What is Distribution Strategy and why it the most important success path of any business?
Basic idea of Distribution Strategy is how effectively you can provide your services to the end customers.
Isn’t a very simple way to understand?
This is the basic definition of a distribution strategy. But, it is the most and only success path to establish your business. Distribution Strategy is often an unrecognized or unappreciated, or underappreciated, aspect of marketing strategy.
And when we talk about distribution strategy, first, distribution refers to ‘channels of distribution,’ like supermarkets are a channel of distribution, convenience or grocery stores are a channel of distribution, vending machines are a channel of distribution.
So, distribution refers to these channels of distribution, to the logistics involved in building a distribution system, and to the processes around that.
Without product distribution strategy can’t be formulated. It defines what would be target customers for this product, its availability, logistics and promotions.
Product or Service
Product is one the core and main element for any business. That is where the entire business idea will get generate. This a basic area and few key parameters are there for choosing your product of services.
As you can see that there are five factors under this category. We will now discuss every character and its importance.
Need is the primary concern area for every star ups. If the need is not identified you cannot conceptualize the product. Here creative thinking is one of the major aspect need to consider. I am giving you a simple example that will explain.
In upcountry or rural market where you hardly find any kind of Coffee joint or a hyper market. But people are coming to nearest city to avail these kind services.
But if you can do research that hypermarket concept can create an impact in the rural market with what all needs would require for the local customer that gives you a clear idea to start hypermarket in the rural area.
After starting this business and create a brand value then slowly you can think for the urban market.
So without knowing the need business can’t be started.
Now competition presence is another factor that should take into consideration.
Now the question is how can it be?
The answer is very simple. If competition is present in that particular rural market then start the mirror effect for them by providing a few unique rather unmatchable services.
- Discount coupons on weekends sale
- Business expansion
- Speedy delivery option
- Excellent customer support
- Creating all type of customer segment
These are the primary or basic competition attack system you can adopt and gradually improve your skills to give it back to your competitor.
After reading above two points don’t you think that these are linked to a particular topic?
The Answer is yes, later I will explain it to you.
Now we should look upon the third one that is –
It is one of the main factor say if you have started a coffee chain or some boutique shops. Two or three factors can be taken into consideration along with your internal cost (raw material, employee, Plant, Infra cost etc.).
- Minimum Price Pont
- Competitive Price
- Competitive Price with best quality and service from you competition
Now will discuss the impact.
In the first case if the price point is very minimum and expects that the quality is ok or good then I think you will be losing money to your competition and your business can’t be profitable.
In the second case if you go for the competitive price and let say your product is ok then you can’t sustain in the long run with your competitor. Because your competition is having a customer base already and to crack that base this would probably not killing stuff.
Now the third one Competitive Price with the best quality and service from your competition. After giving a competitive price and let say your product is good now the most powerful thing that service.
If you can provide a service that is unmatched without competition then it will be a hit. The service you need to think in consideration other facts.
Services can be hot delivery to every corner and how fast the delivery happens. What should the way of talking to the potential customer? If it is café then what all in-house services that you are offering.
This is an integral part to discuss and it is the foundation of any business.
Channel what business need to build according to its resource availability. If a business can afford to set up a large scale distribution strategy then it is fine but they need to figure out the exact path to pump in.
And secondly if a business doesn’t have a huge money to setup its distribution they need to figure out the alternative and the low cost distribution channel.
Now the question is Low cost distribution channel is a good option or not?
- The good or bad option will come if you don’t know how to setup. Some of the small companies will look for the exclusive distribution channel initially. By this they can do well but somewhere they keep themselves in the limit.
But if a business has a future road map considering the exclusive channel then they can think of a period that they will go for exclusive. But after that according to its growth and acceptance factor, they can go for several distribution channel options.
- In another case such as the FMCG category where you need to have set up a distribution network. In the distribution network, you need to create a chain system. Like the distributor network and a strong sales team to drive its reach to end-users.
Sometimes in the initial phase lot many business houses they can’t afford to create large distributor network as it involves a lot many parallel areas look upon.
It needs to build its sales and distribution team and introducing its commission structure for the distribution.
Few big brands followed the low-cost distribution strategy in the initial phase rather go for mass distribution. They have started an exclusive category to the existing channel or they set up an exclusive store, to begin with.
Another channel is the most acceptable channel that is online.
Online or remote sales channel nowadays a killer path of success for any startups. I am taking companies like Uber, Amazon, Pizza Hut, MacDonald, Flipkart, etc. These company has figured out a strategy where less cost is involved and it has the better reach compared to traditional methods.
So As I discussed identifying proper channels would an awesome practice. Exclusive stores, Exclusive Tie-ups, and moreover the online platform will give any startups to reach their consumers.
After you identified the proper channel now it is time think of your unique selling point (USP).
A catchy or a one liner of your product can be select as your unique selling point. USPs need have an overall information about your product or service.
Before selecting USP all you need to think of something that create an impact on the consumer mind.
Now coming to the most important thing before you think of these above point. And that comes the Market Research part.
A proper action can be taken after the rigorous market research has been done or not. Market research can provide honest feedback and understanding the below points.
- Customer Need
- Competition footprints (if any) and its service
- What all distribution channels are operating in the market
- How many retail touchpoints are there
- If your business is online and you are targeting one particular segment or market. Then what would be the strategy of yours to set up distribution option. Figure out that you will definitely have a market research report in your desk.
These are the basic and common items for any research that would take place.
Now after you selected your distribution path now it is the time to discuss our third point. This is another important part called.
Logistics and Supply
Channel and Product have been finalized and here the logistics and supply chain comes in. How effectively product and services should reach to the end-user that the company needs to plan.
If you are offering services like Uber, if a person select a ride then person have that right to get all the information about the CAB.
Like how long it will reach the pickup point and what all extra services that the driver will offer like the shortest possible route to the final destination or a bottle of water can be a nice thing.
All these aspects can create a better brand image in the future customers as hopefully, you are having a feedback form at the customer frontend app or through an SMS.
For a Medical or essential commodity like Food and Grocery it should be a top notch delivery path would also create an impact.
If you have an FMCG company your product should reach or rather available at the market. In this way you will not lose any customer or I would say any potential customer.
BY this point we can definitely understand how important is logistic and supply.
After finalizing all the above points now it is time to educate or showcase the product to your consumer.
It is comes under the Marketing Strategy and several cost effective way is involved in this process. We will now discuss how it will create an impact in the above points.
Typically there two ways to select your promotion strategy. One is the Traditional path and the other one is the online path. Online Marketing is the most dominating part in the current and upcoming market scenario.
But when you thinking about the promotion it always to keep in mind few things.
- Fund Availability
- Mode of Communication
- Target Group
These above points are equally gel with the other parameter when you plan for promotion.
Before thinking about the fund you must think about your target group and the market where you are targeting.
If your TG is youth then 100% online strategy is the most recommended for your business.
If your TG is mix with young and mid aged then 70:30 ration can be taken into consideration.
Lot many new companies are taking the online path rather taking the traditional path.
In traditional way your reach is limited and it not a very cost effective way. But, on the other side online marketing is the most cost effective and reach is phenomenal.
Another major thing is you start doing your marketing activity but somewhere your logistics and the other part like your exclusive services is not in good shape then it creates a heavy negative impact on your business.
Like, If you started a Food Mart and you are promoting Fresh Fish are available. But, when a customer walks in and finds that the fresh fish is not available then it creates an impact on your business.
And if it is continues then you might lose your market and that will be your competition to crack you more by providing the service or product.
So what I would like to say is that do your promotion when your logistics and other points are covered.
Selecting a promotion or a marketing strategy is definitely a major part to run and kill your competition in the market place.
All I can say constructive Distribution Strategy is what that all businesses need to implement during the time of inception. So for any startups go-to-market strategy is the only way to set up your distribution. Do your research before setting up your distribution strategy.