The goal of production is to get the produce goods to the customers. Distribution entails making this goal possible. It involves transportation, storage, and sale through the distribution channel. For distribution to work correctly, the right strategy must be chosen.
There are different types of retail distribution strategy.
Types of Distribution Strategies
Distribution may be divided into direct and indirect: direct distribution involves the passage of goods from the producer directly to the consumer, without intermediaries.
Indirect distribution, on the other hand, involves the passage of goods from the producer to the consumer through intermediaries such as distributors, wholesalers, and retailers.
These strategies can be applied to either of the distribution types:
- Intensive Distribution (Massive Distribution)
This is because the strategy supplies as many stores and retailers as possible, thereby covering a large market base.
The strategy is used to run the distribution of ordinary goods that are in high demand and are used by customers on a daily basis.
- Selective Distribution
The goal of this type of strategy is to supply target outlets or retailers in certain areas. This strategy allows producers to have some control over the price of goods.
In terms of the number of retailers, goods are distributed to, this strategy is the middle ground between an intensive distribution and exclusive distribution.
- Exclusive Distribution
The goal of the strategy is to maintain the supply of goods to special stores and locations. Goods distributed using this strategy are usually luxurious and expensive.
How To Choose the Proper Retail Distribution Strategy
The question is, what is the proper strategy for your business?
To know what retail distribution strategy is best for your business, you must consider the following:
- Type of Goods Sold
The goods to be distributed determine the strategy to adopt. For instance, an intensive distribution strategy often works well for everyday purchases like food, drinks, soap, and toiletries.
The items are better distributed to as many distributors or retailers as possible.
On the other hand, rarely purchased and limited purchase goods are to be distributed with exclusive and selective distribution strategies, respectively.
Such items are not purchased every day and are sold at higher prices. Examples are cars, home appliances, and designer clothing. A producer may adopt different strategies for each of their product lines based on the type.
- Customer Features
Information concerning the customer such as their number and preferences will also date the proper distribution strategy.
Businesses that reach a wide market with low preferences often adopt the intensive distribution strategy. For a few customers with sophisticated taste, exclusive or selective distribution strategy works well.
- Storage and Transportation Capabilities
If the distribution channel is an indirect one containing middlemen, the producers need to have storage and transport facilities.
In an intensive method of distribution, and efficient transport and delivery system is needed to deliver goods to the various outlets. Thus, in deciding the best strategy for your business, it is important to consider if you can bear the cost and physical implications of storage and transportation facilities.