Monday, June 8, 2009

what is distribution?

Now let me discuss about distribution.
As discussed earlier, distribution is about indirect selling as well as physical distribution.
Distribution is about making a product available to the customers. here the major job of the organization is to decide the path i.e. the channel and the various intermediaries for the distribution process.
The intermediaries for the same can be as the middlemen, the agent or brokers, the wholesalers, the retailers, distributors, dealers who are the specialists in any particular products or the value added resellers (VARs).

The types of channels can be one level channel, two level, three level or even four level channels.
The channel strategy decision for distribution is further divided into 3 parts:
1. Intensive distribution i.e. by making the product intensively available widely in the market, it is preferred for the convenience products. For e.g. Pepsi, being made available in each and every small shops. It leads into increased sales, wider customer recognition and in impulse buying by the customers. on the other hand it leads to characterically low prices and low margins in the product.
2. Selective distribution i.e. it limits the availability of the products to a few carefully selected outlets to gain adequate market. For e.g. outlets by fashion designers like satyapaul, whirlpool, Samsung products. It helps in adequate market coverage, more control and less cost and moreover it helps the firms which are capable enough of carrying full product line rather than having only 1 quality.
3. Exclusive distribution i.e. where the supplier agrees to sell his product only to a single middlemen. For e.g. l’oreal, kaya, major women apparel brands etc. It provides the organization with full control, enhances the product image, promotes the dealer loyalty and also restricts the resellers from carrying the competing brands. On the other hand, it becomes risky by betting on only one dealer in the market place. Therefore, this type of distribution is suitable only for the highly priced, high margin and low volume products.


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