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The first and main decision in the marketing strategy is to choose if intermediaries are going to be involved. Distribution strategies require an adequate selection of intermediaries, based on criteria such as distributor size (sales figures), ability to generate business (number of sales points, commercial reputation, market coverage, production lines that work), quality of service, technical competence and equipment, financial capacity and ability to cooperate and avoid conflict. Finally, for the physical distribution of your product, from the manufacturers to the customers, you should perform and control several tasks that include planning, controlling inventory, processing orders, handling products, planning and managing stores, transporting the products from one place to the other. If you have one or several products that you want to distribute, well GED has the solution. With our years of experience in handling product distribution, we can meet all your distribution needs.
From soap to brochures, medicine to research materials, we have the appropriate and adequate knowledge and training to handle the distribution. The FDA recently released this "simplified" chart that illustrates the journey of peanut butter products — and salmonella — from the Peanut Butter Corporation of America to the consumer. The distribution chain, starting with a raw product, is so multi-layered that the we can only be impressed by the enormity of the FDA's job of tracking down sources of contamination and then issuing the necessary recalls.
AmerisourceBergen (NYSE: ABC) recently reported financial results for its 2013 fiscal year. Its Oncology Supply specialty distribution business again underperformed, as that distributor's revenues dropped by 10% in 2013. Over the past ten years, McKesson has emerged as a significant participant in all aspects of the specialty drug distribution and services market. Cardinal Health, the third-largest full-line wholesaler, has a comparatively small business distributing specialty drugs to physician offices and clinics.
For additional information and sources, check out DCI’s new 2013-14 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Whether your new item is geared towards consumers or other businesses, you can (and should) use many different channels of distribution to reach those who need it. Direct retail distribution channels – If your business already operates out of a retail space, this would be the logical place to sell your product. Direct by means of the internet or catalog – Using your own e-commerce site or a catalog is a fantastic way to engage consumers directly and repeatedly.
Outside sales reps – Another option for your product distribution channels would be to use an outsourced sales force.
Wholesaler or distributor – Companies that buy bulk quantities of products from manufacturers and then resell them in smaller amounts to retailers or other resellers.
The different distribution channels that you use when launching a product need to properly service their end users.
Determining the needs of your end users, by means of the above questions, directly correlates with the strategy that you should employ. You’ll also want to make sure that your pricing is structured in such a way that regardless of the channel that you’re using, the price of your product is the same to the end user. Remember too, you want the product distribution channels that you have selected to consistently sell your new items and not those of your competition. Product distribution channels make up one of the “4 P’s” of marketing – product, promotion, price and placement (distribution). The use of multiple product distribution channels lets you zero in on exactly what your consumers need.
If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have future articles delivered to your feed reader. The next element in the marketing mix is place, which refers to strategies for distribution. Many businesses, especially small ones and those just starting up, sell directly to customers. The Internet has greatly expanded the number of companies using direct distribution, either as their only distribution channel or as an additional means of selling. Selling through retailers works fine if youa€™re dealing with only a few stores (or chains). While selling through wholesalers will cut into your profit margins, the practice has several advantages.
Finally, intermediaries, such as wholesalers, can make the distribution channel more cost-effective.
Buyers from the stores that sell Robosapiens dona€™t go to the Wow Wee factory (which happens to be in China) to pick up their orders.
Wal-Mart, for example, maintains more than one hundred distribution centers at which it receives goods purchased from suppliers, sorts them, and distributes them to 3,500 stores, superstores, and Sama€™s Clubs around the country. Making, storing, and distributing Robosapien entails a good deal of materials handlingmaterials handlingProcess of physically moving or carrying goods during production, warehousing, and distribution.a€”the process of physically moving or carrying goods during production, warehousing, and distribution.
All these activities draw on company resources, particularly labor, and therea€™s always the risk of losing money because the robota€™s been damaged during the process.
Another means of reducing materials-handling costs is called just-in-time productionjust-in-time productionSystem for reducing inventories and costs by requiring suppliers to deliver materials just in time to go into the production process..
There are several ways to transport goods from manufacturing facilities to resellers or customersa€”trucks, trains, planes, ships, and even pipelines.
Before we go on to the final component in the marketing mixa€”promotiona€”leta€™s review the elements that wea€™ve discussed so far: product, price, and place.
Purchasing managers buy raw materials from suppliers (sugar and other ingredients used to make marshmallow, food coloring, and so forth).
Other operations managers transform these raw materials, or ingredients, into 4.2 million Marshmallow Peeps every day. Operations managers in shipping send completed packages to a warehouse where theya€™re stored for later distribution. Operations managers at the warehouse forward packaged Marshmallow Peeps to dealers around the world. This process requires considerable cooperation, not only among individuals in the organization but also between Just Born and its suppliers and dealers.
If all the people involved in each of these steps worked independently, the process of turning raw materials into finished Marshmallow Peeps and selling them to customers would be inefficient (to say the least).
Managing your supply chain can be difficult, particularly if your company has large seasonal fluctuations.[316] This is certainly true at Just Born. Supply chain management helps companies produce better products at lower costs and to distribute them more effectively. Todaya€™s consumers can choose from a huge array of products offered at a range of prices through a variety of suppliers.
The idea is fairly simple: by focusing on the interrelated links in its value chain, a company can increase product quality, provide better service, and cut prices. Distribution entails all activities involved in getting the right quantity of a product to customers at the right time and at a reasonable cost. Companies can sell directly (from stores or over the Internet) or indirectly, through intermediariesa€”retailers or wholesalers who help move products from producers to end users. Retailers buy goods from producers and sell them to consumers, whether in stores, by phone, through direct mailings, or over the Internet. Wholesalers (or distributors) buy goods from suppliers and sell them to businesses that will resell or use them. Physical distributiona€”the process of getting products from producers to customersa€”entails several interrelated activities: warehousing in either a storage warehouse or a distribution center, materials handling (physically moving products or components), and transportation (shipping goods from manufacturing facilities to resellers or customers). A firm can produce better-quality products at lower cost and distribute them more effectively by successfully managing its supply chaina€”the entire range of activities involved in producing and distributing products, from purchasing raw materials, transforming raw materials into finished goods, storing finished goods, and distributing them to customers. Effective supply chain management (SCM) requires cooperation, not only among individuals within the organization but also among the company and its suppliers and dealers. Students at Penn State University can take a break from their studies to visit an on-campus ice cream stand called the Creamery.
It integrates all the decisions that allow the finished products to be placed before the final customers or intermediary buyers (industrials), including quantity, place, time, cost and price.


Taking these factors into account, you should conduct an objective and critical analysis of what each potential distributor is offering you, with the goal of choosing the most convenient offer.
As an FYI: As of February 9, 2009, over 1,800 products have been recalled and more than 250 brands affected.
We estimate that these two companies generate more than 75% of total specialty product distribution revenues to physician offices and clinics.
The addition of US Oncology in late 2010 was an especially strategic transaction for McKesson. Economic pressures are shifting care away from community practices to hospital outpatient departments. Even if you don’t, opening a retail store as a way to exclusively sell your products can be a viable option for businesses. You could use one team or many different teams that focus on different segments of your market.
Typically this would be a company that handles multiple manufacturers’ products for sale in a specific geographic location.
For example, if the product requires a lot of information or additional servicing, you might consider using your own sales team or qualified dealers. This eliminates customers going back and forth from one channel to another trying to secure a lower price.
Wholesalers, distributors, VARs, dealers and selling direct are all channels that need to be treated with respect.
DistributiondistributionAll activities involved in getting the right quantity of a product to the right customer at the right time and at a reasonable cost. Dell sells only online, while Adidas and Apple Computer sell both on Web sites and in stores. But what if you produce a producta€”bandagesa€”that you need to sell through thousands of stores, including pharmacies, food stores, and discount stores.
For one thing, wholesalers make it their business to find the best outlets for the goods in which they specialize. The responsibility for getting its products to customers, called physical distributionphysical distributionActivities needed to get a product from where it was manufactured to the customer., belongs to Wow Wee itself.
It would be convenient if theya€™ve already been sold and only needed to be shipped to customers, but business-to-business (B2B) transactions dona€™t always work out this way.
Its efficiency in moving goods to its stores is a major factor in Wal-Marta€™s ability to satisfy customer needs. Someone (or some machine) needs to move both the parts that go into Robosapien and the partially finished robot through the production process.
To sell goods at competitive prices, companies must handle materials as efficiently and inexpensively as possible. Typically, companies require suppliers to deliver materials to their facilities just in time for them to go into the production process. Companies select the best mode (or combination of modes) by considering several factors, including cost, speed, match of transport mode to type of good, dependability, and accessibility. Department of Transportation,[313] trucks are the transportation of choice for most goods, accounting for 65 percent of U.S. As wea€™ve seen, to be competitive, companies must produce quality products, sell them at reasonable prices, and make them available to customers at the right place at the right time. Raw-materials suppliers, for instance, must work closely with Just Born purchasing managers, who must, in turn, work with operations managers in manufacturing at Just Born itself.
The process of integrating all the activities in the supply chain is called supply chain management (SCM)supply chain management (SCM)Process of integrating all the activities in the supply chain..
Even though it has a Marshmallow Peep for every season (heart Peeps for Valentinea€™s Day, spooky Peeps for Halloween, patriotic Peeps for July Fourth, and so on), the biggest problem rests with the standard yellow Marshmallow Peep that provides a major spike in sales each spring. Remember, however, that effective supply chain management doesna€™t necessarily guarantee success. Others take place outside the supply chain, particularly those associated with marketing and selling products and with providing customer support. In other words, it can improve its quality-service-price mix, thereby making its products more competitive.
In addition, a successful company provides customers with added value by focusing on and improving its value chaina€”the entire range of its value-creating activities. Youa€™re confident that it can be a big seller, and youa€™ve found a local company that will manufacture it. Milk for the ice cream comes from cows that graze on university land as part of a program run by the agriculture school. Department of Transportation, Bureau of Transportation Statistics, Commercial Freight Activities in the U.S.
While ABC still accounts for more than 50% of total specialty product distribution revenues to physician offices and clinics, it also faces newly-energized competitors.
These sites of care are a crucial channel for provider-administered specialty drugs, including biological, injectables, IVIG, immunoglobulins, and other pharmaceuticals.
Smith, one of the largest regional full-line wholesalers, recently launched its Smith Medical Partners division to service this market.
Third-party payers are increasing specialty pharmacies’ role in managing and distributing provider-administered specialty pharmaceuticals. The product distribution channels that you use achieve the most fundamental goal: enabling customers to buy your product. If your product is easy to use and the purchasing process is fairly streamlined, think about selling it through your website, catalog or retail space. When discussing this partnership with potential channel members, be sure to discuss its value. Remember, whether your newly launched product is being resold to someone else, or used by the consumer directly, it’s still being purchased by a customer. Or will they sell through an intermediaryintermediaryWholesaler or retailer who helps move products from their original source to the end user.a€”a wholesaler or retailer who helps move products from their original source to the end user?
Tom First and Tom Story began operations at Nantucket Nectars by peddling home-brewed fruit drinks to boaters in Nantucket Harbor. The eBay online auction site has become the channel of choice for countless small businesses. Best Buy, for example, buys Robosapiens from Wow Wee and sells them to customers in its stores. Youa€™ll also want to sell to hospitals, day-care centers, and even college health centers. Theya€™re often equipped to warehouse goods for suppliers and to transport them from the suppliersa€™ plants to the point of final sale. Because every contact between a producer and a consumer incurs costs, the more contacts in the process (panel a), the higher the overall costs to consumers. To keep its customers satisfied, Wow Wee must deliver robots on time, in good shape, and in the quantity ordered. In addition, the finished robot must be moved into storage facilities and, after that, out of storage and onto a truck, plane, train, or ship.
This practice cuts the time and cost entailed by moving raw materials into and out of storage. To accomplish these three tasks, they must work with a network of other firms, both those that supply them with materials and services and those that deliver and sell their products.
People in manufacturing have to work with operations managers in the warehouse, who have to work with retail dealers, who have to work with their customers. Just Born can make a higher-quality product at a lower cost because it knows that ita€™s going to get cooperation from suppliers whose livelihood, after all, depends on the success of customers like Just Born: suppliers can operate more efficiently because they can predict the demand for their products (such as sugar and food coloring). As you can see from our discussion so far, SCM requires a high level of cooperation among the members of the chain.
Without careful supply chain management, there would be either too many or two few yellow Marshmallow Peepsa€”both big problems.


A company must also persuade consumers to buy its products, rather than those of its competitors, and the key to achieving this goal is delivering the most value.
In addition, companies need to find ways of creating value by improving the internal operationsa€”procurement, research and development, human resource management, and financial managementa€”that support their primary value-chain activities.
Unfortunately, you have to handle the distribution yourselfa€”a complex task because your product is made from natural ingredients and can easily spoil. Other ingredients, including sugar and chocolate syrup, are purchased from outside vendors, as are paper products and other supplies.
Other specialty distributors include Metro Medical Supply, CuraScript SD (a business owned by Express Scripts), and many smaller companies.
While you can review them at any time, they’re especially important when targeting a new audience, or bringing a product to market.
In doing so, they add value to the cost of the Intel components; customers who lack technical experience rely on HP to put it together for them. Establish goals and the requirements of everyone who’s involved, and determine if any training will be needed. Thus, distribution involves selecting the most appropriate distribution channels and handling the physical distribution of products. As you can see from FigureA 9.8, a€?Distribution Channelsa€?, various marketing channels are available to companies. Most service companies sell directly to their customers; ita€™s impossible to give a haircut, fit contact lenses, mow a lawn, or repair a car through an intermediary.
The advantage of this approach is a certain degree of control over prices and selling activities: you dona€™t have to depend on or pay an intermediary. Moreover, it promotes Robosapiens to its customers and furnishes technical information and assistance. In this case, youa€™d be committing an immense portion of your resources to the selling process. The presence of an intermediary substantially reduces the total number of contacts (panel b). To accomplish this, Wow Wee must manage several interrelated activities: warehousing, materials handling, and transportation.
At the end of this leg of the trip, it must be moved into the store from which it will be sold. For example, parts that go into the production of BMWs are stored and retrieved through automated sequencing centers.[311] Cars are built on moving assembly lines made of a€?skilletsa€? large enough to hold workers who move along with the car while ita€™s being assembled. Trucks also play an important role in the second highest categorya€”multimodal combinations, which account for 11 percent of expenditures. To better understand the links that must be forged to create an effective network, leta€™s look at the steps that the candy maker Just Born takes to produce and deliver more than one billion Marshmallow Peeps each year to customers throughout the world. At the other end of the chain, dealers can operate efficiently because they can depend on Just Born to deliver a quality product on time. To reduce the likelihood of either situation, the manager of the companya€™s supply chain works to ensure that all members of the chain work together throughout the busy production season, which begins each fall. Have you ever thought about what it takes to ensure that a piping-hot pizza will arrive at your door on Super Bowl Sunday (Dominoa€™s busiest day of the year)? Using your personal knowledge of ice cream stand operations (which probably comes from your experience as a customer), diagram the Creamerya€™s supply chain. Note that it can be difficult for new companies to access to large distributors, because the volumes of products managed are not large enough to generate profits. Many business-to-business sales take place through direct contact between producer and buyer. On the other hand, you must commit your own resources to the selling process, and that strategy isna€™t appropriate for all businesses. Each Best Buy outlet features a special display at which customers can examine Robosapien and even try it out. If it sold Robosapiens to just a few retailers, it wouldna€™t need to go through a distributor.
If Wow Wee has to store a large volume over an extended period (perhaps a month or two right before the holiday season), it will keep unsold robots in a storage warehousestorage warehouseBuilding used for the temporary storage of goods.. Sending goods by cargo ship or barge is inexpensive but very slow (and out of the question if you want to send something from Massachusetts to Chicago).
The real beneficiary is ultimately the end user, or customer: because the process that delivers the product is efficient, its costs are minimized and its quality is optimized. Suppliers promise to deliver large quantities of ingredients, workers recognize that they will be busy through February, and dealers get their orders in early.
How would the supply chain change if the company decided to close its retail outlet and sell directly to supermarkets? Some manufacturers can also sell your products directly to customers without using intermediaries (for example on the Internet, in retail machines, in branches, etc.).
It would hardly be practical for Wow Wee to sell directly to individual consumers scattered around the world. On the other hand, selling through retailers means giving up some control over pricing and promotion, and the wholesale price you get from a retailer, who has to have room to mark up a retail price, is substantially lower than youa€™d get if you sold directly to consumers. Imagine a chain like CVS Pharmacy negotiating sales transactions with the maker of every single product that it carries in its stores. Your profit marginprofit marginAmount that a company earns on each unit sold.a€”the amount you earn on each boxa€”would therefore be less. However, the company needs wholesalers to supply an expanding base of retailers who want to carry the product. On the other hand, if Wow Wee has to hold them only temporarily while theya€™re en route to their final destinations, theya€™ll be kept in a distribution centerdistribution centerLocation where products are received from multiple suppliers, stored temporarily, and then shipped to their final destinations.. For hard-to-reach areas under the car, equipment rotates the car 90 degrees and sets the undercarriage at waist level. Railroads are moderately priced, generally accessible, and faster than ships but slower than planes.
New cars, for example, might travel from Michigan to California by rail and then be moved to tractor trailers to complete their journey to dealerships.
Each member of the chain depends on the others to meet a mutually shared goal: getting the right quantity of yellow Marshmallow Peeps to customers at the right time.
Here are a few examples of distribution channels: direct sales (without intermediaries), independent distributors (commissioned salespeople), major specialized distributors, dispatches to major retail outlets, representatives from outside markets, retailers. CVS deals with wholesalerswholesalers (distributors)Intermediaries who buy goods from suppliers and sell them to businesses that will either resell or use them. Theya€™re particularly appropriate for some types of goods, such as coal, grain, and bulky items (such as heavy equipment and cars). When used alone, rail accounts for only 4 percent but is commonly combined with other modes.
Each year, the company sells about four hundred million pizzas (more than one pizza for every man, woman, and child in the United States).
Likewise, youa€™d sell your bandages to a wholesaler of health care products, which would, in turn, sell them both to businesses like CVS, Kmart, and Giant Supermarkets and to institutions, such as hospitals and college health care centers.
Trucks, though fairly expensive, work for most goods and can go just about anywhere in a reasonable amount of time. Its suppliers help to make this volume possible by providing the company with about one hundred fifty million pounds of cheese and toppings.
Crowded highways notwithstanding, the economy would come to a standstill without the more than 115,000 (generally small) businesses that make up the U.S.
Drivers do their part by logging nine million miles a week (the equivalent of 37.5 round trips to the moon every week).



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