Distribution (business)

Marketing
Key concepts
Product marketing Pricing Distribution Service Retail Brand management Account-based marketing Ethics Effectiveness Research Segmentation Strategy Activation Management Dominance Marketing operations
Promotional contents
Advertising Branding Underwriting spot Direct marketing Personal sales Product placement Publicity Sales promotion Sex in advertising Loyalty marketing Mobile marketing Premiums Prizes
Promotional media
Printing Publication Broadcasting Out-of-home advertising Internet Point of sale Merchandise Digital marketing In-game advertising Product demonstration Word-of-mouth Brand ambassador Drip marketing Visual merchandising

Product distribution (or place) is one of the four elements of the marketing mix. An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.

The other three parts of the marketing mix are product, pricing, and promotion.

Managerial concerns

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:

• Channel membership
• Channel motivation
• Monitoring and managing channels

Type of marketing channel

1. Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, and particularly the brand leaders in consumer goods markets (price competition may be evident).
2. Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.In this case retailers can keep the competitors products in their outlets e.g. furniture etc.
3. Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'. In this retailers are restricted to keep only one manufacturer's products, e.g. exclusive outlets of cars, apparels and jewelry, etc.

Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a compensation is offered to the distributors' sales personnel, so that they are tempted to push the product. Julian Dent defines this incentive as a Channel Value Proposition or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-force, calling on the larger accounts, with agents, covering the smaller customers and prospects. These channels show marketing strategies of an organization. Effective management of distribution channel requires making and implementing decision in these areas.

See also

• Agricultural marketing
• All commodity volume
• Cargo
• Channel Value Proposition
• Document automation in supply chain management and logistics
• Extended Enterprise
• Good distribution practice (GDP)
• Liquid logistics
• Logistics
• Marketing
• Online Channel Management for hotels
• Channels Management for Hotels

Links

• entrepreneur.com Get Your Product to Market in Six Steps, You're the best person for the job, so get started,by Tamara Monosoff, May 7, 2009
• entrepreneur.com Thinking Outside the Big Box, Check out these alternatives to major retail stores that can help your new product reach your target audience, By Tamara Monosoff, February 19, 2007
• entrepreneur.com Beam Me Up, Companies that can help you get your product onto direct-response TV stations and into retail stores, By Don Debelak, June 17, 2007
• state-university.com, Looking Into Marketing and Distribution - MARKETING A PRODUCT, PACKAGING, ADVERTISING AND PUBLIC RELATIONS, SELLING THE PRODUCT, SERVICES MARKETING
• wilsonweb.com, Developing an Internet Marketing Plan, The 4Ps of Marketing:P2 Distribution,Issue 82, June 1, 2000
• on-time.org Oil Distribution
• iris.edu The Uniform Product Distribution System
• mplans.com Product Marketing & Distribution
• indiahowto.com How to design a good distribution system
• preserve-articles.com, 5 factors that governs the selection of a good product distribution system
• forestry.ubc.ca Japanese distribution system building products
• Udell.edu 15 Channels & Wholesaling Class
• know this.com Distribution Systems: Indirect
• pierce college.edu PDF, Product Distribution
• entrepreneur.com Distribution Models