Distribution strategy

Definition
• Distribution channel - a way of selling a
company's product either directly or via
distributors; "possible distribution channels
are wholesalers or small retailers or retail
chains or direct mailers or your own
stores“.
• Distribution channels are the link between
producers and customers.
 Distribution systems
It include

• Direct Distribution Systems

• Indirect Distribution Systems

• Multi-Channel or Hybrid Distribution

Systems
• Direct Distribution System:
In direct distribution system the
marketer reaches the target consumer directly
without the use of any intermediary. The direct
distribution system can be further sub-divided on
the basis of the methods of communication that
takes place during sale between marketer and
consumer. These methods are:
• Direct Marketing Systems:
In this system the consumer buys the
product based on information gained from
impersonal contact with the marketer like by
visiting the marketer's website or ordering from
the marketer's catalog.
• Direct Retail System:
In this type of system the marketer
operates his own retail stores. A perfect example
of this system is Starbucks.
• Personal Selling Systems:
In this system the distribution of the
product is carried forward by people whose main
responsibility is creating and managing sales.
For e.g: sales persons
• Assisted Marketing System:
In this form of distribution system the
marketer handles the distribution of his product
and helps it reach directly to the end user.
However he needs assistance from others to
spread awareness about his product among the
customers
 2 .Indirect Distribution System
• In indirect distribution system the
marketer includes intermediaries or other
members in his distribution chain. These
resellers make sure the product reaches
the end user, while performing their duties
they take complete ownership of the
product.
• Indirect methods include the following:
• Single-Party Selling System:
In this system the marketer involves
another party to sell and distribute his
product to the end user.
• Multiple-Party Selling System:
In multiple-party selling system the
distributor involves two or more reseller in
the distribution process before the product
reaches the end user.
3. Multi-Channel (Hybrid)
Distribution System

• A marketer is said to be using a

multi-channel or hybrid distribution system
when he utilizes more than one distribution
design.
• Multi-Channel distribution system is
advantageous as it expands the
distribution system and more customers
can be reached
 Functions of a Distribution
Channel
• The main function of a distribution channel is to provide a
link between production and consumption. Organisations
that form any particular distribution channel perform
many key functions:
• Information:- Gathering and distributing market
research and intelligence - important for marketing
planning
• Promotion:- Developing and spreading communications
about offers
• Contact:- Finding and communicating with prospective
buyers
• Matching:- Adjusting the offer to fit a buyer's needs,
including grading, assembling and packaging
• Negotiation:- Reaching agreement on
price and other terms of the offer
• Physical distribution:- Transporting and
storing goods
• Financing:- Acquiring and using funds to
cover the costs of the distribution channel
• Risk taking:- Assuming some commercial
risks by operating the channel (e.g.
holding stock)
 Distribution channel levels
• Each layer of marketing
intermediaries that performs some
work in bringing the product to its final
buyer is a "channel level"