Distribution (business)

Distribution (business)

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Product distribution (or place) is one of the four elements of the marketing mix
Marketing mix
The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients",...

. 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
Marketing mix
The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients",...

 are product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

, pricing
Pricing
Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a...

, and promotion
Promotion (marketing)
Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....

.

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
    Goods
    Goods may refer to;*Good , physical product*Personal property, legal personal chattels...

     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 lam-bard 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 manufacturers products e.g. exclusive outlets of cars,apparels and jewellery etc.
Marketing plans

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
Channel Value Proposition
Channel value proposition is the business case made by a supplier to attract members of its distribution channel. This is made up of many elements depending upon the sophistication of the supplier and channel members and the intensity of competition for share of the channel...

 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
    Agricultural marketing
    Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. Numerous interconnected activities are involved in doing this, such as planning production, growing and harvesting, grading, packing, transport, storage, agro- and food processing,...

  • All commodity volume
    All commodity volume
    All commodity Volume represents the total annual sales volume of retailers that can be aggregated from individual store-level up to larger Geographical sets...

  • Cargo
    Cargo
    Cargo is goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck. In modern times, containers are used in most intermodal long-haul cargo transport.-Marine:...

  • Channel Value Proposition
    Channel Value Proposition
    Channel value proposition is the business case made by a supplier to attract members of its distribution channel. This is made up of many elements depending upon the sophistication of the supplier and channel members and the intensity of competition for share of the channel...

  • Document automation
    Document automation
    Document automation is the design of systems and workflow that assist in the creation of electronic documents. These include logic based systems that use segments of pre-existing text and/or data to assemble a new document. This process is increasingly used within certain industries to assemble...

     in supply chain management & logistics
  • Extended Enterprise
    Extended Enterprise
    An extended enterprise is a loosely coupled, self-organizing network of firms that combine their economic output to provide products and services offerings to the market...

  • Good distribution practice
    Good distribution practice
    Good Distribution Practice deals with the guidelines for the proper distribution of medicinal products for human use. GDP is a quality warranty system, which includes requirements for purchase, receiving, storage and export of drugs intended for human consumption.GDP regulates the division and...

     (GDP)
  • Haulage
    Haulage
    Haulage may refer to:* The business of being a haulier or hauler , also called haulage contractor, common carrier, contract carrier, or private carrier, in other words of transporting goods by road or rail for other companies or one's own company.* The horizontal transport of ore, coal, supplies,...

  • Liquid logistics
    Liquid Logistics
    Liquid Logistics is a special category of logistics that relates to liquid products, and is used extensively in the "Supply Chain for Liquids" discipline....

  • Logistics
    Logistics
    Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...

  • Marketing
    Marketing
    Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...

  • Online Channel Management for hotels
  • Channel Management for Hotels

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