Distribution is one of the most important parts of the business. Distribution is basically the process from suppliers to the manufacturers to the step of the sale. Only because of this, one company can control and manage the overall system. It has different parts of the channel and also has different types of methods and strategies.
So without delay let’s talk about in detail.
What is in for you
Definition of Distribution
As I mentioned in the starting line that it is a process of chain. Which is started from suppliers to the manufacturers and then to the point of sale. Now, you should understand the step by step process.
Firstly understand the meaning, what is coming in your mind about this word?
Something related to the delivery!
Yes, your guess is right. But here I want to include some more with perfect definition.
For example, At festival time, you definitely buy lots of gifts for your friends and relatives. In this case, if your friends stayed in another city then what will you do next? How do you send a gift to them?
Obviously, either you can send them by courier or by online delivery. So a delivery company is a type of distribution process. After sometime later you also know about everything.
Similarly, for businesses, they create a distribution system that enhances the business. Also, to reach the customer and consumer, all companies need strong distribution strategies.
With this purpose in mind, move to the next and understand the different types of process.
Types of Distribution
Now you already understand the concept of this process. After that, you have to understand the overall systems.
Generally, there are two main types of distribution. On one hand, commercial or the sales distribution.
On the other hand, physical or logistic distribution. Let’s talk about one and one.
Commercial or Sales Distribution Management
One company can choose this process because of enhancing the sales.
In this process, they can make a way to reach the target audience. In the sales distribution process, the company distributes through the sales channels.
Physical or Logistics Distribution Management
Another most important part is logistics. Here is something important to realise that if the internal logistics does not properly maintain then the company will be suffering. Logistics comprising the supplier, warehouse, inventory, sales and marketing.
Distribution does not mean, sales system only but also maintains the suppliers to inventory management so the overall distributed system becomes easier. Now, you can check out the different mediums used by companies.
Different Systems of Distribution
Business is definitely going in a good way if the distribution system will be as good as competitors. So a system impacts a lot on business.
Generally, there are different methods of distribution involving the different industries. But mostly every industry has some similarities.
One is from Producers to customers. In this case, a manufacturer directly sells to its customers. For example, Bata. Who directly sells to the customer.
Next is from manufacturers to distributors. In this way, someone who does manufacture something but doesn’t want to sell directly, they can sell their products by hiring distributors. For example, medicine manufacturing.
Another distribution system is from manufacturers to wholesalers to the retailer and then the customer. This is basically supplied chain systems used by manufacturers. Example – clothing manufacturing.
In another case, from wholesalers to the retailers distribution system. If a wholesaler doesn’t want to sell directly to the customer then they distribute their products to multiple retailers. Example – bookseller or different electrical products.
You will know more detailed strategies below this section.
Different Functions of Distribution
If I talk about functions then the first thing coming in my mind is inventory.
It is definitely a huge part of the distribution system. Inventory means a company’s overall in-house management. What is coming and what is going out of the company? Maintains the stock is a part of the inventory. In this distribution system, every company managed their productions.
Next is warehouse maintenance. It is similar to inventory management. But in this management system, the company maintains an overall inventory to packaging and to the sipping. They distributed works in different parts.
Another one is handling the materials. If you want to maintain the quality of your product then you need to maintain the materials. Because material is the most important thing in production. Your distributor should be strong so that materials also control.
You might be confused now, what is receiving maintenance? So, this is again a type of distribution system used by industry. As I discussed above there are different distribution systems present in the industry. So, in this case, receiving goods from the suppliers and then maintenance the networks as much as possible.
If all companies maintain its distribution system then they provide the best customer service as well. Because the distributor only reaches the target people. As fast as the distributor delivers to the customer then the customer will be happy. Every company maintains the best customer service before and after the supply.
Now, this is a little interesting right? Because somehow distribution maintenance records the overall track also. For companies in-house maintenance you need to track the maintenance.
So these are some most important functions. Now you also need to know all strategies so you can enhance your distributors.
One of the best things about distribution is strategies. Here are all strategies used by different companies.
Mostly all companies used this strategy either through the wholesaler, retailers, agents and jobber.
Above all are playing the role of middlemen. As I discussed the supply chain where everything is connected to another. Now you also know the technical terms of the distribution system.
Intensive or Mass Distribution Strategies
As the name suggests that mass means distribute in a bulk action. Bulk means wholesale. Where a company decided to sell its products in a massive amount. Also, mass distribution means the company does not provide specific retailers or shops where they sell the product. For example, different snacks and drinks outlets. You can see in different places and most of the places.
In this case, companies decided to sell their products in very limited stores. Where they can sell and track all records. For maintenance, some companies use this technique.
In this strategy, the company used to distribute their products in a specific geographical location. (Internal link to geographical expansion page)
They give the rights to the distributors where they sell the products in the relevant area and sometimes own nearby areas.
Mix of Everything Strategy
At last, the mix of everything means here a company chose to distribute in multiple ways. They either can use the exclusive strategy or can use the selective strategy. Or can use the mix of three strategies.
Choice is yours. Now you can make a decision about your distribution process.
Distribution Marketing Strategies
Marketing is definitely the key point of a business. Similarly, in distributions also marketing is most important. Then let’s look at each strategy.
You need to care about your products. It should be according to customers. The brand, quality, size, it looks, colour, packaging, check competitor strategies, product differentiation.
You should have all the answers according to your products. Such as
What is your product? What are its features? How will the customer use it? What are the various sizes and colours available in your products? What are the benefits they get?
When you will get your answer, it will be easier to distribute your product to the right person.
Next is the price. Do you want to sell your products in a higher range or in a normal range? Before you do anything make sure about your price range.
You must have this answer, such as
What is the pricing of your products? How much discount are you giving to your consumer? What is your brand value? How is your packaging done?
Basically, there are two types of pricing used by different companies. One is
Skimming or Premium Price
In these processes, one can choose the premium price charged.
For example, Apple is using the premium prices. It only focuses on specific people, not everyone.
Penetration or General Price
If you don’t want to set up a high rate then can make a normal price range. But in this strategy, you do not need to set a targeted audience. In the normal price range, anyone can buy your products. For example, Vivo, oppo. These are the most popular brands but those all are within a range so anyone can buy.
You can choose either one of them.
Chose the Place
After deciding the product and the price now you need to look for the right place to sell. Again, you can choose either one of them.
Direct means direct manufacturer to the customer. In this case, one manufacturing company sells products directly to the consumers or customers by e-commerce. In this situation, the cost will be on a higher side. Because manufacturing and then selling directly to the customer will gain the logistics costs and also the transportation cost.
For example, Amazon. It is doing all things. Manufacturing to the selling.
Next is indirect selling means one company does not do the direct selling to the consumers. Previously I talked about the supply chain system. So here is also the same process going on.
First manufacturing then goes to the distributor ( either wholesalers or retailers) after that the customer.
So these are the two types of distribution according to place. Either you can choose to direct distribution or indirectly.
Do the Promotion
At last, is promotion. This is one of the most important things in business. If you do the previous 3 things but not doing the promotion thus you will not get any results.
So, by promotion, you can reach your potential customers. You can advertise on tv, newspapers, online, by personal selling and building public relations. In this process, you will reach your target audience faster. Now, let’s understand the benefits you will get by using these strategies.
Benefits of this Distribution Management
Finally, you also need to understand the overall benefits of the process. If there is no benefit there is no business. After using the marketing strategies everyone wants to benefit from it. So let’s take a look at all benefits.
Firstly, the business gets to benefit from it because the distribution process solves the cost calculation. If you understand your overall costs of distributions and where you should focus on the investment then your cost will be in control.
As you realise that this process provides the control of overall sales and productions. So when a company manages the best distribution networks then the cost will be reduced as well.
Benefits the Business
Secondly, this process has benefits to organise everything. Business depends on two factors. On the one hand, is a production and on the other hand, is marketing. And distribution is a part of marketing. So if it is built strong then eventually the business will improve.
Satisfy the Customer
Thirdly, the best benefit from this process is, it satisfies the customers. As you realise the overall costs. After that, you can target the specific people and when you provide the best service then you can satisfy the consumer or customer.
(Internal link to capturing the non-consumer page)
When the distribution system is strong then one company makes customers happy and satisfied.
Reduced the Order Time
Fourthly, If the distribution network is strong it will give fast delivery. Also, you can reduce the overall logistic costs. If you control your logistics and have a balanced supply chain system then you can reduce your order time as well.
Control Operational cost
Distribution also managed the operating system. If a company chose the perfect distribution system for their company then definitely it will control the overall management of the company.
So these are the most common and important benefits that enhance the overall business.
In conclusion, I must say that you have better information than yesterday. Take a quick look at overall. So, the distribution process does not only enhance the business. But also it maintains the overall business. Because of the distribution system, everything is going well. Above all strategies and functions help you to understand the overall system.
Frequently Asked Questions
It is a chain of processes that comprises raw materials to manufacturers then the distributor to retailers and lasts the consumer.
It is a part of the supply chain process. In this system, one company plans, implements, controls the inventory, controls the goods coming in and the customer service, requirements, etc.
As I discussed in the blog that it has many benefits. One is reduced extra cost, another is maintained the logistics and sales and marketing.
You can find supply chain management jobs such as inventory work, distributor, sales, marketer jobs everywhere. The supply chain is a system that has different parts. So search on Google and find a suitable job for you.