Table of content
- Who are the distributors?
- What Is Product Distribution?
- Know Your Product Distribution Channels
- Channels of distribution
- Distributorship business model?
- What are the types of distribution strategies?
- Distribution channels
- What are examples of distribution strategies?
Who are the distributors?
Let’s better understand “Who are the distributors?” A wholesaler who takes on additional responsibilities is a distributor. They actively promote the producers’ goods while also completing retailer requests. Distributors of goods do more than only function as a go-between for retailers and producers, coordinating orders and returns and even serving as sales representatives. They conduct market research and look for fresh opportunities all the time to maximize sales. A distributor can build solid ties with manufacturers because they concentrate on a certain region and market. They most likely have a stronger relationship with certain businesses than a wholesaler does. It is directly the distributors’ job to ensure that merchandise is flying off the shelves.
For instance, one distributor may reach a deal with a well-known beverage firm that collaborates with them frequently, whereas wholesalers are utilized as needed. They can choose to sell directly to customers and companies or to retailers and other merchants. We hope Myanmar Golden Heart successfully makes you understand: who are the distributors?
What Is Product Distribution?
Let’s get deep. Making a thing accessible for purchasing involves disseminating it throughout the market. Delivery, packaging, and transportation are all involved. A company’s sales depend heavily on distribution.
A distributor is referred to as someone who buys goods, warehouses them, and then distributes them to customers. They function as a middleman between producers and retailers or customers, rather than acting in their own best interests. The majority of the time, distributors collaborate with buyers and suppliers.
According to Myanmar Golden Heart, the ideal distributor improves a business’s product market exposure and can give it a competitive edge in terms of speed and efficiency.
Know Your Product Distribution Channels
The business transaction that takes place between a manufacturer and a customer is referred to as a distribution channel. It is the course a transaction takes. Distributors of goods act as middlemen between producers and retailers, handling product delivery and storage. These routes may be somewhat straightforward or get more intricate.
Both direct and indirect pathways exist. In a direct channel, the producer and the customer interact directly. On the other hand, an indirect channel includes intermediaries in the sales flow. The movement between producers and consumers is divided into four tiers. You must be aware of the various levels of distribution if you want to diversify your distribution methods or enter new markets.
Channels of distribution
Level Zero:
The most straightforward distribution channel is level zero. There is no middleman involved; sales are made directly to consumers from manufacturers.
Level One:
One middleman serves as the link between the producer and the consumer in a level one channel. A retailer who stands in between a manufacturer and a customer is one example.
Level Two:Â
When considering levels, relate the quantity to the number of intermediaries. A level two channel in this situation places two middlemen between the producer and the consumer. Here, a wholesaler selling to a retailer who then sells to the consumer would be an example.
Level Three:
An agent or broker can help in this situation. Agents represent businesses and mostly work with wholesalers. Wholesalers then sell to retailers, who in turn sell to customers.
Distributorship business model?
Although the term “distribution” may bring up pictures of trucks crammed with freight, distribution is also a matter of sales and marketing. The strategy used by your business to sell goods and services to its intended customers is called a distributorship business model. Products and services would sell themselves in an ideal society.
The method used to deliver commodities, services, and products to consumers or end users is known as a distributorship business model. Depending on the product and its distribution requirements, maintaining a simple and efficient method of getting your goods and services to people frequently results in repeat business. The optimal distribution plan is one that maximizes total profitability while being cost-effective. To reach target audiences and achieve business goals and objectives, Myanmar Golden Heart uses numerous or overlapping distributorship business models. For instance, a product might do better online with one demographic than it would with another via a mail-order catalog.
When planning your distributorship business model, there are several factors to consider, including:
1. Product type:
Your distribution method may change depending on the kind of goods or services you provide. For instance, a manufacturer of paper towels might have a different distribution strategy than a brand of luxury cars. These three groupings are used to classify the majority of consumer purchases:
- Routine: A customer makes a routine purchase when they swiftly decide on a low-cost good or service, such as gum, soda, and paper goods.
- Limited: A modestly expensive item that a buyer spends more time choosing than a standard purchase, such as a refrigerator, couch, or computer, is known as a limited purchase.
- Extensive: A costly item that a buyer carefully considers before making a big purchase is frequently a car, house, or college degree.
2. Customer base
Your user base, or client base, is another thing to take into account. Your distribution plan differs depending on where your customers frequently purchase, and distribution is frequently impacted by technological advancements as well. You might decide to distribute to different brick-and-mortar shops, such as grocery store chains and warehouse firms, if your product’s target market is a middle-aged lady shopping at a grocery store. Distributing directly from the production facility via online sales may be the best option if your target market for your customisable furniture is a high-tech, rich clientele. The types of shopping techniques that people favor can be as follows:
- E-commerce websites
- Direct mail ordering
- Storefronts, booths and shops
- Door-to-door sales
3. Warehouse and transportation logistics
When creating a distribution strategy, another factor to take into account is the capabilities and expenses related to managing a warehouse and delivery operations. For instance, it costs a lot of money to maintain a warehouse for storing goods, a fleet of trucks and vans for transportation, and staff to manage the warehouse and distribute the goods. Choosing an alternative distribution method could result in greater cost savings and more revenue, depending on the storage and delivery requirements for your goods or service.
What are the types of distribution strategies?
Direct and indirect distribution strategies are the two main varieties, and depending on the good or service, each one provides a company with distinct advantages and cost savings.
An explanation of direct and indirect distribution strategies is provided below:
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Direct distribution strategy:
Direct distribution is the practice of manufacturers sending their goods directly to customers without the assistance of intermediaries. Having a warehouse to keep the products and a delivery system to convey them to the clients is frequently necessary.
Indirect distribution strategy:
Using intermediary companies and entities to assist in the logistical delivery of goods to clients is known as an indirect distribution strategy. It can help a corporation save money by producing vast quantities of routine products more efficiently.
There are more focused possibilities within these two primary categories of distribution strategy, including:
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Exclusive:Â
When a company selects a small number of sales outlets to build a level of exclusivity for a product or brand, like luxury products or exotic cars, this is known as exclusive distribution.
Intensive:
Intensive distribution occurs when a producer attempts to break into the market by selling its goods to as many sales outlets as possible to reach clients, most frequently for affordable everyday items like candy bars, household goods, and beverage items.
Selective:
A high-end rug manufacturer might choose a specific retail department store to reach more customers by using selective distribution, which combines exclusive and intensive distribution. This method gives you more places to sell a product while allowing you to be selective about which stores or partnerships to sell within.
Dual:
To expand market influence and preserve direct customer sales, dual distribution combines direct and selective distribution tactics.
Reverse:
Reverse distribution, where a product flows from the client back to the business, is less frequent. However, this is typically done for recycling or refurbishing products like used electronics or computers.
Distribution channels
A distribution channel is a route that goods or services take to get to their clients and end users. The product, the audience it serves, and the destination all influence the appropriate distribution route. A product might travel from a factory to a warehouse to a consumer, for instance. Alternatively, it might move from production to a wholesaler, then a retailer, and finally the customer. The product’s distribution channel would be this sequence of activities.
Myanmar Golden Heart mentioned below the four major avenues of distribution, along with descriptions of how they operate:
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Wholesale
When a wholesaler buys goods in large quantities from a manufacturer and later sells them to retailers, this is a wholesale distribution channel. Because you place a large order, this is frequently a fantastic way to get things for less money. Wholesalers rarely deal directly with customers; instead, they concentrate on the storage and transportation of goods while serving as a middleman between the manufacturer and the store that sells them.
Retail
Before being bought by a customer, an item frequently ends up at a retail distributor of goods. Retailers can purchase their goods from wholesalers or the manufacturer directly. To turn a profit, they mark up the cost of the product. Although supermarkets and department stores are examples of genuine storefront retailers, with technological improvements, retailers can also be internet businesses, catalogue corporations, or even phone-order enterprises.
Franchisor
A distinct method of delivering goods and services is through a franchise channel. However, a business owner pays to leverage brand recognition to increase sales through flat fees and predetermined royalties set down in a contract. However companies and manufacturers with well-known brands and established clientele can profit from this channel of distribution without having to deal with the regular hassles of running each site. Well-known fast-food chains, real estate agencies, and various healthcare organizations are a few examples of franchise distribution channels. The three main categories of franchising are as follows:
- Product distribution franchising
- Business format franchising
- Social franchising
Distributor
It is advantageous to adopt this strategy to save the costs associated with maintaining a shipping site, employees, and logistics operation. A distributor of goods obtains and transports products from producers to retailers and other sites. Hence a distributor of goods can gain from having numerous clients who work together to create comprehensive product groups that increase sales.
What are examples of distribution strategies?
Here are three instances of different distribution tactics utilizing actual business cases from different sectors of the economy:
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A toothpaste company
In this case, a toothpaste firm chooses intense distribution through both direct and indirect outlets because it wants to sell its product in as many places as possible to reach consumers. In order to increase sales, it uses indirect strategies like distributors of goods and wholesalers in addition to online sales through a website and direct shipping to clients. The toothpaste is available widely in locations such as:
- Supermarkets
- Convenience stores
- Warehouses
- Big-box retailers
- E-commerce websites
Myanmar Golden Heart believes that for everyday goods like toothpaste, intensive distribution strategies are helpful for customers who are brand loyal and buy it every time, regardless of where they buy it, as well as for customers who buy based on sales promotions, want to try a new brand or variety, or need to replace a brand they usually buy that is out of stock or costs significantly more.
A luxury watch brand
One flagship store for a high-end luxury watch brand is located on each U.S. coast. Hence by having a few stores where customers may purchase watches, this exclusive distribution strategy capitalizes on the prestige and scarcity of its brand. When adopting this exclusive distribution strategy, there are fewer parties involved, which gives the business more control over manufacturing, price, contract negotiations, and other aspects of the process.
To increase sales in a regulated manner, the watch firm may decide to combine its exclusive distribution strategy with a selective distribution one. For instance, to preserve its luxury appeal and brand, the corporation might collaborate with a luxury department store that has more locations than its flagship stores, but fewer locations than more reasonably priced department stores. They might think of doing it all year long, only occasionally, or on special occasions like the holiday shopping season.
A neighbourhood lawn care business
Using this example, a small business owner may choose to market and offer all of the lawn care services themselves using an online presence, door-to-door flyer sales, and a small staff. They may also choose to distribute their services directly to the consumer.
As the business expands, it can think about franchising to other local entrepreneurs who wish to offer lawn care services under the brand of this now-established organization. However, the owner of the lawn care company may charge a one-time fee for the right to use their brand and retain a portion of the revenue from each franchised territory.Â
Hence for more information related to the above topic, feel free to contact Myanmar Golden Heart.
