A distribution strategy outlines the method by which your product is delivered to customers. It encompasses all the channels and procedures involved, serving as a roadmap for the journey of your product from creation or production to receipt by the customer.
Your distribution strategy is a critical component for the success of your business. The better the strategy, the happier and more loyal your customers will be, the lower your costs will be, and the more opportunities you will have for growth and reaching new customers
An optimised distribution strategy can streamline product delivery and save time. What are the key considerations for designing an effective strategy? This article will highlight the advantages of having a distribution strategy and provide insight into various options, allowing you to determine the best fit for your product.
What is the goal of a distribution strategy?
A well-constructed distribution strategy should specify where and how consumers can purchase your products. An effective strategy balances internal resources to save money, while outsourcing any necessary additional services.
It is crucial to design a distribution plan that is customer-friendly and encourages repeat purchases. Make your product easily accessible to your target audience to drive discovery and future sales. A successful distribution strategy will also expand your pool of potential customers over time. Another good idea is to consider aligning your distribution strategy with your growth goals to reach new customers and increase brand recognition through the chosen distribution channels.
Benefits of effective distribution strategy
Reduce Logistical Costs
By implementing an efficient distribution strategy, companies can lower their logistical costs, including transportation, storage, and handling expenses. This results in significant cost savings and increased profitability.
Prevent Supply Chain Issues
A well-designed distribution strategy can help prevent problems in the supply chain, such as delays, stockouts, and lost or damaged goods. This leads to increased reliability and customer satisfaction, as well as better control over inventory levels.
Meet Delivery Deadlines
A comprehensive distribution strategy helps ensure that delivery deadlines are met, and products are delivered on time to customers. This results in improved customer satisfaction and trust, as well as increased sales and revenue.
Enhance Customer Experience
A strong distribution strategy helps to improve the customer experience by offering convenient and accessible delivery options, such as home delivery or pickup at a nearby store. Additionally, it helps to ensure that products are delivered in good condition, providing a positive impression of the brand and increasing customer loyalty.
Expand Market Reach
By developing a tailored distribution strategy, companies can promote their products to new markets and reach a wider audience. This leads to increased brand recognition and market share, as well as opportunities for growth and expansion.
What are the different types of distribution strategy?
There are several types of distribution strategies, each with its own advantages and disadvantages, and it's important to choose the one that best suits your company's needs and goals. Some of the common types of distribution strategies include:
Direct distribution involves selling products directly to customers through company-owned retail stores or e-commerce platforms. This strategy allows companies to have direct control over the pricing, promotion, and distribution of their products, and provides valuable insights into customer behaviour and preferences. However, it also requires a significant investment in marketing and sales, as well as a physical or digital presence to reach customers. This strategy is best suited for companies with well-established brands, high-value products, and a loyal customer base.
Indirect distribution involves partnering with intermediaries such as wholesalers, distributors, or retailers to reach customers. This strategy allows companies to reach a larger customer base and reduces the cost of marketing and sales, as intermediaries already have established relationships with retailers and customers. However, it also requires companies to give up some control over pricing, promotion, and distribution, and to rely on intermediaries to accurately represent their brand and products. This strategy is best suited for companies with a wide range of products or those targeting a large and diverse market.
Exclusive distribution involves granting exclusive rights to one or a few intermediaries to distribute the product in a specific geographic area. This strategy allows companies to build strong relationships with select intermediaries, who can effectively promote and distribute the product. However, it also restricts the distribution of the product to a specific geographic area, reducing the potential market reach. This strategy is best suited for companies with high-value products and a need for exclusive representation in a specific area.
Intensive distribution involves maximising product availability through widespread distribution, making the product accessible to customers in as many locations as possible. This strategy increases product visibility and accessibility, making it easier for customers to find and purchase the product. However, it also requires a significant investment in distribution infrastructure, and there is a risk of over-saturating the market, which can negatively impact the perceived value of the product. This strategy is best suited for companies with low-cost, high-volume products, such as fast-moving consumer goods.
Selective distribution involves choosing a limited number of intermediaries, who are carefully selected based on specific criteria, to distribute the product. This strategy allows companies to control the distribution of the product, while still leveraging the expertise and resources of intermediaries. It also enables companies to target specific markets or customer segments. This strategy requires careful selection and management of intermediaries, and there is a risk of limiting market reach if the intermediaries are not effectively promoting and distributing the product. This strategy is best suited for companies with high-value products and a need for selective representation in specific markets or customer segments.
How NetSuite supports all Distribution strategies
NetSuite is a comprehensive software solution that can support all distribution strategies by providing powerful tools for managing supply chain, inventory, and order management. With NetSuite’s cloud-based platform, companies can manage every aspect of their operations in one place, from sales and marketing to finance and accounting. The system also offers customisable analytics and reporting tools to help companies track and monitor performance across all channels. With its flexible architecture, NetSuite can be tailored to meet the unique needs of any company, providing a comprehensive solution for managing your distribution strategy and operations.
If you are interested in learning more about how NetSuite can support your distribution business, reach out to the experts at PKF Digital.