Distribution Channel Marketing Strategy – Case Study (Starbucks)
Advantages and disadvantages of sales distribution
The majority of businesses that produce goods rely on their capacity to generate sales and profits. The sales distribution model and company chosen can have a significant impact on the brand, communications, and products of a company. You should carefully weigh the benefits and drawbacks of working with a sales distributor, taking into account elements like your industry, business model, and product categories.
The following are some benefits, drawbacks, and factors to think about when deciding whether your company should distribute sales in a certain way:
Advantages
There are many advantages to sales distribution, such as:
Disadvantages
There are also disadvantages to sales distribution, such as:
Considerations
Some things to take into consideration with sales distribution include:
What is the distribution of sales?
When a business sells its goods through indirect distribution as opposed to doing so directly to the customer, it is said to be “distributing sales.” With this approach, a distributor manages every aspect of the product’s sale and serves as a liaison between the business and the client. The distributor purchases the product from the company at a discounted price and resells it to customers at the distributor’s discretion. The distributor then gets to keep the revenue from product sales.
A distributor and a manufacturer of a product work together to procure, transport, store, package, sell, and deliver the product on the manufacturer’s behalf. A business may decide to use a sales distribution model to increase the product’s market exposure or distribute it more quickly and effectively. A distribution channel is how products move from the manufacturer to the consumer. Depending on how many middlemen there are between the company and the customer, these channels can be simple or complex.
Types of sales distribution models
The different types of sales distribution models vary by industry. Every industry typically has specialized distributors with specially trained sales teams and connections to the industry. For instance, a local organic grocery store would work with a distributor who has connections to farmers in the area and sales representatives who have connections to other organic buyers in the area. Alternatively, a distributor of office supplies might focus on hiring tech-savvy salespeople who have a good rapport with offices and small businesses.
The three most common types of sales distribution models are:
Intensive distribution
When there are numerous middlemen in the distribution chain, the distribution model is intensive. This kind of intensive distribution model is referred to as a three-level distribution channel because there are three or more middlemen between the producer and the consumer. A manufacturer selling to a distributor selling to a retailer selling to an agent selling to a customer is an illustration of this intensive model. Reaching as many outlets as possible, entering the market, and expanding the number of establishments are the objectives of intensive distribution.
Selective distribution
When there are only a few intermediaries in the distribution channel, it is known as a selective distribution model. This kind of selective distribution model is referred to as a two-level distribution channel because there are two middlemen between the producer and the customer. A manufacturer who sells to a distributor who sells to a retailer who sells to a customer would be an illustration of this intensive model. Selective distribution aims to choose outlets in a particular area, focus on specific consumer markets, and reduce the number of outlets or locations.
Exclusive distribution
When there is only one intermediary in the distribution channel, it is an exclusive distribution model. This kind of selective distribution model is referred to as a one-level distribution channel because there is only one middleman between the producer and the customer. A manufacturer selling to a distributor who then sells to a customer would be an illustration of this intensive model. Exclusive distribution aims to target luxury or exclusive markets, limit outlets to maintain brand image and product exclusivity, and only have a small number of stores or locations.
FAQ
What are the 4 types of distribution?
Direct selling, selling through intermediaries, dual distribution, and reverse logistics channels are the four different types of distribution channels that exist.
Why is distribution important in sales?
The Value of Sales and Distribution Management By facilitating sales at a set price, it helps the business turn a profit. Setting and achieving corporate sales and performance goals depends in large part on sales and distribution management.
What are the 3 types of distribution?
Wholesalers, retailers, and direct-to-consumer sales are the three categories of distribution channels. Wholesalers are middlemen companies that buy large quantities of goods from manufacturers and resell them to retailers or, occasionally, to the final customers.
What is sales distribution management?
The process of managing the flow of goods from supplier to manufacturer to wholesaler or retailer to final consumer is known as distribution management.
