DISTRIBUTION POLICY

Distribution policy

Includes two sets of activities:

(1) logistics

(2) selection and management of channels of distribution

Policy involves two main decisions:

Those related to design Direct or Indirect

Those related to management

Two Types of Middlemenin direct channels

Merchant middlemen take title to products and may or may not take possession

Brokers may or may not take possession, but never take title

decisions related to design--basically related to length (number of different types of middlemen) and breath (number within each type of middleman)

Marketer > wholesaler> retailer> consumer “ > “ > “ “ > “ etc.

MANAGEMENT REFERS TO ON-GOING EFFORTS TO DEVELOP, MANAGE, AND CONTROL THE

DESIGNED/SELECTED CHANNEL

Distribution Strategy

SHOULD ACCOMPLISH THE FOLLOWING OBJECTIVES:

1. Provide the best coverage of target market(s)--deliver product at right place, in right quantity, at right price, and at a time when buyers wish to purchase

2. Satisfy buyer requirements--needs for information, convenience of purchase, services (delivery, credit, repair, etc.)

3. Maximize potential revenues returned to the organization while minimizing the costs of achieving 1 and 2

NEED TO CONSIDER FUNCTIONS PERFORMED BY CHANNEL MEMBERS

REQUIRED FUNCTIONS ARE RELATED TO PUSH AND PULL

DISTRIBUTION POLICY DEVELOPMENT

Channel Functions

What tasks have to be performed Physical possession Fulfill demand Ownership After sale service Information Provide feedback Orders Payment Generate demand

How much does it cost to perform the tasks

What channel structure can most efficiently perform the tasks

YOU CAN DO AWAY WITH THE DISTRIBUTOR BUT NOT ITS FUNCTIONS

CHANNEL SELECTION

What different channels exist/are availableWhich can best deliver our products to

different segments of our end usersWhich channels do our competitors useHow intensive should our distribution be

Exclusive (specialty products) Selective (shopping products) Intensive (convenience products)