What is Distribution Strategy?

An organization in order to make its product available to consumers at right place and right time
should have a strong supply chain this is where different distribution strategies come’s into the
picture. So, what happens over here is an organization makes certain plans and strategies to make
their goods and services available to its target consumers through its supply chain. An organization is
their capable enough they can use their own channel of distribution or they also have the option of
outsourcing it to third party.

A distribution strategy is very important for any organization as it makes goods and services available
to final consumers at minimal cost. A good strategy not only makes the distribution activities
efficient but it also reduces cost on the other end a bad strategy may end up increasing the cost
which may lead to losses and at the same time the competitors will try to grab the opportunity
which the firm has left open.

Types of Distribution Strategy-

1) Exclusive Distribution- It is a type of distribution where an organization comes in agreement

with an exclusive dealer to sell their product or distribute it to the wholesaler or retailer.
This type of agreement normally happens when an organization sells luxury goods and they
don’t want their product to be available in every store as this may affect their brand value.
For example- Rolex.

2) Intensive Distribution- This type of distribution normally happens when an organization is

looking to sell its products to mass audiences. This type of goods are available in every store
possible, right from local kirana store to big hypermarkets. The main motto behind this type
of production is that higher the distribution of the product higher will be the sale and at the
same time it will build awareness among the people for the product. For Example- Soft
drinks.

3) Selective Distribution- This type of distribution happens when an organization want their
products to be distributed by selective retailers. Their products are sold at more than one
outlet in a particular area unlike exclusive distribution and less than intensive distribution.
This type of distribution somewhere helps them to reduce cost on distribution and at the
same time help them to cover large market. For example- Home appliances

Factors affecting Distribution Strategy-

1) Location- Location is one of the most important factors that decides the cost and strategy to
be implemented in terms of distribution. If the location of the manufacturing unit is far from
target market then it increases the cost.

2) Storage- Storage of goods is also important in terms of distribution. If the goods are durable
goods it can be stored for a long time and can be distributed accordingly when required.

3) Price of product- If the product is a normal good than multiple channels of distribution can
be used and if the product is luxury good then direct or short channel of distribution is used
as it may cost more and also there are chances of theft or robbery.
 4) Financial Strength- An organizations financial strength plays an important role determining
the channel of distribution they want to choose. Suppose a company is financially strong
they can form their own channel of distribution whereas on the other hand, if the company
is not that strong financially, they have to choose existing channel of production as forming
a new channel of distribution requires huge amount of money.

These are some of the factors affecting distribution channel.

Distribution Strategy of Hero MotoCorp Ltd

Manufacturers

Dealers Sub Dealers

Consumer

Hero MotoCorp Ltd has a very intensive distribution system. They make their product available to
customers through their dealers and showrooms. In total Hero Moto Corp has 6000 dealers plus
showrooms all over India. Hero Moto Corp has a very positive and trustworthy perception in the
mind of the customers as it is known for providing quality product in less price. The reach of Hero
Moto Corp is very big. It is also seen in many villages and remote areas as people know about the
brand since 1980s. One of the positive of Hero Moto Corp limited in terms of dealership is that it a
gives a fair margin to dealers which somewhere builds a strong relationship.

Hero Moto Corp even though they have so many dealers to deal with yet they have never
compromised in providing the final goods or orders to the dealers on time. They have planned out a
simple blue print in which what happens is the manufacturers and the dealers are in constant
contact with each other. So, whenever there is any order the dealer’s they fax the order to the
manufacturers and the manufacturer accordingly dispatches the order. Normally it takes one day if
the order is not far from manufacturers and if the order is from far place then it takes 7 working
days.

Manufacturers when they dispatch the product it is dispatched in standard condition that is they
don’t send accessories with it like seat cover, back mirror etc. Once the dispatched goods reaches
the dealer they either store it in their warehouse or they store it near they showroom where they
some space. Dealer’s transportation cost is saved if the goods are directly transported near their
showroom. If the goods are transported near the dealer’s warehouse then the dealer has to set up
his own transport which will increase his cost. In October 2020, Hero Moto Corp signed an exclusive
agreement with Harley Davidson in which Hero will distribute Harley Davidson vehicles in the
market. For that they are planning to open a separate vertical for selling Harley Davidson vehicles.
Hero Moto Corp is looking to expand its business globally.

https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/7048-distribution-
strategy.html

https://www.globalnegotiator.com/international-trade/dictionary/exclusive-distribution/

https://economictimes.indiatimes.com/definition/intensive-distribution