The Value of the Distribution of Products
Distribution involves ensuring that goods are available at the right place for the consumers to purchase them. Various elements of distribution used by manufacturers have considerable significance to the products. Channels of distribution facilitate selling and distributing products from where manufacturers produce them to the place of consumption. Grewal and Levy (2020) note that distribution channels comprise individuals or firms that transfer ownership of goods as they move from producers to consumers. These channels are vital because they allow manufacturers to effectively and efficiently reach out to their existing and potential customers. Some functions of distribution channels that add value to the products include sorting, allocation, assorting, and promotion. For example, intermediaries sort goods based on size and quality before selling them to ensure that every customer gets what they demand. Equally, retailers promote products by displaying them or demonstrating them to end-users. Assortment satisfies consumers’ needs by supplying various products from different producers.
Physical distribution, which comprises different components, ensures that products are available to the customers on-demand in the correct quantity and quality. For example, speedy and accurate order processing guarantees delivery of goods with the right quality and specifications, developing an excellent relationship with the consumers and maintaining the company’s image. Safe and efficient transportation make sure that products move from the point of production to the end of the sale at the right time and condition (Affran & Asare, 2019). Warehousing adds value to the products through storing, grading, and assorting to generate time utility. It allows companies to store their goods near the targeted markets and serve their customers, alleviating the time difference between production and consumption. The inventory control component allows maintenance of appropriate stock and just-in-time operations (Affran & Asare, 2019). The information gathered along the distribution line can facilitate accurate market demand prediction, which is vital for manufacturers to maintain consistent quality and production levels.
Distribution Strategies: Intensive Distribution
Intensive distribution is one of the strategies adopted by organizations in marketing products. According to Grewal and Levy (2020), intensive distribution is a marketing strategy used by companies as they try to sell their products through small vendors and big stores. The approach focuses on ensuring that customers find the products in all places they go. Firms use all possible outlets to distribute their products under this strategy. Grewal and Levy (2020) add that an intensive distribution strategy helps companies create brand awareness of their products and enhance sales. For instance, this method is helpful for fast-moving consumer goods such as soft drinks. Adoption of an intensive distribution strategy is associated with various advantages and disadvantages.
Intensive distribution is advantageous since it increases sales and profit, enhances trust, and allows companies to analyze the sale source. Firms can supply products to all places, raising the possibility of making more sales, which in turn leads to high profits. This method created an improved trust in the consumers’ minds regarding products’ authenticity since the goods are on display in all supermarkets and small retail shops (Parikh, 2020). This distribution strategy lets companies know where the demand for their products is high, for example, at hypermarket stores or local vendors. Such information is instrumental in further planning for promotional efforts to increase products’ presence in the market and boost sales. Equally, companies can utilize the data to analyze the causes of their failure in enhancing sale their sales at particular locations.
Nevertheless, the intensive distribution approach is expensive, makes it challenging to manage partners, and deprives companies of the opportunity to apply premium pricing. This method is costly since companies spend a significant amount of money and effort to establish vast distributors’ and retailers’ networks (Parikh, 2020). It is challenging to manage many distributors and retailers needed to implement this distribution method effectively. Firms have to use an extra workforce and incur additional costs to manage the distribution partners. Companies have to charge competitive prices from the consumers when using this strategy since the products are easily available in the market.
Effectiveness of Intensive Distribution Strategy
The intensive distribution strategy can be successful when launching the new V Fusion due to various reasons. The strategy will facilitate faster product promotion because it will be supplied to all places, including small retail shops and supermarkets. Equally, the strategy will allow the company to create trust in the minds of potential consumers about its authenticity because it will be displayed in all retail outlets. The company will have higher chances of enjoying substitution benefits. For instance, if customers go to buy other brands of soft drinks, but the sellers only have V Fusion, most of them will buy the latter, and the company will indirectly benefit because of using an intensive distribution strategy. As a result, the strategy will allow the company to make considerable sales and profits as it penetrates the market.
Channel Conflict
Channel conflict occurs when actions of one intermediary of distribution prevent another from accomplishing its goals. A real-life example of channel conflict is in the Coca-Cola Company. Channel conflicts exist in the company because it uses multiple distributor channels. Equally, the company sometimes ignores the distributor channels and sells products directly to the consumers. One distributor may opt to sell products at lower prices for reasons best known to them, hurting the profit margin of others because they have to lower the amount they charge per unit sale.
References
Affran, S., & Asare, R. (2019). Emergence of new marketing distribution strategies: a call for a paradigm shift. European Journal of Business And Management Research, 4(6), 1-15. Web.
Grewal, D., & Levy, M. (2020). M:Marketing (7th ed.). McGraw-Hill.
Parikh, V. (2020). Advantages and disadvantages of intensive distribution. Letslearnfinance.com. Web.