Distribution ensures that a commodity is distributed across the market so that a wide number of consumers can purchase it. In addition, the fundamental concern is to ensure that goods meet their intended consumers in the most cost-effective way.
While distribution as a principle is relatively straightforward. In reality, distribution management can entail a broad variety of activities and disciplines, including : comprehensive logistics, transport, warehousing, storage management, and channel management, including the selection of channel participants and rewarding distributors.
How is a good distribution service carried out?
A good distribution service contains the following things:
- A strong distribution method for shipping goods to various geographical regions.
- A good monitoring device so that the right products enter the right amount at the right time.
- A strong, efficient packaging with the capability to handle the wear and tear of transport.
- Locating places with maximum chances of earning profits.
- It also consists of a system for the return of goods.
Successful distribution infrastructure very clearly means that the company has a better chance of selling its goods than its rivals. Hence, very few companies such as P.L Global have been able to establish an efficient distribution system.
A business that spreads its goods more efficiently and more rapidly to the consumer at a cheaper cost than its rivals would make higher profits. Therefore, it will also better absorb the price of raw materials and last longer in difficult market conditions.
In the FMCG industry in India, companies sell their low-value, high-volume goods to more than 1 million retail outlets. The most popular FMCG firms include the largest networks, made up of factories, warehouses, wholesalers, retailers, and customers.
There are various factors on which a distribution plan depends:
Product: Whether the product will last for a longer duration or not would be a factor in evaluating the model of delivery.
Demand: The size of the market is going to be a consideration. In a wide market, the direct sale may not be the best option. Also, indirect marketing are more fitting for scattered markets.
Business: The scale of the company and the product mix are also important considerations while deciding on the distribution system.
Marketing scenario: In a sluggish or depressed economy, a shorter delivery chain is preferable. Hence, there is a greater range of options in a balanced economy.
Price: The cost of a channel, such as transportation, toll bills, and storage, etc., is an important factor in this decision.
Technical factor: Professional goods cannot be used without proper knowledge and close monitoring. It is recommended that indirect and multi-level networks should be followed to assist customers in the secure use of.
Middleman: In case an indirect distribution network is chosen then the credibility, financial position, service, behaviour of the middleman becomes really important for successful implementation.
Importance of distribution:
Distribution is an important aspect of the operation. It is because an organization can provide the best services only if it has a good relationship with its clients. In order for a distribution system to be fully efficient, a constant feedback channel has to be introduced. This is to ensure that everybody is satisfied with the process and to look after the changes.
The distribution feature aims to raise the quality of life of consumers in society. The proper delivery of the required goods and services to customers conveniently at the right moment will not only please them but will also bring about an improvement in their quality of living.
Distribution acts as a mode of communication between producers and customers. Manufacturers will deliver information and messages to customers about their goods, costs, discounts, etc. by channel representatives. Similarly, they collect information from channel representatives about consumers, rivals, and environmental shifts.
E-distribution is an automated distribution of items such as software and digital downloads. This include video games, computer applications, film, songs, and ebooks. Due to the ease of transaction and prompt reception of the purchase, this business is fast-moving and very lucrative.
E-distribution is an integral aspect of e-commerce. Hence, there are many incentives for companies to embrace e-distribution. The most important of which is the straightforward existence of the purchase (business to consumer or B2C). Consumers are confident that they are working with actual and legitimate producers or manufacturers. Another advantage is the opportunity to enter the market, which is extensive.
There are, however, certain drawbacks of e-distribution. Hence, customers handle the expense of distribution. Targeted advertisements could lead to further purchases, which can sometimes not help the actual needs of the customer. As interpersonal and social interactions have declined, there is a lot of customer decision-making involved which takes time.
Understanding pull vs push:
Another main strategic level judgment on customer markets is whether to employ a push or pull approach. In a push campaign, the marketer uses intensive advertisements and promotions targeted at manufacturers, in particular retailers and wholesalers. They do this with the hope that they will store the product or brand. Hence, customers will buy it when they see it in supermarkets.
On the other hand, with a pull tactic, the marketer markets the product directly to customers. They believe that they can compel retailers to store the product and thereby pull it across the sales channel.
Therefore, the option of a push or pull approach has significant consequences for advertisement and marketing.
In a push tactic, the promotional mix would consist of commercial ads and sales calls. Also, trade publications, exhibitions, and trade shows will have the focus of advertising channels.
The pull strategy would make more intensive use of consumer advertising and sales promotions, and the advertising would be focused towards newspapers and magazines.
In conclusion, distribution decisions need to be made in accordance with the broader strategy and mission of the organization. Therefore, the creation of a working distribution strategy is a core component of strategizing. Companies such as P.L Global have been extremely successful when it comes to building relationships with clients. In addition, they have excellent strategies and that has led them to become a strong leader in the industry.