During my radio program today we discussed the marketing mix [many people know this as the 4 P’s] as this was requested by one of the listeners. For those of you who are not familiar with the Marketing Mix, the 4 P’s stand for :-
… now when we talk about distribution channels in marketing, this topic falls under that P of Place. That is to say, where will the end user customer actually end up purchasing the product and/or service that is produced by the company in question.
If you consider a company like coca cola and how you can go almost anywhere in the world and purchase this soft drink, you can begin to get an idea of how important channels of distribution in marketing are for businesses of all sizes. Of course none of us ever purchase Coca Cola from the company itself – instead we purchase from a retailer who would have in turn purchased from one of many possible distribution channels. There can be many intermediaries in the supply chain which of course all adds to the final price paid by the end user.
In my consulting and training work – this topic of distribution channel management is continuing to be an ever important one. How is your company doing in terms of actively managing your distribution partners ?
Are you working in partnership ?
Do you know their margins ?
Do you know their fixed costs ?
Do you know how much your products are contributing to their fixed costs ??
As the price that the end user pays for a product continues to be tied to the costs incurred in getting that product to the end user, training and consulting requirements on this subject matter will rise and those companies that make the incremental necessary changes in this respect will be those that take more market share and ultimately be the ones that excel.
As always, any thoughts, comments or consulting requirements ? don’t hesitate to get in touch.
Companies all over the world deliver products and/or services to end user clients – these customers by definition are located at the end of a marketing [distribution] channel.
Whilst Small and Medium Enterprises and Large Corporates by definition will be using some form of distribution channel through which to deliver their products, services and messages – very often we see that they are all but doing more of the same. The recent intensive corporate training seminar that I wrote and ran for Marcus Evans Professional Training was focussed on Enhancing Channel Management Strategies to Maximise Sales Through Distributors. In essence companies face to major decision when it comes to dealing with their distribution channels :-
The Design of the Distribution Channel
The Management of the distribution Channel
… as we see that when new employees join an organisation they normally end up sitting with someone who knows how things operate within that company. They learn how things ‘have been done’ and are often judged and measured on how well they measure up to that which they have been taught. However when we look at some of the great business breakthroughs – take for example Dell migrating away from a …
Direct Only Distribution Channel
…. to that of one where customer can purchase their products via retail and even the television. We see that challenging the norm when it comes to dealing with distribution channels is the same as with everything else in life i.e…. Keep doing the same things and you will get the same results !!! As an Business Strategy Consultant I always aim to look if there is another way as well as looking at what is working and methods for improving on that. It is often said that one cannot change distribution channels easily or taking on new partners is fraught with danger as the existing partners will object, resist and damage the ongoing business relationship. It looks as though many companies are in fact modifying their distribution channel strategies as well as looking to manage exisiting partners and relationships more effectively. As you look to get more out of your business could it be that taking some time out to examine your current distribution channel makeup and management should be the very thing to concentrate on ?? Get in touch if you’d like some outside perspective to help you on your way in your business endeavours. Best, Stephen C Campbell [distribution channel management trainer]