CHAPTER 10
Developing Distribution HERE MUST — DANTE
ALL DISTRUST BEHIND THEE LEAVE.
of getting the product to the customer at the right place and the right time. This seems to be a simple requirement, but it’s one that has caused the failure of innumerable companies over the centuries, despite the fact that many of these companies have had well-made and well-priced products. The main cause of failure isn’t the unavailablity of distribution channels but the lack of consideration given to distribution during the early stages of market planning. This chapter will examine all of the variables that need to be part of distribution planning.
DISTRIBUTION IS THE PROCESS
Controlling the Channels: Getting to the Customer A distribution channel is the route a product takes when moving from the producer to the consumer. Channels may be simple with few intermediaries or they may be composed of complex networks with numerous layers of middlemen. Marketeers must contend with their domestic market distribution to get supplies as well as with international distribution networks to get their product or service to the foreign market. Once this is done, local distribution inside the target market will have to be considered. Plainly, the greater control a marketeer has over these three distribution channels, the greater the likelihood of success. The amount of control will be determined by the following factors. COST
Initially, there’s the cost of setting up the channel, which involves the management labor to locate and negotiate distribution deals—a process that can be as lengthy and expensive as finding the consumers for the product. Secondly, maintenance costs on the channel include the cost of internal sales staff, middlemen, and promotional efforts. The final costs to be considered are those associated with transportation, storage, and administration. All costs determined at this level will eventually be passed along to the consumer; therefore, marketeers seek to reduce these expenditures whenever possible. CAPITAL DEPTH
The choice and control of a channel will depend greatly on a marketeer’s ability to capitalize the process. Some parts of the distribution chain may pay for the product as it moves through the channel, in which case the marketeer must only finance the production. This is true, for instance, of an import distributor that buys a product from an marketeer/exporter for eventual resale to local retailers, who’ve bought it outright for sale to consumers. Each member of the chain
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