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

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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
organization’s 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.

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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.

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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 organizations—such as wholesalers, retailers, and
sales agents—involved 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.

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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, transportation, warehouse site selection, and
warehousing. Physical distribution is part of a larger process
called "distribution," which includes wholesale and retail
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.

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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 company’s 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 company’s warehousing, transportation, and
related logistics services through an outsourced or "third party"
partnership.

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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.

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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 firm’s
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.

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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.

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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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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 is managing its logistics through SAP (System

Application Product). It is software which delivers products and
services that help accelerate business innovation for our
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

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service activities like handling of complaints and return goods to

Orient.

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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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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

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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.

OOOOOOOOOOOOOOOOOO

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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6) http://www.oppapers.com/essays/Value-Delivery-
Network/59040

OOOOOOOOOOOOOOOOOO

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