Distribution Channel Strategies
Distribution is one of the four basic tools in the marketing mix, together with product, promotion and price. Marketers design a distribution strategy to ensure that their offering is available for purchase by target consumers when, where and in what way they wish to shop. Some key considerations include market, product, resources and intensity.
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Market
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The characteristics of the target market play an important role in distribution strategy. Business customers, for example, commonly expect to buy direct from a manufacturer. Household consumers are accustomed to intermediary distribution channels like wholesalers and retailers. However, individuals can differ in their shopping preferences based on age, income and other demographics. Additionally, where they live and how widely they are dispersed will help determine the most effective number and type of distribution outlets.
Product
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Distribution choices must take into account the nature of the product. Typically, the more complex and/or expensive an offering, the more it will benefit from direct selling. For example, most buyers of computer systems, boats or pianos expect to interact with knowledgeable manufacturers' representatives. In contrast, household goods that have fairly standard features, low cost and a relatively long shelf life, like shampoo, can be distributed through a wide array of stores and websites.
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Resources
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It is expensive for a firm to provide its own distribution facilities, like warehouses and showrooms, and to hire salespeople and support staff. In general, only companies with large marketing budgets are able to make direct distribution efficient by spreading its costs over many products. Smaller firms with limited lines and fewer resources are typically forced to rely on wholesalers, retailers and other intermediaries to fund basic distribution costs as storage, transportation and display.
Intensity
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The intensity of a distribution strategy refers to the number and diversity of outlets chosen to sell a firm's products. High intensity means using as many retail and/or wholesale outlets as possible, an approach especially appropriate for low involvement, frequently purchased goods like soap or cereal. Low intensity, commonly chosen for luxury products in a form called exclusive distribution, may restrict availability to just one specialty store or manufacturer's showroom. As a middle ground, marketers may use selective distribution, making their products available through a few stores located in the same region.
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References
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