Wholesaling and Retailing in a Competitive Market Essay
- Length: 5 pages
- Sources: 5
- Subject: Business - Advertising
- Type: Essay
- Paper: #86920583
Excerpt from Essay :
Distribution strategy is a plan designed by the top management of an organization or a company, which specifies the ways in which the firm intends to move its products to middle traders retailers, and even consumers. After the product has been launched, it should reach the end consumer in the market or any other place. Between the manufacturer and the consumer are other intermediaries who are the brokers, wholesalers, and the retailers. The intermediaries are responsible in the distribution of the product to the end consumer. Sometimes the manufacturer decides to sell the product direct to the consumer. It is when the manufacturer or a business owner is dealing with an impulse purchase or low priced products. Distribution channel strategy allows wholesalers and retailers to reach customers in various geographical areas that the sales team cannot reach. It enables them to cover a large area reaching more customers and increasing sales. Wholesalers a retailer can use three distribution strategies when transferring the products to the consumers (Lamb & McDaniel, 2011). Policies that they can apply could be inclusive, exclusive, and selective distribution strategies. Before wholesalers and retailers select one of these distribution strategies to use the distribution of products, they should consider some factors. Factors that should be considered include reaching the consumer, cost, contribution, support, and customer service (Rosenbloom, 2011).
Wholesalers and retailers will select distribution strategies to use depending on their products. Intensive distribution strategy is also known as mass distribution strategy. It is because the company or organization using this approach incorporates as many channels as possible to reach many people in the field. In this strategy, wholesalers and retailers are struggling to cover a wide such that they can increase sales leading to increased profits. Examples of products, which fit intensive distribution strategy, are beer, cigarettes, fruit juices, chocolates, and other soft drinks. In most cases, intensive distribution is much acceptable when customers have a wide range of brands to choose. It is where the customer will choose another brand in absents of the favorite brand. Distribution is a key success factor in all businesses (Marks & O'Connor 2014). Each company or organization is fighting to make the products easily available and reachable to consumers. Wholesalers and retailers dealing with soft drinks use this distribution strategy to make sure the products reach all consumers in different geographical areas. Due to intensive distribution strategy, soft drinks are available in both the small kiosks and five-star hotels (Perreault, Cannon & McCarthy, 2010).
Selective distribution is another strategy that can be used by wholesalers and retailers to distribute their products. It is whereby they decide to use a limited number of distribution channels outlets when supplying the products. The strategy is advantageous because wholesalers and retailers can choose the best performing and appropriate distribution outlets, unlike intensive distribution. Wholesalers and retailers will focus on the selected outlets and offer better training on they can distribute the products to reach the customers quickly (Armstrong & Cunningham 2012). It means the consumers prefer certain brand or price of the product and they can search the outlets supplying the brand. Selective distribution strategy enables wholesalers and retailers to manage the prices of products such that the consumer is not overburden. Wholesalers and retailers will control the outlets supplying the product because the more the outlets handling the product, the higher the prices on reaching the consumer. In addition, wholesalers and retailers will control the costs of distributing the product (Lamb & McDaniel 2011).
Exclusive distribution strategy is using one distributor in a given geographical area. Wholesaler of the retailer will select one outlet that will supply the product to the consumers. The products that can be supplied using this distribution strategy are those having high prestigious image. Examples are automobiles, designer ware, and major domestic appliances. Wholesaler or the retailer will have control over the products since there is no competition between the intermediaries (Perreault, Cannon & McCarthy, 2010). The selected distributor will sell the products as per the instructions from the wholesaler or the retailer. Wholesalers and retailers will experience aggressing selling from the selected intermediary because it will not have any competition in the market. In this distribution channel, the prices of the products might be much higher because there is only one outlet supplying the products. The outlet or intermediary selected in exclusive distribution strategy should have experience in handling the same products, known by customers, and should be credible (Marks & O'Connor 2014).
Wholesalers and retailers should highlight geographical areas that they want to cover before selecting their distribution strategy. It will enable them to select the best and appropriate distribution strategy. After identifying the geographical areas, they should identify existing distributors to provide comprehensive coverage of the territories in the area (Armstrong & Cunningham 2012). If wholesalers and retailers are planning to export the products, they should focus on well-established local distributors having detailed knowledge of the market. In addition, they should sell their products online to reach various consumers before distribution. It will enable the consumers to be familiar with the products such when it is supplied they will have knowledge about the product (Rosenbloom, 2011).
Distribution strategy provides a ready platform for the wholesalers and retailers to expand their business but cost should be considered. Different distribution channels have different costs of distribution. Wholesalers and retailers should compare the cost between different channels and select one having lower costs. Direct distribution is much cheaper than indirect distribution. Wholesalers and retailers should compare the cost of customer service, delivery, stockholding, and repackaging incurred in indirect distribution with that of direct distribution. In indirect distribution, distributors will incur all these cost since they should stock and repack the products in quantities needed by the consumers (Lamb & McDaniel, 2011). Wholesalers and retailers should consider the contribution of the distributors in the course of supplying the products. They should not incorporate distributors who increase the costs of distribution, but assist in reaching more consumers. Distributors should assist them to have larger customer base and local market knowledge. It will enable wholesalers and retailers to establish business in new marketplaces without incurring more market entry costs (Perreault, Cannon & McCarthy, 2010).
Wholesalers and retailer should identify customers in which they want to serve directly before selecting distribution channel. They should determine if they could reach the customers easily without using distributors. They should also determine if the consumers they want to require technical support, which cannot be offered by the distributors. After determining all these, they can choose the best distribution strategy to supply their products. Support is very important when distributing products (Armstrong & Cunningham 2012). Wholesalers should seek support from other specialists who can manage the supply of the products. For example, if a manager is appointed to monitor the distributors, wholesalers and retailer will not be straining following the distributors up and down. Support from different professionals will enable wholesalers and retailers to make sound decisions. The professionals will organize manage programs like training of distributors (Rosenbloom, 2011).
It is important to choose the best and appropriate distribution strategies to supply the products. It will enable the organizations or companies producing products to select affordable and sound distribution strategies as per the ethical requirements. Bets and appropriate distribution strategies will enable the organization to reach as many consumers as possible leading to wide market and increased sales.
New product in the market
New product in the market should be distributed using appropriate distribution channels. Distribution channels are selected as per the products. If a product is a perishable, shorter distribution channel should be used. For example, the product can be distributed direct from the manufacturer to the consumer (Marks & O'Connor 2014). For example, vegetables cannot be distributed using long distribution channels…