Developing & Implementing Distribution Strategies

What is Distribution?
Distribution (or "Place") is the fourth traditional element of the marketing mix. Distribution is about getting the products to the customer. Place (or distribution) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions. Some examples of distribution decisions include:

Distribution channels Market coverage (inclusive, selective, or exclusive distribution) Specific channel members Inventory management Warehousing Distribution centers Order processing Transportation

Supply Chain
A supply chain is a network of retailers, distributors, transporters, storage facilities, and suppliers that participate in the production, delivery, and sale of a product to the consumer. The supply chain is typically made up of multiple companies who coordinate activities to set themselves apart from the competition. A supply chain strategy defines how the supply chain should

Developing & Implementing Distribution Strategies operate in order to compete in the market. The strategy evaluates the benefits and costs relating to the operation. While a business strategy focuses on the overall direction a company wishes to pursue, supply chain strategy focuses on the actual operations of the organization and the supply chain that will be used to meet a specific goal.

Value Delivery Network

A "Value delivery network," is made up of the company, suppliers, distributors, and ultimately the customers who partner with each other to improve the performance of the entire system. The network of all direct industry participants involved in the production, marketing, delivery, installation and service of your organizations goods into specific demographic and geographic markets. A value delivery network allows many companies to create customer value that cannot be created by use of the company's own value chain.

The Nature & Significance of marketing channels

Members of the marketing channel are specialists in what they do and can often perform tasks better and at lower cost than companies who do not have distribution experience. Marketers attempting to handle too many aspects of distribution may end up exhausting company resources as they learn how to distribute. Not only are channel members able to reduce distribution costs by being experienced at what they do, they often perform their job more rapidly resulting in faster product delivery.

Developing & Implementing Distribution Strategies Marketers have to understand what customers want in their shopping experience .Resellers within the channel of distribution serve two very important needs: they give customers the products they want by purchasing from many suppliers and they make it convenient to purchase by making products available in single location. Intermediaries, however, provide several benefits to both manufacturers and consumers: improved efficiency, a better assortment of products and easier searching for goods as well as customers.

Types of distribution intermediary

There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below:

Retailers: Retailers operate outlets that trade directly with

household customers. Retailers can be classified in several ways:

Wholesalers: Wholesalers stock a range of products from

several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialize in particular products.

Distributors and dealers: Distributors or dealers have a

similar role to wholesalers that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service.

Developing & Implementing Distribution Strategies

Franchises: Franchises are independent businesses that

operate a branded product (usually a service) in exchange for a license fee and a share of sales.

Agents: Agents sell the products and services of producers in

return for a commission (a percentage of the sales revenues)

Number of channel levels

Distribution channels move products and services from

businesses to consumers and to other businesses. Also known as marketing channels, channels of distribution consist of a set of interdependent organizationssuch as wholesalers, retailers, and sales agentsinvolved in making a product or service available for use or consumption. In the figure below, Channel 1 is called a direct-marketing channel, since it has no intermediary levels. Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. Channel 3 contains two intermediary levels - a wholesaler and a retailer.

Developing & Implementing Distribution Strategies

Marketing Logistics
Marketing logistics is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Marketing logistics takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, called transportation, which warehouse includes site selection, and and retail warehousing. Physical distribution is part of a larger process "distribution," wholesale marketing, as well the physical movement of products.

Major Logistics Functions Warehousing

Storage warehouses are basically commercial buildings used in storing goods or merchandise owned by different companies. It helps lessen the expense of companies in having to transport all the goods to different places. Storage warehouses serve as depots for merchandise or other parts for manufacturing companies.

Inventory Control
Inventory control can be a major component of a small business physical distribution system. Inventory management also effects customer satisfaction. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. 5

Developing & Implementing Distribution Strategies

Transportation
The choice of transportation carriers affects the pricing of products, delivery performance and condition of the goods when they arrive. In shipping goods to its warehouses, dealers and customers the company can choose among five main transportation modes: truck, rail, water, pipeline and air along with the internet.

Third Party Logistics

Anyone can store inventory and send it out on a truck. When looking to outsource all or part of a companys logistics function it is important to look for a third party logistics provider with proven expertise. To put it simply, third party logistics or "3PL" is the integration of a companys warehousing, transportation, and related logistics services through an outsourced or "third party" partnership.

Developing & Implementing Distribution Strategies

Distribution Strategies
For product-focused companies, establishing the most appropriate distribution strategies is a major key to success, defined as maximizing sales and profits. Depending on the type of product being distributed there are three common distribution strategies available:

Intensive distribution
It is a distribution strategy based on making the product available to consumers at every possible location so that consumers can buy with a minimum of effort. Used commonly to distribute low priced or impulse purchase products e.g. chocolates, soft drinks.

Exclusive distribution
IT involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell. An example of would be the sale of vehicles through exclusive dealers.

Selective Distribution:
A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread.

Developing & Implementing Distribution Strategies

Developing and implementing distribution strategies

While some businesses can handle all factors and aspects of its own distribution, others require some level of distribution partnership. Choosing the right distribution channel to move products or services to the end user is a long-term strategic decision and varies according to the product, service and market. When choosing a distribution strategy, a marketer must determine what value a channel member adds to the firms products and/or service. A well-chosen channel is necessary because it constitutes a significant competitive advantage and is designed to save on cost, improve and increase efficiency, provide routinization of transactions, provide a larger customer base, and allows businesses to focus on other aspects of the organization. It is important that the channel also provide businesses with strategic promotion, brand strategy, and provide convenience for customers while bridging the gap between the assortment of goods and services generated by producers and those in demand from consumers. Poorly chosen channels can have long-term consequences and can ultimately lead to a superior product or services failure in the market. Having access to good distribution is fundamental to good marketing. Within the distribution channel is the ability to use intermediaries to strategically market a product or service.

Developing & Implementing Distribution Strategies

Orient appeared on the horizons of trading business of Pakistan in 1957. The GROUP started with the establishment of ORIENT COLOR LABS, a humble business in photo optics and photo finishing and in just 40 years of operations it has developed into one of the largest trading company in Pakistan dealing in popular brand names in consumers' electronics, audio and video goods, photographic equipment, cell phones and lighting products. The Group imports all renowned brands from America, Japan, Europe, Germany and Italy and has business deals with such international names in the consumer products' market as Mitsubishi, Yashica, Osram, Sanyo and a number of Italian and German companies. Today the business concerns of OG (Orient Group) encompass three major industries: Photographic Industry Electronics and Home Appliance Industry Lighting Industry

Distribution Intermediaries
Distribution intermediaries are helping the company to promote, sell, and make-available a good or service through contractual arrangements or purchase and resale of the item. Orient is using direct marketing channel as well as indirect marketing channels like wholesalers and retailers who in turn sell the product to customers.

Developing & Implementing Distribution Strategies

Marketing Logistics Warehousing

Storage warehousing is of great importance to the fast

developing businesses of today. Orient is having three types of warehouses: raw material stores, finished goods warehouses and after sale service warehouse.

Raw material stores

It can take a wide variety of component parts to successfully manufacture the final product, which is why accurate labeling, weighing and management of raw materials are so vital to the processing operation. Orient is managing all this through raw material stores.

Finished goods warehouses

Completely manufactured products ready for sale and delivery to the marketplace are kept in finished goods warehouse. There are total five warehouses of Orient Refrigerator Air Conditioners Lighting Microwave ovens Washing machines

After Sale Service Warehouse

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Developing & Implementing Distribution Strategies Orient supports clients and customers throughout Pakistan with reliable after sales services provided by a warehouse, logistics and repair network. If a customer has any complaint regarding any appliance of Orient, the damaged part is repaired or replaced immediately.

Transportation
As transportation affects the delivery performance so it is of great importance in marketing logistics. Orient has its own fleet of 20 vehicles. It also uses vehicles of contractors. Stock is delivered to different branches through trucks all over Pakistan.

Logistics Information Management

Company services is managing its logistics through SAP (System for our

Application Product). It is software which delivers products and that help accelerate business innovation customers. We believe that doing so will unleash growth and create significant new value for our customers, SAP, and ultimately, entire industries and the economy at large. Through SAP, the company stays connected with its 14 branches all over Pakistan. When stock is required by any branch, a stock transfer request is passed to finished goods warehouse manager. General Manager of sales & distribution approves it. Then MD authorizes it. Then outward gate pass is formed and stock is delivered to the destination. The services within this column relate to the ultimate delivery of the goods to the customer. Besides physical distribution including store distribution Orient also offers customer service activities. On behalf of the customer it is possible to outsource all customer 11

Developing & Implementing Distribution Strategies service activities like handling of complaints and return goods to Orient.

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Developing & Implementing Distribution Strategies Most of the information is collected from secondary sources. Information required in writing this report is already available on internet and I have extracted it from different websites. I have extracted information about Chinese economy from different reports. I have also collected data from sources such as articles, journals, magazines, books and periodicals to obtain historical and other types of information. Some information is also collected from the primary source. I have taken lot of information about the company from its website and one of its employees.

A marketing channel is critical to large and small businesses because they use these distribution channels to meet their

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Developing & Implementing Distribution Strategies marketing and business objectives by providing and delivering products and/or services that generate profit and increase their customer base. Well networked and properly knitted distribution channel plays an important role in enhancement of sales growth. It is the key for resellers to get the real picture and review of the product. Besides, giving them the first step aid in understanding product and answering their queries, the distribution partners bridge the gap between vendors and resellers. They facilitate them with the ability to roll back to the vendors to rectify any problem and also to concentrate on the market with right policies in place. In the end, from my point of reasoning, I would like to say that Orient is developing and managing distribution strategies in a very professional manner. OOOOOOOOOOOOOOOOOO

Company should try to keep optimum level of raw material to avoid breakdowns in production function. Company should emphasize to develop channel management strategies that are more competitive and cost effective. It should design a 14

Developing & Implementing Distribution Strategies distribution strategy to fit current and future competitive market scenarios. Company should treat resellers and third party distributions channels just as if they were its own employees. Understand how to motivate them, how to get to know them, create relationships with them, spend time with them in the field, make sure that they have the resources and support in order to be effective at their job and Orient can win the distribution channel and get them selling for the company.

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1) http://www.learnmarketing.net/place.html 2) http://www.consumerpsychologist.com/distribution.html 3) http://www.business.com/directory/transportation_and_logistic s/logistics /warehousing_and_distribution/ 4) http://en.wikipedia.org/wiki/Logistics 5) http://www.rozee.pk/company-details.php?compid=4507

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Developing & Implementing Distribution Strategies 6) Network/59040 http://www.oppapers.com/essays/Value-Delivery-

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