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Marketing
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To many companies distribution of products/services is a big problem. If you want to sell directly to the Danish consumers it is often hard to find qualified sales channels.
Selling to Private Consumers
Picture yourself having found some fair priced very cool and hard-wearing outdoor shoes of a superior quality on a trip to Australia. You may even have visited the production facilities who are willing to deliver the shoes. You return back home where you want to market the shoes. How is this done? Well, you can run advertisements in the newspaper, but it is costly and who would buy shoes from a stranger? Would it be possible to get a deal with a shoe chain such as Skoringen? Maybe, but most likely they are not going to offer you a 10% margin per sold pair of shoes, as they would easily be able to deal direct with the Australian supplier simply because of their size. Here the internet comes in handy as a distributional alternative – but then again. Who would buy a pair of shoes without having tried them on first?
Wholesaling
Offering services to a limited target group makes the distribution more manageable. You may have developed plastics components manufacturing software for the pharmaceutical industry. Thus, your customers are plastics manufacturers. In Denmark there are maybe 20 such manufacturers supplying to the pharmaceutical industry and throughout Europe there may be 4,000. For a newly established company it is somewhat easier to contact, distribute to and service 4,000 companies than several million individual consumers.
Customers’ Purchasing Behaviour
Before settling for a specific distributive system you must know your customers’ buying habits. You can ask your customer: “What, where, how and when do you purchase goods?”.
The customer most likely makes demands on:
- Purchase volume – is the customer ordering 600,000 units or single units?
- Delivery lead time – does the customer want the order right now or will s/he be able to wait for 30 days?
- Geographic logistics – will a central distributor do or must you have distributors spread throughout the market?
- Product diversity – does the customer require multiple product diversity or will a standard product be enough?
- Additional services – Do the customer weight other issues such as guarantee, franco, credit extention, etc.?
Choosing Distributive System
Many people want to sell their product/service directly to their customers. Doing so, you score the full profit yourself without having to split it between one or more intermediaries.
There is a tendency towards direct sales to consumers, but to a newly established company a hookup with one or more distributors is a wise decision.
A distributor/liaison can take some costly tasks off your shoulders. An example:- Collecting market data
- Marketing
- Negotiation
- Order book
- Financing
- Transfer of risk
- Warehousing
- Payments
- Carriage to customers
Having analysed your customers’ purchasing behaviour and pros and cons of using a distributor you are now ready to choose the ideal distribution system for you and your customers.
Thomsen
- Guide til agentkontrakt
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