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Chapter 20 : Distribution Strategy

Strategic Issues in Distribution

   Issues Related to Marketing Decisions
   Product Issues
   Issues Related to Channel Relations

Types of Distribution Channels

   Reverse Channel of Distribution
   Flexible Distribution Channels

Considerations in Distribution Channels

   Middlemen Considerations
   Customer Considerations
   Product Considerations
   Price Considerations
   Setting up a Distribution Channel

Distribution Intensity

   Exclusive Coverage
   Selective Coverage
   Intensive Coverage
   Determinants of Distribution Intensity

Conflict and Control in Distribution Channels

   Identifying Channel Conflict
   Avoidance of a Channel Collapse

Managing the Channel

   Functions Associated with Distribution Management
   Management of the Distribution Channel

International Channels

   Problems with Local Channel Partners

Chapter Summary

A distribution channel links the manufacturer of a product with the end users i.e. the consumers. Decisions regarding distribution channels are of great significance to the manufacturers. Organizations can have strategic distribution systems that help them to examine the current distribution system and decide on the distribution system that can be useful in the future. In designing a distribution channel for an organization, there are mainly three steps identifying the functions to be performed by the distribution system, designing the channel, and putting the structure into operation. There are different types of distribution channels depending on the number of levels that exist between the producer and the consumer. In deciding on the kind of distribution strategy to be used, there are various considerations to be kept in mind considerations on middlemen, customers, product, price, etc. The middlemen should have the necessary financial capacity to carry out the task effectively. Customers should be able to get the products conveniently. Product features to be considered include durability, toughness etc. The price of the product also requires consideration in deciding the distribution strategies.

Distribution intensity can be referred to in terms of the number of retail stores carrying a product in a geographical location. In intensive distribution, the manufacturer distributes the products through the maximum number of outlets. In exclusive distribution, the number of distribution channels will be very limited. In selected distribution, the number of retail outlets in a location will be greater than in the case of exclusive distribution and fewer than in the case of intensive distribution. Distribution management is of strategic importance to any organization as distribution plays a crucial role in the success of the product in the market. Distribution management also helps to maximize profits.

In managing the distribution channels, maintaining a mutually beneficial relationship between the manufacturer and distributor is necessary. International distribution is gaining importance with the increase in the number of multinational companies. There are certain factors to be considered in international distribution. The distributors should be chosen carefully with a long-term focus. It is better to build a long-term relationship with the local distributors. They should be provided with all the necessary support in expanding their operations. The marketing strategy for the product should be controlled solely by the MNC. Information plays an important role in distribution and the MNC has to ensure that the local distributors provide them with the required information which will help them to increase sales and expand their business.

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