Distribution Strategy: Automobiles vs. Canned Soups

Overview of Distribution Strategy

Distribution plays an important role in the success of a business because it ensures that a firm can deliver products and/or services to customers efficiently and at effective costs. Generally, the members of a firm's distribution channel offer a significant marketing resource that enables the company to increase market share and expand to new markets based on established business relationships and local knowledge. Notably, distribution provides various opportunities for the marketer that could normally be linked with the other elements of the marketing mix. Nonetheless, the same distribution strategy is unlikely to be effective for every company because of the need for markets to be balanced. Therefore, companies are required to make decisions regarding the most effective and appropriate distribution strategy. The main focus of distribution decisions is to establish a system that permits customers to gain access to and purchase a marketer's product.

Distribution Strategy for Automobiles

The basic element of a marketer's distribution strategy and system is that it must be both effective and efficient. Effectiveness ensures that products and services are delivered to the right place, in the right condition, and in the right quantity, while efficiency ensures that products and services are provided at the right time and at the appropriate cost (Christ, 2011). For automobiles, there is an increased need to adopt an effective distribution strategy because the business of selling cars is changing rapidly and resulting in the adoption of new competitive rules. Furthermore, the automobile industry has long been characterized by high costs, poor service, and an unpleasant selling process. During this period, auto manufacturers have competed intensely in attempts to drive out costs and meet customer needs for improved and cheaper cars and trucks.

As part of measures to cope with the numerous changes in the automotive industry, car manufacturers are becoming more serious about marketing and addressing the weaknesses entrenched in conventional franchised-dealer channels of distribution. Traditionally, automobiles have been marketed through dealer network distribution channels that were developed as reasonable extensions of the supply-push model. This model of distribution has been extremely resistant to change, as dealer networks have become embedded and entrenched over time by laws, regulations, habits, and contracts.

Selective Distribution in the Automotive Industry

In light of the ongoing changes in the automotive industry, the most appropriate distribution strategy for automobiles is the Selective Distribution Strategy. This distribution strategy is commonly used for products that customers are willing to shop around for and where manufacturers require a large geographical spread. The manufacturer should identify an intermediary with experience handling such products, strong credibility, and wide recognition among the target audience. For the automotive industry, the transformation of auto retailing channels requires not only customer-service and cost improvements but also recognition of various programs (Hirsh, Rodewig, Soliman & Wheeler, 1999). These programs include consideration of the various customer segments to be targeted, the suitable marketing mix and level, and the distribution functions required for each customer segment.

Through the selective distribution strategy, the automotive industry will be able to identify the appropriate portfolio of distribution models and effective distribution channels to reach targeted customers. Since customers are dissatisfied with low-satisfaction, high-pressure sales models, they want a less time-consuming and simpler sales process. The use of selective distribution channels will enable car manufacturers to meet these new customer requirements. For instance, this strategy will enable Mercedes to identify and tailor soft-offer packages to individual customers, especially buyers of the Mercedes "A" class. Conversely, the strategy will enable Ford's product line to abandon the supply-push philosophy that has forced firms to fill factories in attempts to cover high fixed costs. In return, Ford will be able to achieve superiority in channel-oriented customer service by avoiding mistakes and developing best practices in customer care.

Conclusion

Distribution decisions are among the major aspects that a marketer should consider because they have a direct impact on the delivery of products and/or services to end users, which in turn affects sales. Because a firm must distribute its products or services to the end user at the appropriate place and right time, an efficient and effective distribution strategy is crucial for an organization to achieve its overall marketing objectives. However, the appropriate distribution strategy is primarily dependent on the type of product to be distributed.

References

"Canned/Preserved Food in the U.S." (2011, October). Euromonitor International. Retrieved October 30, 2012, from

Christ, P. (2011). Principles of Marketing. Retrieved October 30, 2012, from

Hirsh, E. R., Rodewig, L. F., Soliman, P., & Wheeler, S. B. (1999, January 1). Changing channels in the automotive industry: The future of automotive marketing and distribution. Strategy+Business, First Quarter, 1999(14). Retrieved from http://www.strategy-business.com/article/10102?gko=f738b

"Marketing Mix: Place." (n.d.). LearnMarketing.net — For Marketing Learners Globally. Retrieved October 30, 2012, from http://www.learnmarketing.net/place.htm