Distribution strategies
PART A
Introduction
The fundamental scope of this paper is to discuss in detail the various distribution strategies that a motor scooter firm is going to distribute its high-cost scooter. Also importantly, the paper will identify and list all the strategies for motivating the dealership as intermediaries with a view of snatching them away from the competitors. In addition to that, the paper will mention the various advantages and disadvantages of the different strategies. Moreover, the paper will strive to evaluate the effectiveness and efficiency of each strategy as well as describe the distribution programming as a comprehensive strategy for motivating the intermediaries.
Distribution strategies refer to plans created by the top management to specify how the company envisions or intends to transfer its products and services to its intermediaries, wholesalers, retailers and ultimately its end consumers. Distribution incentives are defined as activities undertaken by the manufacturer or any other business to motivate its distributors, dealers or its supply chain link to take up more of its product.
Importance of Distribution strategies.
There exist various kinds of distribution strategies. Distribution strategies determine the level of distribution intensity in the market. In addition to that, distributive strategies play a fundamental role in resolving vital questions about the level of distribution, intensity, desirability and performance levels.
Most firms use intermediaries in their business to solely increase their market presence as well as ensure that the products reach the consumer at the right time, price and place. A company distribution strategy affects all other business functions such as marketing and finance. Distribution strategies and channels serve different purposes in the market, for instance, they can determine the price, they can position a particular brand in a given distinct position in the market or consumers mind. In most cases, the choice of a distribution strategy is tied to the product itself. In most motor distribution channels, the manufacturer will select mass distribution retailers and merchandisers who will be championed to distribute the products on behalf of the client.
Description of strategies
Selective distribution strategy
Advantages
The selective distribution will help deal with the issues of price undercutting in the market. Also importantly, selective distribution strategy will help the motor scooter firm reduce its marketing costs while at the same time establishing strong working relationships with distributors along the distribution channel.
Disadvantage: Focusing on just a few outlets or products may not give a clear picture as some of the products that are left out may have undiscovered potential.
Exclusive distribution strategy.
In regions where a specific distributor seems to have a footing or is well established, the motor scooter should consider utilizing one distributor in that particular area.
Advantages: The benefits that arise from using a large established wholesaler or retailer in a large geographical region are immense. First of all, exclusive distribution strategy will ensure that the motor scooter firm can distinctly position itself in the market as a prestigious product.
Disadvantage: Having a single distributor may limit sales especially if the distributor is unable to perform their duty at any point. There would be no alternative distributors to come in at such a time.
Embracing the internet in the distribution channel
Using the internet in the distribution channel will ensure that the firm uses the minimum resources to reach out to its clients both locally and internationally since the internet has not international boundaries.
Improving the customer experience and establishing durable customer relationships
Ways to motivate the dealers as intermediaries.
1. Increasing dealer margins
Increasing the dealer margins too much to higher levels than the competitors. The advantage in this is that higher margins translate to more income to the intermediaries as well as happy customers in the long run.
Disadvantage: An increase in the dealer margins may in turn other subsidiary products to become more expensive.
2. Change the intermediary credit policy
The motor scooter company can change its credit policy to suit its dealers and intermediaries better. The company can increase the intermediary credit duration and amount.
The advantage in this is that it will enhance the distributor’s uptake of more products into the market.
Disadvantage: An extremely long duration and amount increase may end up hurting the company’s financial position.
3. Installation of information systems to allow closer collaboration
The firm can install information systems that dealers can use to assess the demand and supply levels.
Advantage: The closer collaboration with the scooter company will result in reduced inventory costs.
Disadvantage: This will be an added expense to the firm that will call for maintenance and installation costs.
4. Leveraging purchasing power
The scooter firm can capitalize its financial muscle by subsidizing some of the costs incurred by the distributor channels. For instance financing costs, advertising, and management of personnel, payroll handling, insurance, supplies, and administrative functional and other core components.
Advantage: This will provide more money for the new strategies that will require higher amounts to establish.
Disadvantage: Some of the firm’s functions may end up performing poorly after the financial amounts dedicated to them are subsidized.
C). EVALUATING THE SUCCESS OF THE STRATEGIES
It is vital to evaluate strategies in order to determine which particular strategies function efficiently in the market, which should be retained and which should be discarded. The following are key indicators of effectiveness of the strategies as mentioned earlier.
1. Assessing the sales value and volumes that have been generated through the strategies as mentioned earlier. Effective strategies will result into greater sales values and volumes
2. Assessing the profitability after utilizing those kinds of strategies. A good strategy will result into higher levels of revenue
3. Assessing the quality of customer experience. A good strategy will lead into a superior customer experience
B). DISTRIBUTION PROGRAMMING
Distribution programming has been defined as a vertical marketing system that has been designed to meet the distributors and producers short term and long term goals. Distributors and producers have many different needs, objective and motivations. However, the distributors are fundamental stakeholders in the automobile industry .and provide a vital way to reach out to more customers. Therefore, to ensure that intermediaries meet the producers goals, the producers must develop sustainable programs to motivate the distributors (Klein & Selz, 2000).
PART B
A). Importance of choosing appropriate channel members
1. Enables high multi-level working relationship throughout the chain while providing the business with the efficient processing of work while effectively solving the variant problems that might eventually crop out in course of the business.
2. Ensure that there is regular dialogue which ensures that the business is constantly adding value
3. Right channel members are instrumental in achieving some of the laid out distribution strategies
4. Right channel members ensure that there the customer is always happy, in addition to that, the customer feedback always get back to the parent company.
B). A list of strategies that the manufacturer should use when evaluating intermediaries
1. Financial soundness of the distribution channel.
2. The Market reputation.
3. The physical and online presence in the market.
4. Its past clients and previous achievements.
5. Capacity/ ability to deliver products into the market.
6. Effective Distribution strategies to be used by the motor scooter firm.
C). Discussion on the criterion to be used to choose an intermediary.
1. Financial soundness of the distribution channel.
The distribution channel should be in a position to meet its short and long-term financial needs. Therefore before partnering with the delivery agents, a clear look at its financial background is necessary before making that final decision.
2. The Market reputation.
Working with a distribution intermediary with a bad reputation will ultimately ruin your business in the long run. These is because, such intermediaries will scare away customers. Therefore assessing the market reputation is key.
3. The physical and online presence in the market.
Assessing the intermediary physical presence in the market is important as it will give the motor scooter company an overview of the geographical coverage the intermediary might be able to cover. Also importantly, its online presence.
4. Its past clients and previous achievements.
Assessing the intermediaries past clients and achievement, will give the firm an overview of the reliability. If the company past clients were big in the corporate sector the without a shadow of a doubt, the firm would be able to deliver on the present mandate.
5. Capacity/ ability to deliver products into the market.
Assessing the intermediaries’ ability to move the products into the market is a fundamental factor that needs to be evaluated before the firm can decide to work with the new intermediaries.
6. Effective Distribution strategies to be used by the motor scooter firm.
A combination of the selective and exclusive distribution strategy will be efficient for the motor scooter firm as a tool to enter the market. A selective distribution channel is the one in which an organization utilizes a few number of channels to distribute its products in the market. An exclusive distribution channel is the one that uses a particular distributor to distribute all its products over a certain geographical region
Conclusion
Distribution strategies play a fundamental role in the achievement of the organization goals in the long-run as well as short-run periods. Investing in proper distribution channels can be used as a perfect way to offset competition and gain a distinct position in the market. However, lots combined efforts need to be put through in order to sustain the distribution channel
Reference
Bradley F. (2003). Strategic Marketing. May 24, 2012. www.scribd.com/doc/78667894/167/Selecting-and-motivating-intermediaries
