Selecting and managing your distribution channels is a key component of your marketing mix, and integral to the successful operations of your business.
It is all very well to have a fantastic product with a well-recognised brand, clever promotion and a price your customers will pay; but if they can’t get their hands on it, your endeavours are wasted.
Choosing the right distribution channel for your business is critical, and ensuring you understand the process and have a documented agreement will assist in the development of a mutually beneficial relationship.
The first decision is whether to handle the whole distribution internally (i.e. conducting all activities to do with selling, distribution, transportation, storage etc), or to use the services of other businesses. Remember you can take away the ‘middle man’ but you can’t take away their function, and if you don’t have the skills, resources or time to spend on distribution, then outsource it to the experts.
Deciding to use intermediaries will determine to a large extent, where you will focus your marketing activities. For example, you may decide to focus your advertising, sales promotion and pricing strategies at generating trade interest and demand for your products, or you may focus these activities on consumers. Most businesses use a combination of both, with the balance laying more one way than the other, depending on your target market.
It is important you analyse the nature of your product, market, and the activities of your competitors.
- Determine which type(s) of intermediaries you need:
- Determine intermediaries available – ask competitors, look in directories (such as Yellow Pages, Trade Directories and magazines).
- Arrange meetings with short-listed potential intermediaries.
- Before the meetings consider and document your decisions on the following:
- The information you require from your intermediaries, how much and how often and how passionate they are
- Whether you want regular meetings with your intermediaries
- What your distributors will expect from you in terms of promotional literature and support
- Set a budget for distributor support activities in your business
- Outline what promotional activities will be directed towards intermediaries
- Document and provide information to potential intermediaries on:
- The background of your business
- Details of your product and target market
- Customer requirements and buying behaviour.
Products for the major retail supermarket chains are generally delivered from sophisticated centralised warehouses called Distribution Centres. Delivery of products onto the shelf is a complex and challenging issue for these nationwide companies due to the vast distances and diverse weather conditions, which can affect supply, particularly of fresh fruit and vegetables.
The distribution channels in the food service sector are fragmented. There are two major national providers – Bidvest and PFD – but unlike the retail market they have a small market share overall. The balance of the food service distribution market is supplied by a number of state-based companies and a very large number of small, regional, local and niche businesses.
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