Strategic Marketing Management
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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
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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. |
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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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Short Case Studies / Caselets