Distribution Strategies Essay

2334 Words10 Pages
INTRODUCTION The primary objective of distribution strategy is to provide sufficiently broad, gap-free market coverage, i.e. being available in enough outlets so that customers have convenient access for purchases. Distribution strategy is influenced by the market structure (Lippert et al, 2008), the firm's objectives, and its resources and of course it’s overall marketing strategy. The first strategic decision is whether the distribution is to be: Intensive (with mass distribution into all outlets as in the case of confectionery); Selective (with carefully chosen distributors e.g. speciality goods such as car repair kits); or Exclusive (with distribution restricted to upmarket outlets, as in the case of Gucci clothes). The next strategic decision clarifies the number of levels within a channel such as agents, distributors, wholesalers, retailers. In some Japanese markets there are many, many intermediaries involved. Next comes a sensitive strategic decision whether to go single channel or multi-channel. Some producers, like Coca Cola, use multi-channels - they use many different routes, direct and indirect, to bring their products to their customers. Multi-channel Systems like this are common where intensive distribution is required. So direct marketing is combined with indirect marketing through intermediaries. Then comes the next level of strategic decisions concerning strategic relationships and partnerships. Two common strategies are Vertical Marketing Systems and Horizontal Marketing Systems. Vertical Marketing Systems involve suppliers and intermediaries working closely together instead of against each other. They plan production and delivery schedules, quality levels, promotions and sometimes prices. Resources, like information, equipment and expertise, are shared. The system is usually managed by a dominant member, or 'channel captain'. VMS is
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