Distribution Channel Strategy | Distribution Types | Distribution Methods | Distribution Channel Partners
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Distribution Strategy for Small Business
Getting your product or service to market may
require your sales effort
and/or the physical transfer of your product with one or more
intermediate parties before it reaches the ultimate end-user. The process of getting
products or services from its source to market is referred to as a ‘distribution
channel’ or ‘chain.’
There are important reasons to utilize distribution partners and critical
questions to get answers on deciding the appropriate channel of distribution for
your business.
Reasons for Using Distribution Channel Partners:
-
Selling - A common reason to expand sales quickly by employing either directly or indirectly a channel partner to perform the task of selling your products or services
-
Physical Product Distribution – Products that are sold in a master pack and require a cutting, or breaking down the of the master pack to be sold in smaller quantities shares marketing expenses, provides credit and last mile delivery - in local markets
-
Value Add – Where a channel partner adds to the value of the product or service sold through providing additional services to the end-user. Examples of vale add are installation, assembly, and customization of the product or service.
Types of Distribution Channels:
| Distribution Types |
Distribution Methods |
||
| Company Owned or Provided |
Direct Sales
|
||
| Outside Sales Agents |
Indirect Sales
|
||
| Distributors/Wholesalers |
Indirect
Sales
|
||
| Franchising |
Indirect
Sales
|
||
| Retailers/Dealers | Indirect Sales
|
||
| Value Added Resellers (VARs) | Indirect Sales
|
Deciding the Right Distribution Channel Strategy for Your Business:
To select the distribution channel appropriate for your business requires assessing a wide number of important factors about:
-
Your Business
the specific nature of your business
the type of product or service you want to sell
the geographic make-up and location of the markets you serve
selling costs verses the amount of sales process control you desire
the profit margin of your products or services
-
Your Customers
preferred purchasing methods of your customers
size, quantity, price, convenience, variety
Importance of Brand
required or preferred presale services by your customer
required or preferred after sales services by your customer
-
Your Distribution Partners
Intensity of distribution partners to your product or service
selective distribution, exclusive distribution, limited product offering, private label
Motivation of distribution partners
Ability to manage distribution partners
Integration of various types of distribution partners
Cost of distribution partners
Today, many companies use a mix of different distribution channels; as an example, you could augment a direct sales force, that calls on and services large established accounts, with agents, covering smaller customers and performing new business prospecting. There are other combinations of distribution channels appropriate for your business.
A through analysis of all the critical factors to consider will
lead to the best decision for your business. For more information on an analysis
and custom distribution strategy for your business, contact us now
1-866-875-2534.
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