Distribution (business) - AbsoluteAstronomy.com

Product distribution (or place) is one of the four elements of the marketing mix

Marketing mix

The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients",...

. An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.

The other three parts of the marketing mix

Marketing mix

are product

Product (business)

In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

, pricing

Pricing

Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a...

, and promotion

Promotion (marketing)

Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....

Managerial concerns

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order.
Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:

Channel membership
Channel motivation
Monitoring and managing channels

Type of marketing channel

Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, and particularly the brand leaders in consumer goods
Goods
Goods may refer to;*Good , physical product*Personal property, legal personal chattels...

markets (price competition may be evident).
Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.In this case retailers can keep the competitors products in their outlets e.g. furniture etc.
Exclusive distribution - Only lam-bard specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.

In this retailers are restricted to keep only one manufacturers products e.g. exclusive outlets of cars,apparels and jewellery etc.
Marketing plans

Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a compensation is offered to the distributors' sales personnel, so that they are tempted to push the product. Julian Dent defines this incentive as a Channel Value Proposition

Channel Value Proposition

Channel value proposition is the business case made by a supplier to attract members of its distribution channel. This is made up of many elements depending upon the sophistication of the supplier and channel members and the intensity of competition for share of the channel...

or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-force, calling on the larger accounts, with agents, covering the smaller customers and prospects.
These channels show marketing strategies of an organization. Effective management of distribution channel requires making and implementing decision in these areas.

Ref and ext. links

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Managerial concerns

Type of marketing channel

Channel motivation

Monitoring and managing channels

See also

Ref and ext. links