An Introduction To Managing Distribution

Managing Distribution: An Introduction

A distribution channel is the path your product follows to reach the end user, through distributors, wholesalers, retailers, self-service outlets, telephone sales ETC.

I have chosen 2 manufacturers of mass produced products and I will describe in detail how they deal with the distribution channel decision.

The first company I will talk about is the Benetton Group. Today, the Benetton Group is present in 120 countries around the world. It’s core business is clothing. The group produces over 110 million garments every year, 90% of which is manufactured in Europe.

Benetton innovated a technologically advanced system of distribution. The company linked its sales agents, factory and warehouse together using an international electronic data interchange system (EDI). This means if there is an order made in another part of the world, it is sent and placed on a personal computer where the information is collected and sent to the company’s mainframe system in Italy. If the order is not ready, it travels automatically to a machine that cuts the materials and immediately starts to knit the garment. It is then sent to the warehouse where a computer commands a robot to retrieve the garment and any other merchandise that needs to be transported to the same store.

This state-of-the-art system allows Benetton to provide the best of customer service. Everything is sorted automatically.

Another form of distribution channel Benetton adopt is a direct channel which is home shopping via catalogues and courier delivery businesses.

Through efficient management of physical distribution and the use of technologically advanced equipment, Benetton ensures that it’s products are available to consumers when and where they want them. Close attention to physical distribution has helped the company achieve its objectives and become a major competitor in the fashion industry.

The second company I will look at is Dell computers.

Dell computers is an American technology based company which develops, manufactures, sells and supports personal computers, servers, data storage devices, network switches, personal digit assistants, software, televisions ETC. It currently holds the second spot in the hardware computer industry.

As a result of its worldwide reach, Dell relies on the diversity of its personnel, suppliers and customer communities to maximize innovation, growth, competitiveness, and customer satisfaction. As Dell is too big a company to do direct business with many retailers, it relies on using the channel A method of distribution to aid its success. It does this by using the internet as the major selling source. As well as distributing through main businesses, using small disadvantaged businesses can also provide equal access to potential business opportunities for theses smaller outlets.

To provide great customer service, Dell has a general policy of manufacturing its products close to its customers, implementing �just in time’ manufacturing. The assembly of products will take place in the nearest Dell plants to where the product is marketed at. Using this form of distribution gives the company efficiency, and a good brand image. Dell provides many services and employs thousands of people to ensure the route its products take to reach the consumer is as quick and efficient as possible.

A brand manager is someone who plans, develops and directs the marketing efforts for a particular brand or product. They may also be responsible for coordinating activities of specialists in production, sales, advertising, promotion, research and development, marketing research, purchasing, distribution, package development and finance.

As brand manager, I am asked for my views on how to distribute the following products to achieve maximum market share, positive corporate image and profitability.

Pharmaceuticals -

In order for customer to be safe in the knowledge about any pharmaceutical products they wish to purchase, the distribution system id important.

A source from BBCNEWS.CO.UK states that the European Union must put tougher measures in place to stamp out the growing problem of trading in counterfeit medicines. Many of these have been purchased via the internet. This is a factor to consider when deciding on the distribution system. Packaging should be tamperproof to begin with.

I would recommend the channel B distribution method and selective distribution for pharmaceuticals. The product is less tampered with and therefore consumers can trust it.

A source from the British association of pharmaceutical wholesalers states there is a 20 minute turnaround on orders - 20 minutes after pharmacy makes an order, the product is in a vehicle ready to be delivered.

Adopting this method gives products positive corporate image.

Designer Jeans -

The distribution of designer jeans is inter-related with who the jeans are targeted at. A company that has the right goods in the right place at the right time in the right quantity and with the right support services is able to sell more than competing businesses that fail to accomplish these goals.

If a brand wants to create a perception of quality they may want to charge higher prices and exclusively distribute the product in defined areas/territories.

They are able to do this by building a positive corporate image which can be achieved by celebrity endorsement, effective promotions ETC.

I would recommend channel B distribution method for designer jeans because if the jeans are going straight from the producer to the retailer this gives off the image of quality

Detergents -

The distribution of detergents is important in the success of its sales. As detergents is an everyday household necessity, consumers expect the product to be easily available in most retailers. I would recommend intensive distribution for this product so it is stocked in as many outlets that