As a producer, you need to ensure that your goods get to the final consumer. That usually involves a chain of individuals and businesses collectively called the distribution channel.
The channel may be short, as in the movement of goods from the producer directly to the consumer, or it may be longer, involving distributors, wholesalers, and retailers.
The plan and methods through which goods produced move through the distribution channel to the consumer are known as retail distribution strategies.
Some retail distribution strategies are listed below:
Intensive Distribution (Mass Distribution)
This is one strategy in which the producer offers the goods to as many retailers as possible. The channel employed may be from producer to wholesaler to many retailers.
This strategy ensures that goods are available in many stores and supply is made to a broad market in a cost-effective way.
It is employed in the distribution of everyday or regular purchase goods such as groceries.
This type of strategy strictly focuses on a particular retailer. The producers choose one individual or store to sell in a particular area or region. Producers who employ this strategy are largely able to control the prices of goods and effectively train distributors to meet consumer’s needs.
This strategy is often used to distribute high end, luxury items.
This strategy is halfway between intensive and exclusive distribution.
The goods are supplied to a target group of retailers. The producer chooses retailers for the products based on predetermined criteria. For instance, a producer may choose to sell their products to retailers who can explain its function to consumers. Producers who adopt this strategy often have a close relationship with the retailers they supply. In this type, the products are not supplied to one retailer as in exclusive distribution but also not to as many retailers as in intensive distribution. This strategy is used to distribute goods such as clothing.
How to Choose a Distribution Strategy
To choose the right distribution strategy for your line of business, here are helpful guidelines to note:
It is helpful to consider other companies producing similar products and the type of strategy they use. Ascertain if those strategies are working for them or not. You can then decide if adopting the same strategy or taking up a new one will give you an edge over the competition.
Choose Based on Product Type
The kind of products you sell will determine what type of distribution strategy you will employ. For instance, highly demanded goods that sell every day are usually distributed using the intensive distribution strategy.
Consider Expenses and Returns
Every strategy type invites certain expenses. Decide if your business can afford to bear the expenses compared with the possible returns. Before running with a strategy, considering this is very important.
Arrange available strategies in order of suitability for your business. This is because as your business grows, you may want to change strategy or explore two strategies (dual strategies) at the same time.