The modeling process involves maximizing or minimizing a desired outcome, given various inputs and constraints. Modeling and optimization might be a final step to combine all of this knowledge with the hypotheses, preferences and the many types of data into one or more simulation models. The exact types of secondary data required vary by type of product or service and the geographic area. Such data might include population and demographic data economic data and trends consumer spending data by product category and type of household transportation alternatives, delivery times and relative costs traffic patterns and congestion data competitive data, etc. Secondary data is often used to help optimize a distribution system. The goal is to not only prove or disprove some of the major hypotheses developed during the qualitative research, but also to determine the relative appeal of various distribution models to end-customers, retailers, dealers, distributors, etc. Survey-based research yields statistically projectable knowledge about the attitudes, observations and behaviors of consumers, retailers, dealers and distribution workers. #WHY IS VOLUME OF DISTRIBUTION IMPORTANT HOW TO#Qualitative research among consumers, customers, dealers, salespeople and workers in the distribution system provides observations, understanding and knowledge that can suggest viable distribution strategies, identify logistic alternatives and develop hypotheses about how to improve or optimize a distribution network. While these are just some ways that distribution can play a direct or supporting role in strategy, here’s how a company get to an optimal distribution strategy: If a manufacturer should become aware that a major competitor is planning to massively expand its online presence and direct-to-consumer business activity, then that manufacturer might aggressively expand its own direct-to-consumer channel of distribution as a blocking action or delaying tactic to blunt the competitor’s actions. In contrast, a brand targeting a mass market might seek distribution in every channel and every nook and cranny of the economy.īlock a competitor. For instance, a luxury brand might choose to be distributed exclusively in upscale, high-end retail stores. The types of stores a product is placed in can shape and reinforce the consumer’s image of that brand. A variation of this strategy is to offer the new product to each retail chain under an exclusive brand name/private label.īurnish a brand image. While this strategy limits the upside potential of a new product because it limits distribution possibilities, it might still be a wise strategy for a small company (limited distribution is better than no distribution). If a small company with limited resources developed an appealing new product, but can’t get its new product on the shelf in retail stores, then it could approach a major retailer and offer to distribute its new product exclusively in that retailer’s stores. For example, if a retailer is operating a very expensive retail-store distribution system, the retailer might benefit from shifting some of its sales to an online distribution system to save money.Īchieve distribution. If a new system of distribution or improved logistics can significantly reduce costs and improve profit margins, then that distribution strategy might be worthy of pursuit. Speed-of-delivery combined with a direct-to-consumer business model and possibly smartphone app convenience may forge a new distribution strategy. Distributing a product or service more quickly is sometimes enough of an advantage to justify a new distribution strategy. Or, the coffee manufacturer might open its own coffee shops, or distribute coffee in new geographic areas. For example, a coffee manufacturer selling its coffees only in supermarkets might decide to buy its own trucks and start an office coffee business to deliver coffee directly to workplaces. Opening up a new channel of distribution or expanding distribution into new geographic areas can give new groups or new types of consumers access to a company’s products or services.
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