There are two basic types of distribution channels:
- Direct: Consumers buy the product or service directly from your business, whether through a physical storefront or an e-commerce website.
- Indirect: Consumers buy the product or service through an intermediary, like a big-box retailer you have distribution agreements with or a broker agent you partner with.
What are the 3 types of distribution?
Types of Distribution: Intensive, Selective and Exclusive... Intensive Distribution: Intensive distribution aims to provide saturation coverage of the market by using all available outlets. ... Selective Distribution: ... Exclusive Distribution:
What are the main distribution strategies?
There are three methods of distribution that outline how manufacturers choose how they want their goods to be dispersed in the market.Intensive Distribution: As many outlets as possible. ... Selective Distribution: Select outlets in specific locations. ... Exclusive Distribution: Limited outlets.
What are the two types of distribution?
There are two types of distribution channels: direct and indirect. As the names would imply, direct distribution is a direct sale between the manufacturer and the consumer, and indirect distribution is when a manufacturer utilizes a wholesaler or retailer to sell their products.
What are the 2 main types of distribution and why is it important?
Direct and Indirect Channels Channels are broken into two different forms—direct and indirect. A direct channel allows the consumer to make purchases from the manufacturer while an indirect channel allows the consumer to buy the goods from a wholesaler or retailer.
What is simple distribution strategy?
What is a distribution strategy? Distribution strategy is the method used to bring products, goods and services to customers or end-users. You often gain repeat customers by ensuring an easy and effective way to get your goods and services to people, depending on the item and its distribution needs.
What are the three distribution strategy?
There are three distribution strategies: intensive distribution; exclusive distribution; selective distribution.
What is 2 level distribution channel?
A two level channel encompasses two intermediary levels – a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of merchandise from various manufacturers and then breaks into the bulk deliveries to supply retailers with smaller quantities.
What are the 4 types of distribution?
There are four types of distribution channels that exist: direct selling, selling through intermediaries, dual distribution, and reverse logistics channels.
What is distribution strategy in marketing?
What is distribution strategy? Distribution strategy involves coming up with an efficient method of disseminating your company's products or services. The goal of this type of strategy is to maximize revenue while maintaining loyal customers.
How do you choose a distribution strategy?
How to Choose a Channel of DistributionConsider your competitors. What methods are your competitors using? ... Examine costs and benefits. After deciding on a method of distribution, creating the support systems that go with it is time-consuming and expensive. ... Rank your options. ... Have a plan for growth.
What is distribution channel strategy?
A distribution channel strategy evaluates ways to improve the positioning of products to boost demand around them. Your main goal is to find the right customers and locations of demand, in order to speed up the process of connection between products and customers and make it profitable.
What are the two types of customers?
Broadly speaking, there are two types of customers: internal customer and external customer.
What are the 4 types of distribution strategies?
What Are the Different Types of Distribution Strategies?Direct Distribution. Direct distribution is a strategy where manufacturers directly sell and send products to consumers. ... Indirect Distribution. ... Intensive Distribution. ... Exclusive Distribution. ... Selective Distribution. ... Wholesaler. ... Retailer. ... Franchisor.More items...•
What are the 4 types of distribution?
There are four types of distribution channels that exist: direct selling, selling through intermediaries, dual distribution, and reverse logistics channels.
What are distribution strategies in supply chain management?
Distribution management manages the supply chain for a firm, from vendors and suppliers to manufacturer to point of sale, including packaging, inventory, warehousing, and logistics. Adopting a distribution management strategy is important for a company's financial success and corporate longevity.
What are examples of distribution?
The following are examples of distribution.Retail. An organic food brand opens its own chain of retail shops.Retail Partners. A toy manufacturers sells through a network of retail partners.International Retail Partners. ... Wholesale. ... Personal Selling. ... Direct Marketing. ... Ecommerce. ... Direct Mail.More items...•
What are examples of distribution strategies?
Here are three examples of various distribution strategies using business examples from various industries:
How to determine distribution strategy?
Consider basing distribution on your ideal customer, thinking about where and how they buy products and what you can do to make purchasing your goods or services easier. The item itself is often key to determining the right distribution strategy, type and channel. For example, if your product is a high-end designer line of furniture, buying directly from the manufacture may be worth the customer's time. Or if your product is a routine, everyday item like a bottle of water, buying through convenient and nearby shops may be more appealing to the customer.
What is a distribution strategy?
Distribution strategy is the method used to bring products, goods and services to customers or end-users. You often gain repeat customers by ensuring an easy and effective way to get your goods and services to people, depending on the item and its distribution needs. Organizations consider which distribution strategy is best while being cost-effective and increasing overall profitability. You can even use multiple or overlapping distribution strategies to reach target audiences and meet company goals and objectives. For example, a product might sell better online to one demographic and via a mail-to-order catalog to another target audience group.
What is wholesale distribution channel?
A wholesale distribution channel is when a wholesaler purchases items in bulk from a manufacturer and then sells them to retailers later. This is often a good way to secure products for less money because you place a large order. Wholesalers focus on the storage and delivery of goods and act as a trader between the manufacturer and the retailer who sells them, rarely interacting directly with the customer.
What is retail distributor?
A retail distributor is often the place an item ends up before being purchased by a customer. Retailers can get their product by buying from wholesalers or the manufacturer directly, and they mark up the cost of an item to earn a profit. Retailers are often thought of as actual storefront locations, like a supermarket or department store, though with technological advancements, retailers are also online websites, catalog companies or even phone-order businesses.
Why is distribution important?
Companies that make products use distribution to get them to the consumer market, and there are several types and forms to choose from. Selecting a distribution strategy is important in business, and there are various benefits for each method. Knowing more about distribution strategy can help you develop professional skills whether you work in the industry or need to get your business's goods and services to customers. In this article, we explore what distribution strategy is and examples of it, plus take an in-depth look at distribution channels and types to help you better understand this aspect of business.
How does a distributor benefit?
A distributor can also benefit by having multiple clients that overlap, creating comprehensive product groupings that generate more sales. For example, a distributor that has separate furniture, rug and lighting manufacturers can create an all-in-one living room package deal for the customer to buy that includes a sofa, chair, coffee and end tables and two lamps.
What are the two distribution strategies?
There are two main distribution strategies: direct and indirect. In this article, we will explore the intricacies related to both of these methods, how to choose the best strategy for your business, and some ways to improve the selection and distribution processes.
What Are the Different Types of Distribution Strategies?
As mentioned above, the two main types of distribution strategies are direct and indirect. There are also more nuanced types of distribution that fall into these categories — intensive, selective and exclusive distribution. But what exactly do these methods entail? Let’s examine some of the factors that go into each of these cutting edge distribution strategies so you can determine which practice is best for your primary customer base.
What Are Some of the Different Distribution Channels?
For companies that do opt to go with an indirect distribution method, there are a variety of ways to get products into the hands of customers. Here are some of the intermediaries that businesses use to fulfill distribution strategies.
How Do I Select the Right Distribution Strategy for my Business?
Selecting the correct distribution strategy for your business depends on factors such as the type of item you are creating, your customer base, warehouse capabilities and logistics support. Now let’s go in depth on each of these factors:
What Are Some Technologies that Aid in Distribution?
One of the main ways to optimize the distribution workflow is to employ a distribution software. Whether you’re a manufacturer conducting your own distribution or a distributor looking to improve operations, a software solution can be a beneficial option. Here are some of the new technologies included in distribution software that can positively influence your business.
What Are Some Common Distribution Software Features?
Distribution software contains many different features to aid in the distribution process. Here’s a quick overview of some of the commonly included features in these programs.
What is direct distribution?
Direct distribution is a strategy where manufacturers directly sell and send products to consumers. There are a few different ways to implement this method. Some organizations may opt to take a more modern approach and use an e-commerce website where users can make a purchase online.
How is distribution strategy decided?
Distribution strategy is mainly decided by keeping the top management in loop because it affects overall operations. This strategy can be summarised with 3 main points. How to get the product from the manufacturing point to the end customer. On a macro level, there are two types of distribution.
What is distribution strategy?
Overall, distribution strategies depend a lot on the various products which the companies might have. A single company might have multiple product line and lengths, each with its own distribution strategy. Some products, which are premium, might need selective distribution whereas others which are mass products, may need intensive distribution.
How to reach far and wide?
To reach far and wide, you need the right distribution strategies in place. You cannot market a product and then not deliver the product to the end customer. This is a sheer loss of money as you waste money on your marketing and the opportunity loss is also huge. Not to mention, the loss to the brand when the customer wants to purchase ...
What is indirect distribution?
Indirect distribution is when the product reaches the end customer through numerous channels in between. For example – The product goes from manufacturer to C&F, then to the distributor, then to the retailer and finally to the customer. Thus the chain is long.
Why is distribution important in today's world?
In today’s fast paced world, distribution by a company can be an enormous competitive advantage to the company. Most companies target their customers far and wide. Because of the rising costs, companies are trying to expand in various markets so that they have a higher turnover and hence a higher margin. To reach far and wide, you need the right ...
Do premium products need selective distribution?
Some products, which are premium, might need selective distribution whereas others which are mass products, may need intensive distribution. The strategies for both types will be different. So, in the end, the distribution of a company is dynamic in nature and it contributes a lot to the competitive advantage of the company.
Does Zara have selective distribution?
A company like Armani, Zara or any other such branded company will have selective distribution. These companies are likely to have only limited outlets. For example – In an urban city, Armani might have 2-3 outlets at the maximum whereas Zara might have 4-5. You can read this detailed article on Selective Distribution.
What is distribution strategy?
Distribution strategy is a comprehensive process of making products and services available to businesses and target customers for their use. Brands have strategized their distribution channels since time immemorial.
What is direct distribution?
Direct distribution is exactly what it sounds like, the manufacturer directly selling to the consumer. It may include a selling platform such as an e-commerce store, but as long as the length of the distribution channel is minimal the process will be considered as a direct distribution process. Modern retail brands are also examples ...
Why do brands use intensive distribution?
Household goods or automobile brands use intensive distribution strategy to ensure that their products are being catered to the most number of consumers possible. Such a strategy can include a long distribution channel or a short one, depending on the needs of the target marke t.
Why are brands trying to broaden their target markets?
The current market conditions for any goods or commodities have shape d up to be a global one. And for this particular reason brands are constantly trying to broaden their target markets. When it comes to increasing one’s customer base there are two primary aspects to look into, marketing and distribution.
When is indirect distribution considered?
When the chain of distribution channel is long and includes various steps , the process is considered to be indirect distribution. If a brand creates a product, sends it over to C&F specialists, who then send it to a distributor followed by the retailer where the customer finally buys it, the process will be termed as indirect distribution.
Is distribution strategy based on length?
Once again, such a distribution strategy is not categorized based on the length of its distribution channel but rather on the basis of its marketing strategy. Premium brands realize that their products are highly unlikely to be purchased at certain locations and thus they actively place their distribution channels in select areas.
What are the different types of distribution strategies?
There are three major types of distribution strategies developed or identified at the strategic level. Below are the following: 1. Mass or Intensive Distribution. A mass or intensive distribution is a specific strategy in which a business or marketer seeks out intermediaries or third-party distributors that appeal to a broad market base ...
What is distribution strategy?
Distribution strategies are strategic plans developed and implemented to deliver goods or services from the point of origin to end-user consumers. On the other hand, distribution channels are the activities and the organizations or people involved used to move products from the point of origin to the consumers.
What is an intermediary distributor?
The intermediary or exclusive distributor works closely with the business to add value such as after-sales services and other value-added services. Some examples of exclusive distribution arrangements include manufacturers of luxury vehicles and their arrangements with geographic distributors. Note that the exclusive distributors have ...
What are some examples of selective distribution?
Examples include snack foods and other consumer goods such as toiletries sold through intermediaries such as supermarket s and convenience stores. 2. Selective Distribution. Producers of high-end items such as designer bags and luxury cosmetics often employ selective distribution.
How many levels of distribution are there?
Take note that in a channel design, there are three levels of distribution channel: zero level or direct distribution that involves direct transaction between the business and end-use consumers, one level that involves a retailer at the center of the business and end-use consumers, and two levels that includes wholesalers and then the retailers to move the product form the business to end-use consumers. Using an agent is essentially a zero level configuration.
Why do specialized products go through selective distribution?
In addition, most specialized products also go through selective distribution because they need to target specified markets. Examples include consumer-grade medical equipment sold through pharmacies industrial-grade machines sold through business-to-business retailers.
Can businesses choose one or more channels?
However, businesses can choose one or more channels to optimize the distribution of their products. Several large organizations such as Apple or the marketing of its iPhone products and The Coca-Cola Compan y use a mix of different channels, thus creating a multi-channel distribution network.
Direct Distribution Strategy
Indirect Distribution Strategy
- When the chain of distribution channel is long andincludes various steps, the process is considered to be indirect distribution.If a brand creates a product, sends it over to C&F specialists, who thensend it to a distributor followed by the retailer where the customer finallybuys it, the process will be termed as indirect distribution. Brands such as Pepsi or Nestle are great exampl…
Intensive Distribution Strategy
- Sometimes the categorization of distribution strategiesis not simply based on the size of the distribution channel, but also its goalsand capabilities. One such strategy is intensive distribution. This is when abrand tries to push its products to maximum market capabilities and cover asmuch ground as possible. Household goods or automobile brands u...
Exclusive Distribution Strategy
- A brand need not always push itself on its targetmarket. There are various brands that have such high brand value that havingexclusive region-based showrooms serve their purpose better. Let us takeMercedes for example. This brand does not try to have an outlet in every city,but only in certain major cities. This is an example of exclusive distributionstrategy. Such strategies are mo…
Selective Distribution Strategy
- There are brands that try to place themselves on every street corner, and then there are brands that have a selected number of outlets in every city. McDonalds, for example, will sport at least 8-10 outlets in any major city. Whereas a premium clothing brand like Gucci or Versace will have maybe 3-5 outlets at premium shoppingcenters. This process is known as selective distribution. …