old, established channels fade, few companies are able to change their channel structure with the same ease of frequency as they can change other marketing mix variables like price or advertising strategies...
eBook - ePubInternational Marketing (RLE International Business)
A Strategic Approach to World Markets
- Simon Majaro(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...Chapter 8 Distribution Decisions in International Marketing Distribution Decisions are pretty difficult in domestic marketing; they are even more complicated in international marketing. The problem of selecting the right channels is simply multiplied by as many countries as one wishes to serve. Yet it is essential for companies which market their products internationally to be able to find their way through the maze of channels that are available or can be developed in each market. The variations that exist in institutional availability are very extensive indeed and no one person can ever hope to become aware of the details of the channel options in every country. Furthermore, environmental and legal constaints play an enormous role in the choices that can be made and the distribution strategies that can be explored. It is important to remember that the best product in the world may prove a commercial disaster if the channels of distribution selected are incapable or unwilling to provide the ‘utility of place’ and the ‘utility of time’ which the local consumer expects. The expectation of the consumer is ultimately the criterion of effectiveness and therefore failure to satisfy the consumer means a poor marketing effort. This chapter deals with two interrelated aspects of the distribution process: Channels of distribution in world markets. Physical distribution (logistics) for the international manufacturer. Channels of Distribution in World Markets An international company can have a number of bases from which channel decisions originate. A manufacturing orientated company would have a number of plants located around the world and Distribution Decisions will probably stem from logistics rather than marketing considerations...
eBook - ePub- Marcos Fava Neves(Author)
- 2012(Publication Date)
- Routledge(Publisher)
...8 Distribution Channels Decisions A fundamental step in the DDSP is to think about how products will be made available to consumers; in other words, how they will be delivered to the target consumers of the marketing strategies developed in Chapter 5. In line with earlier comments, the plan must be well integrated with what is already established in terms of general strategies, product policies, communications, sales and prices; in short, with all the controllable marketing variables. The topic of distribution is one of the oldest in marketing literature, giving rise to some of its most original theories (Wilkinson, 2001). Some authors regard it in a wider sense, classically calling it “distribution channels” (Neves, 1999). At this stage of the DDSP, the following must be done: analyze existing distribution channels for the company’s products, seek new channels and define distribution objectives, such as: market presence, type and number of points of sale, services offered, market information, product promotion and incentives; define opportunities and threats of the current distribution system; identify possible distributor and consumer needs in order to fulfill service expectations; define ways of entering markets: via franchises; joint ventures or other contractual forms; or even via vertical integration; explore domestic or international contracts with distribution channels, such as international representation; determine the annual distribution budget; determine how distribution actions can be done jointly with other companies in the network; determine what are the opportunities emerging from web-based marketing and distribution systems. Channels over the years have always had the power to transform markets, because they are the drivers of consumer access to products and services (Wilson et al., 2008)...
- Bonita Kolb(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...What they do not instinctively think of is the distribution of a product. Yet, distribution is the key to the success of a strategic marketing plan as it is how a product gets into the hands of the consumer. Direct versus indirect distribution—one or both, the choice is yours Direct distribution, the easiest method, is where the product is sold straight from the producer to the consumer. This may be face-to-face such as when the creator sells the product in their studio. It can also be when the creator sells at events and fairs. Even distribution from the creator’s website is considered direct even though there is no personal contact. It is fairly simple to integrate direct distribution methods so that the producer may use e-commerce on their website, maintain a studio, and also sell at events. However, using direct distribution limits the number of purchases as there are only so many consumers the producer can reach personally. In addition, it is a problem for the consumer as they must seek out the producer of the product in order to purchase. If the organization decides that it will distribute directly using e-commerce, it may need to find a logistics partner such as a shipping company. This company will not only deliver packages but can also advise on the packaging and the paperwork required on international shipments. In addition, they will provide monthly documentation on how many and where packages have been shipped. Indirect distribution uses channel intermediaries, or other people and organizations, to sell the product to consumers. This can greatly increase the number of consumers who have the opportunity to conveniently purchase the product. However, the intermediary will also need to make a profit on the sale of the product. Either the producer must sell the product more cheaply to the intermediary so that once it is marked up the price will still be the same as it was originally, or the final retail price will be higher...
eBook - ePubHow to Write a Marketing Plan
Define Your Strategy, Plan Effectively and Reach Your Marketing Goals
- John Westwood(Author)
- 2019(Publication Date)
- Kogan Page(Publisher)
...05 The distribution plan Before you can plan your advertising and sales promotion you need to select the right channels for your product and your business from those available. This is part of the distribution plan, which will always be part of any marketing plan. The physical distribution of goods is only one aspect of distribution as defined by marketing planners. Top tip Distribution involves: Marketing channels. Physical distribution. Customer service. Marketing channels Marketing channels are the means that a company can select to get into contact with its potential customers. If its potential customers are unaware of the product, they will not buy it. There are a wide variety of different channels that a company can use. Figure 5.1 shows a typical selection of available marketing channels. Figure 5.1 Marketing channels On the left are examples of marketing channels are direct sales, distributors, telemarketing, websites, e-mail/e-marketing, and direct mail. An arrow pointing to the list upward shows that these channels are applicable for direct face-to-face contact. While the arrow pointing to the list downward shows that these channels are applicable for no personal contact Direct sales is an expensive channel to operate and is mainly restricted to high value industrial goods. The bulk of advertising expenditure is used on consumer goods, particularly low value, repeat buy items such as food and household consumables. Consumer goods are usually sold through distributors, wholesalers and retailers rather than through direct selling, but it is usually still necessary for the company to have a salesforce to sell to these distributors, wholesalers and retailers. The characteristics of the product you are selling will have a considerable influence on the mix of marketing channels that you finally select (see Figure 5.2)...
eBook - ePub- Stanley Paliwoda, Michael Thomas(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...The same ‘black market’ phenomenon occurs, too, where goods may be in short supply and not generally available at what may be officially determined govemmentally controlled prices, but available nevertheless to those willing to pay a little extra. Table 7.4 Ten distribution myths 1. A channel of distributions the movement of a product from the manufacturer to the ultimate consumer. 2. A channel’s structure is determined by the characteristics of its products. 3. A distribution channel is managed by the manufacturer. 4. A firm should strive to maximize co-operation within its distribution channel. 5. The primary function of a warehouse is storage. 6. A firm sells to, or buys from, another firm. 7. Eliminating the middlemen will reduce distribution costs. 8. Administered channels are more efficient an non-administered channels. 9. A profitable channel is an efficient channel. 10. Planning distributions strategy is the responsibility of the distribution manager. Source: Pearson, M. M.(1981) Ten distribution myths. Business Horizons, May-June, 17-23 Technology also imposes change on channels of distribution as with containerization, in the use of freeports based near existing airports for the assembly and manufacture of duty-free goods for export only; and in electronic payments transfer, which allows for instantaneous transfer of funds between countries. Technology also affects the distribution channel ranging from vending machines to goods material handling, as in laser scanning of purchases at checkouts in large supermarkets or even larger hypermarkets. One example is the development of home shopping in Britain via a home computer keyboard link through the public telephone system to a specially adapted television set, whereby it is possible to view data on any- tiling from bank statements to household items, book holidays, transfer money in and out of bank accounts, and make purchases...
