Product Distribution Strategy

Devise multiple strategies to get your products to consumers.

When selling products is your business' main purpose, the first thing you must do is create a demand for those products. The second is getting those products into consumers' hands. It's imperative to know how you will satisfy the demand for your product once you have created desire in the hearts of your consumers. Planning your product distribution strategy should be considered during the product development stage.

The Importance of Product Distribution Strategy

A thorough product distribution strategy attempts to define the cost-variables involved in getting your products from creation to consumption. The method of distribution will impact the actual retail price of the product, the profit margin, the marketing budget and the way the product is marketed. Lars Perner, Ph.D., assistant professor of clinical marketing at the University of California teaches that cost is the leading factor in determining distribution. He says, "Cost has to be traded off against speed of delivery and intensity."

Extensive Distribution Strategy

When the distribution channels are wide and varied, it's called an extensive distribution strategy. The distribution partners are mostly sales order processors. This method is used for common commodities in which exclusivity isn't a part of the brand image. This strategy seeks to eliminate extra effort on the consumer's part to purchase. John O'Shaughnessy writes in "Competitive Marketing: A Strategic Approach," "The greater the perceived cost of shopping in terms of effort, time and expense, the fewer will buy, even if the price and product are 'right.'"

Exclusive Distribution Strategy

Exclusivity is a strategy often used to establish a particular image of a product or brand. Using a limited number of distribution channel partners helps to create an image of exclusivity. It's also a measure of quality control by using only distributors who specialize within that industry. Distribution channel partnerships requires both the manufacturer and the distribution partners to take a larger stake in one another's survival.

Creating a Product Distribution Strategy

Keep an open mind on new possibilities in distribution and changes that may impact current distribution structures. Consider parallel distribution opportunities and joint promotion partnerships. Get the opinions of distribution partners. Set up market research opportunities to find out how the customer prefers to receive the product. Examine competitors' strategies and compare them to your own. Adopt the ones that work and discard or improve the ones that don't.

Insight

As Perner teaches, the distribution method is highly dependent on your consumers' whims, their willingness to search for the product and their likelihood of switching. Retailers who sign exclusivity deals put more effort into selling the products on their shelves, carry more of your products, and are often more loyal.

References

• "International Marketing Strategy: Analysis, Development and Implementation"; Isobel Doole, Robin Lowe; 2008
• "The Undermining of Beliefs in the Autonomy and Rationality of Consumers"; John O'Shaughnessy; 2007
• USC Marshall School of Business; Channels of Distribution