Distribution Strategy

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A Distribution Strategy is a business strategy that focuses on how a company will deliver its products or services to consumers or end-users.

  • Context:
    • It can (typically) be part of a company’s overall Strategic Planning, aligning distribution channels with the company’s goals and market positioning.
    • It can (typically) include a focus on Cost Efficiency, ensuring that the distribution method chosen is economical and aligns with the company's pricing strategy.
    • It can (typically) be supported by the development of clear Vision Statement and Mission Statement, which guide the long-term direction and goals of the distribution strategy.
    • It can (often) require a focus on Field Inventory Management, where distributors or sales agents manage inventory close to the point of sale to respond quickly to customer demand.
    • It can (often) consider the Marketing Mix, integrating distribution with other elements like Product (Business), Pricing, and Promotion (Marketing) to create a cohesive approach to reaching customers.
    • It can (often) involve decisions about whether to use a Direct Distribution Channel (where the company sells directly to consumers) or an Indirect Distribution Channel (where intermediaries like wholesalers or retailers are involved).
    • ...
    • It can range from using Mass Distribution, which aims to maximize availability by distributing products in as many locations as possible, to Exclusive Distribution, which limits distribution to select outlets to maintain brand prestige.
    • ...
    • It can include determining the appropriate number of Intermediaries, such as wholesalers and retailers, that will handle the products between the producer and the consumer.
    • It can involve Distribution Management Systems that oversee the logistics, transportation, warehousing, and inventory management needed to ensure timely and efficient product delivery.
    • It can be impacted by geographic factors, requiring region-specific strategies, such as in areas like the Delaware Valley or other defined markets.
    • It can involve Digital Distribution Channels for companies offering digital products or services, where distribution occurs online without physical intermediaries.
    • It can aim to enhance the Value Chain, ensuring that distribution adds value to the customer experience by making available products or services where and when needed.
    • It can involve planning for Channel Conflict Management and resolving potential disputes between distribution partners, especially when multiple channels are involved.
    • It can explore Hybrid Distribution Systems, where both direct and indirect channels are used. This would allow the company to reach a broader customer base while maintaining control over key markets.
    • It can be designed to account for International Distribution Considerations, such as compliance with trade regulations, tariffs, and international logistics challenges.
    • ...
  • Example(s):
    • A Selective Distribution Strategy for luxury goods, only partnering with premium retailers to maintain the brand’s exclusivity and appeal.
    • A Direct-to-Consumer Distribution Model for its digital services, bypassing traditional retailers and allowing customers to subscribe or purchase directly from its website.
    • A Mass Distribution Strategy for consumer goods, ensuring that its products are available in a wide variety of online and offline stores to maximize sales volume.
    • A Hybrid Distribution Model by selling its services directly to customers through its website and working with third-party resellers in certain markets to expand its reach.
    • ...
  • Counter-Example(s):
    • A Production Strategy, which focuses on the processes involved in creating a product or service rather than its delivery to the market.
    • A Brand Strategy, which focuses on how a company’s brand is perceived by the market, rather than on how its products are delivered to customers.
    • A Partnership Agreement, which may involve cooperation between two companies on various business activities but is not focused exclusively on distribution.
    • A Franchise Agreement, which typically gives a franchisee the right to operate a business under a company’s brand, involving broader operational control beyond just distribution.
  • See: Strategic Planning, Delaware Valley, Value Chain, Trading Intermediary, Marketing Mix, Product (Business), Pricing, Promotion (Marketing), Vision Statement, Mission Statement.

References

2024

  • (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Distribution_(marketing) Retrieved:2024-9-11.
    • Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries. Distribution (or place) is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.

      Decisions about distribution need to be taken in line with a company's overall strategic vision and mission. Developing a coherent distribution plan is a central component of strategic planning. At the strategic level, as well as deciding whether to distribute directly or via a distribution network, there are three broad approaches to distribution, namely mass, selective and exclusive distribution. The number and type of intermediaries selected largely depends on the strategic approach. The overall distribution channel should add value to the consumer.

2024

  1. ↑ Dent, J., Distribution Channels: Understanding and Managing Channels to Market, Kogan Page, 2011, Chapter 1
  2. ↑ Armstrong, G., Adam, S., Denize, S. and Kotler, P., Principles of Marketing, Sydney, Australia, Pearson, 2014, pp 297-394
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