Channels of Distribution

Topics: Marketing, Retailing, Marketing plan Pages: 6 (1224 words) Published: February 28, 2004
Once you have selected and developed a unique product or business idea, correctly positioned and targeted it to buyers, and developed your packaging and pricing, the selection of distribution channels and sales representation is key to successful marketing.

It's fairly easy to change many of your marketing tactics and strategies on a periodic basis; pricing, packaging, and product mix are among these flexible choices. However, distribution and sales decisions, once made, are much more difficult to change. And distribution affects the selection and utilization of all other marketing tools.

There is a wide variety of possible distribution channels, including:

Retail Outlets owned by your company or by an independent merchant or chain

Wholesale Outlets of your own or those of independent distributors or brokers

Sales Force compensated by salary, commission, or both

Direct mail via your own catalog or flyers

Telemarketing on your own or through a contract firm

Cyber Marketing, surfing the newest frontier

TV and Cable direct marketing and home shopping channels

Distribution choices for a service business follow the same lines as those for a physical product. For example, financial planning services may be offered from printed material, sold at retail by consultants, delivered electronically by computer, or relayed by phone, fax or mail.

Steps for selecting distribution and sales force representation include:

Identify how competitors' products are sold.

Analyze strengths, weaknesses, opportunities, and threats for your business.

Examine costs of channels and sales force options.

Determine which distribution options match your overall marketing strategy.

Prioritize your distribution choices.

Identify How Competitors' Products are Sold.

Small businesses may face a particular difficulty in identifying their directly competitive selling channels, not usually in identifying where target buyers buy competitive products. How Are Competitor's Products Sold?

Small companies should make a list of any competitors in their marketing area that could compete directly with them for the same list of potential customers. The list of competitors should then be divided into different distribution channels, if applicable.

In the architect example, a list of competitors broken down by different local distribution channels includes:

*competitors who advertise in local city and county magazines, newspapers, and real-estate flyers, subdivided by home-design only firms and home-design + industrial-design firms

*competitors who work with contractors and developers in the local county

*the local university's architectural design department

Architectural competitors who advertise in local city media may be local, regional or national. In some cases, these competitors solicit home design business from wealthy industrial design clients they are doing work for. Other competitors have contracts to design and modify development-tract homes for local developers. And some competitors work with contractors to design home remodeling/addition projects. The local university is active in publicizing student residential design projects that result in several new homes and remodeling/addition jobs each year.

Analyze Strengths, Weaknesses, Opportunities, and Threats for your Business.

Strength and weakness analysis is an internal company exercise to gauge your ability to compete effectively. Opportunity and threat analysis is an external exercise centered on competitors and the external environment that affect a company's ability to compete effectively. Taken together, they are referred to as SWOT analysis.

Each distribution channel alternative and sales force option carries specific costs that can be estimated in most industries and categories.

Small businesses need to network with potential or current customers, industry associations, trade suppliers, and competitors to help answer these...
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