The Distribution of Products
Distribution is the path through which goods and services travel from the manufacturer to the consumers through different channels. Manufacturers should be able to spread the product throughout the marketplace, in order to reach a large number of potential clients.
Channels are sets of interdependent organizations, called as intermediaries, involved in making the product available for consumption of the consumers. Intermediaries include agents, brokers, wholesalers, distributors and merchants. Each intermediary receives the item at a pricing point and moves it to the next higher pricing point until it reaches the consumer.
Businesses can design any number of channels they want. It can be classified based on the number of intermediaries between a manufacturer and its consumers. Level zero channel means no intermediaries, or can be called as direct marketing, where a business communicates directly to their consumers. Level one channel has a single intermediary that typically flows from a manufacturer to retailer then to the consumer.
Businesses may use a combination of different channels, in order to spread their products or services. They may have a sales department that communicates with large customers such as wholesalers, and at the same time have agents that cover customers like retailers. Some companies have a specific number of intermediaries based on their distribution strategies.
- First is the Exclusive Distribution that has a limited number of intermediaries. Manufacturer/producers want to control the service level and outputs offered by the resellers, which has exclusive dealing arrangements.
- Second is Selective Distribution that has few intermediaries. Only some available outlets in an area are chosen to distribute a product/service, which is commonly observed for specialized goods that are carried through specialist dealers.
- The third type is Intensive Distribution that uses multiple channels. It uses all of the available outlets to distribute a product, which is common for basic supplies like food and beverages.
Distribution involves several factors that need to be considered:
It is the manner where the company distributes the goods into different locations. Companies need to make sure that the goods will arrive at their destinations in the best condition. Therefore, several issues need to be addressed in order to safely transport the goods including mode of transportation, weather conditions during travel, handling method, packaging, and much more.
This is where the goods are inspected and if these reached the destination at the exact time and in good quality. It is extremely important that a company is able to deliver within the schedule because customers seriously hate it when their orders are delayed. This is one of the major factors that customers check before purchasing online.
If the products look good then more customers will be enticed to buy it because it also symbolizes its quality. Aside from aesthetic purpose, the packaging also serves as a protection. It should be able to withstand the wear and tear during the transportation of the product against the conditions where it will be subjected to. So that when it arrived at the end user or the customer, it will still look presentable.
Business owners should evaluate where to place a product in order to have the maximum opportunity to sell the goods. This is related to the type of distribution strategy that you want to use for your company. Note that they key factor is distributing the products to the users at the right place and at the right time. If you just started a small business then you will be using a direct distribution. On the other hand, large companies are using indirect distribution to deliver the products.
There are some cases where a company experiences a product recall, which means that there are issues regarding the product and these needs to be sent back to the manufacturer. In order to take the goods back from the trade without any problem, you should be prepared with a backtrack system.
Distribution is critical because it can make or break a business. With a good distribution system, the business will have a greater chance of selling the goods more than its competitors. The main goal is to spread the goods wider and faster in the marketplace at lower costs than the competitors. With this strategy, the business will make greater margins absorbing the raw material price to rise better and last longer in today’s tough marketing conditions.
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