How to Develop a Solid Product Distribution Strategy From Start to Finish
A solid distribution strategy is to marketing as a roadmap is to a road trip. Without it, your business could wind up in a rut with no way out.
Identify Your Target Market
Determining your target market is essential in creating a product distribution strategy to meet your company’s objectives. A target market can be a broad group, such as married men over 40 in the US, or narrow, such as urban, health-conscious women who live in Texas. It is essential to understand your customers’ demographics, such as age, gender, occupation, education level, and family status. Developing a product distribution strategy that doesn’t align with your target audience is like going on a road trip without a GPS. You’ll likely you will miss your destination and get lost. To avoid this, use POS data to track sales trends, including how quickly you’re required to replenish inventory and which channels and outlets sell more than others. This will help you identify potential problem areas that need to be addressed.
Develop a Marketing Strategy
Getting your product into customers’ hands is key. The distribution channel you select depends on various factors, including the type of product you are selling and your target market. A direct distribution model may be necessary if your product is perishable or requires special care during transit.
Intensive distribution is common for fast-moving consumer goods, where brand loyalty is low, and impulse buying drives sales. This approach involves establishing partnerships with multiple retailers and distributors to promote and sell the product.
For brick-and-mortar retailers, a buy online pick up in-store strategy can streamline the distribution process and improve customer satisfaction by reducing wait times for product delivery. Companies can also optimize their distribution channels by reviewing warehouse performance, utilizing direct vendor shipments, and installing parcel lockers.
Select Your Distribution Channels
Companies should consider their sales goals and products when choosing a distribution channel. For example, an organic farmer may prefer selling directly to consumers through a farmers’ market. At the same time, an electronics company focusing on B2B sales may want to partner with an authorized distributor or retailer.
It’s important to note that the type of distribution channel may affect pricing structures. For example, a product sold directly from the manufacturer to the consumer may need to be priced at wholesale prices, while a retailer can mark the price.
Retailers are often key players in a distribution strategy and can help reach many customers. When partnering with retailers, companies should look at their geographic reach, product range, employee expertise, and customer service reputation. Additionally, companies should be sure to negotiate fair and competitive prices. It’s also essential to monitor sales indicators and assess customer satisfaction surveys. This information will help companies determine if they need to adjust their distribution strategies.
Manage Inventory
Developing a distribution plan requires careful analysis and optimization. A robust commerce platform that can provide visibility and improve inventory management helps ensure the plan stays on track. It’s important to know how much stock is needed, when and where it should be stored, and how long you can expect it to be available. Use data analytics and market research to determine how to balance inventory levels. You should also set reorder points to alert you when your inventory drops below predetermined par levels. Regularly review these levels to see if they need to be adjusted up or down.
