Distribution Decisions

Our discussions in the tutorials Product Decisions and Managing Products indicate product decisions may be the most important of all marketing decisions since these lead directly to the reasons (i.e., offer benefits that satisfy needs) why customers decide to make a purchase.  But having a strong product does little good if customers are not able to easily and conveniently obtain it.  With this in mind we turn to the second major marketing decision area – distribution.

Distribution decisions focus on establishing a system that, at its basic level, allows customers to gain access and purchase a marketer’s product.  However, marketers may find that getting to the point at which a customer can acquire a product is complicated, time consuming, and expensive.  The bottom line is a marketer’s distribution system must be both effective (i.e., delivers a good or service to the right place, in the right amount, in the right condition) and efficient (i.e., delivers at the right time and for the right cost).  Yet, as we will see, achieving these goals takes considerable effort. 

Distribution decisions are relevant for nearly all types of products.  While it is easy to see how distribution decisions impact physical goods, such as laundry detergent or truck parts, distribution is equally important for digital goods (e.g., television programming, downloadable music) and services (e.g., income tax services).  In fact, while the Internet is playing a major role in changing product distribution and is perceived to offer more opportunities for reaching customers, online marketers still face the same distribution issues and obstacles as those faced by offline marketers.

In order to facilitate an effective and efficient distribution system many decisions must be made including (but certainly not limited to):

• Assessing the best distribution channels for getting products to customers
• Determining whether a reseller network is needed to assist in the distribution process
• Arranging a reliable ordering system that allows customers to place orders
• Creating a delivery system for transporting the product to the customer
• For tangible and digital goods, establishing facilities for product storage

In this part of our highly detailed Principles of Marketing Tutorials we cover the basics of distribution including defining what channels of distribution are and why these are important.  We will also introduce the key parties in a distribution system, such as the reseller network, though much greater coverage will be given to channel partners and to technical aspects of distribution (e.g., ordering, delivery, storage, etc.) in our next tutorial.