Distribution Methods and Marketing Plans

Candy is a type of low-price, high-turnover product often sold through wholesalers.

Along with product, promotion and price, a method of distribution is one of the tactics addressed in the strategy section of the marketing plan. Specific choices reflect where and when target consumers wish to shop. Distribution methods are also influenced by the nature of the product and by opportunities in the business environment.

Direct Channel

A direct channel form of distribution is often part of the marketing plan for products like fashion and home linens, with many manufacturers running their own retail stores. It is a system where producers sell directly to consumers, with no intermediary. Historically, this was the conventional method used by farmers and artisans whose markets were primarily local. Today, direct distribution may be facilitated by activities like online sales, shop-at-home television shows, mail order catalogs and telemarketing.

Indirect Channel

When the marketing plan specifies an indirect channel of distribution, manufacturers will sell to wholesalers, retailers, agents or brokers. These independent businesses earn profits by performing distribution activities like warehousing and shipping. Selling to retail stores is typical in categories like cosmetics, where retailers are usually large enough to order in cost-efficient volumes from the producer. Selling to wholesalers, who in turn sell to retailers, is common among manufacturers of low-price, high-turnover goods like candy and cigarettes.

Channel Alternatives

Sometimes marketers have the option of using nontraditional or partnership-based channels of distribution. For example, selling umbrellas or hats at taxi stands would circumvent the traditional retail outlets for outdoor accessories. A company may also obtain access to the channels of others when the alliance could benefit both partners. This approach can be helpful when the marketing plan involves expansion into foreign markets, where the firm has not established a distribution network of its own.

Distribution Intensity

Marketing plans often specify an intensive, selective or exclusive form of distribution. Intensive distribution, used primarily for convenience goods, means making a product available in all types of outlets where consumers expect to find it. For example, magazines are sold not only at newsstands but also at supermarkets and drugstores. Selective distribution involves selling a product through a small number of stores selected for their image or other distinctive characteristics. In exclusive distribution, product availability is limited to a single outlet, like selling a fine jewelry brand only at one department store.

References

• "Essentials of Marketing"; Charles Lamb, et al.; 2009
• "Marketing"; Roger Kerin, et al.; 2009