Place Distribution Strategies PDF

Place Customer Location Distribution Channels Distribution Strategy Understanding where customers are Choosing the right distribution channels is A well-designed distribution strategy is key located is crucial for a firm to effecti...

Place Customer Location Distribution Channels Distribution Strategy Understanding where customers are Choosing the right distribution channels is A well-designed distribution strategy is key located is crucial for a firm to effectively essential to conveniently and to ensuring products reach customers reach and serve them. economically deliver products to effectively. customers.  Place Decision Areas Distribution Channel Transportation Warehousing Inventory Selecting the right channels to Effective transportation Strategically located Management conveniently and cost- planning for timely and warehouses to ensure product Optimizing inventory levels to effectively deliver products to efficient product delivery. availability and distribution meet customer demand while customers. efficiency. minimizing costs.  Place Mix Overview Channels of Physical Distribution Physical Distribution Combination of all decision Distribution The set of activities involved in Activities related with the flow of goods The route through which a the movement of goods from The major activities of physical from the place of product moves from the the producer to consumer via distribution are transportation, manufacturer to the place of producer to the ultimate distribution channels. warehousing, inventory consumer. Two manor consumer, including the management and order components are channels of original producer, the final processing. distribution and physical buyer, and middlemen who act distribution. in between.  Channels of Distribution Channels of distribution refer to the routes a product takes to get from the manufacturer to the end consumer. This includes the various intermediaries involved, such as wholesalers, retailers, and online marketplaces. The choice of distribution channels is a critical strategic decision that impacts a company's reach, costs, and customer experience. Effective distribution channels ensure products are conveniently available to target customers through the right mix of physical stores, e-commerce platforms, and other sales outlets. The process which concentrate on the management of channels and flow of goods and services through this channel is referred as logistic or logistic management or SCM Serve as a bridge to fill the gap between the point of production and the point of consumption, creating time, place and possession utility  Definition According to Stanton, a distribution channel consists of the set of According to Phillip Kotler, distribution channels are "a set of people and firms involved in the transfer of a product from independent organizations involved in the process of making a producer to ultimate consumer. product or service available for use or consumption."  Types of Channels-Levels A distribution channel connects the producer and the consumer, with several intermediaries functioning in between. The number of intermediaries determines the length or "level" of a channel. The choice of distribution channel varies according to the specific product, producer, and target market. Some common channel types include: 1. Direct channel - Producer sells directly to consumer (e.g. factory outlet store, company website) 2. Single-level channel - Producer sells to retailer who then sells to consumer 3. Double-level channel - Producer sells to wholesaler who sells to retailer who sells to consumer 4. Triple-level channel - Producer sells to wholesaler who sells to agent/broker who sells to retailer who then sells to consumer The appropriate channel structure depends on factors like product complexity, target market size, producer resources, and desired level of control over the sales process. Innovative approaches like e-commerce and direct-to-consumer models are also increasingly common.  Direct Distribution/Zero level Zero Level Channel Examples of Direct Advantages Drawbacks In a direct distribution channel, Channels Better profit margins Requires producer to invest the producer sells products or The producer's own Stronger brand control in all aspects of the sales services directly to the end branded retail stores and distribution More detailed customer consumer, without any Their website for e- infrastructure data intermediaries like wholesalers commerce or retailers. Direct sales teams that interact with customers Manufacturer → Consumer This model works well for products or services that can be easily shipped or delivered directly to the consumer, and where the producer has the resources to handle customer service and logistics. Overall, the direct channel is best suited for producers who want tight control over their go-to-market strategy and customer relationships.  Retail Distribution Producer Manufactures Retailer Sells Consumer Purchases The producer creates the product and The retailer markets, displays, and sells The consumer purchases the product sells it to a retailer, either directly or the product to the final consumer in their from the retailer to meet their needs or through a wholesaler. physical or online store. desires. Manufacturer → Retailer → Consumer This model benefits both producers and retailers by allowing them to focus on their core competencies. Producers can concentrate on product development and manufacturing, while retailers handle the sales, customer service, and inventory management aspects. Retail distribution also gives consumers convenient access to a wide variety of products in a single location.  Wholesale Distribution Wholesale distribution is a key part of the supply chain, where businesses sell goods to other businesses, rather than directly to consumers. Wholesalers buy in bulk from manufacturers and sell smaller quantities to retailers, who then sell the products to end customers. Manufacturer → Wholesaler → Retailer → Consumer This model benefits both producers and retailers. Producers can focus on manufacturing, while wholesalers handle sales, logistics, and inventory. Retailers gain access to a diverse range of products without establishing direct relationships with each supplier. Wholesalers also improve supply chain efficiency by consolidating orders and shipments, taking advantage of economies of scale. Three-Level Channel This channel includes an additional intermediary, such as an agent or broker, who helps facilitate sales between the manufacturer and wholesalers. Agents or brokers typically do not take ownership of the goods but earn a commission on sales. Manufacturer → Wholesaler → Agent/broker→ Retailer → Consumer Examples: Imported goods, agricultural products, and real estate.  The Vital Role of Middlemen Link Production & Identify & Contact Facilitate Delivery Influence Buyers Consumption Buyers Ensure goods are delivered Encourage and persuade Provide the essential Locate prospective as required, in suitable prospective customers to connection between what is customers and facilitate the packaging. make purchases. produced and what is sales process. consumed. Pricing & Information Enable Distribution Develop New Markets Provide Services Formulate pricing policies Support the overall process Help create and grow Offer pre- and post-sales and provide product/market of getting products to markets for new products. support, and educate insights. consumers. customers. Extend Credit Manage Risk Provide financing options to retailers and consumers. Accept the risks of storage, handling, and transportation.