Intro Unit 7 (1)
The distribution mix of a company is the combination of channels the company uses to get its products to customers through placement, promotion, delivery and sale (Jones, 2007). Correct choosing of the distribution mix will ensure that a company attracts and reaches it targeted customers. There are three major factors affecting the selection of a company’s distribution mix. The first factor is product characteristics. Products vary in their complexity such that some products have features and characteristics that make their evaluation difficult for a customer. Complex products include cars, computers and machinery, and their evaluation is only possible after purchase and extended use.
For this reason, companies that sell complex products need to do more promotion and sale of their products in order to communicate with the customer about the product’s characteristics (Jones, 2007). Product characteristics determine what approach the company will take to reach its customers. If the product is complex, the company will most likely use distributors, sales teams, and dealers to reach its customers. A less complex product only requires advertisement in order for it to reach its consumers. Product characteristics have a major influence on the choice of a company’s distribution mix.
In addition to product characteristics, the importance of the purchase to the final consumer is also a major factor affecting the selection of a company’s distribution mix. Significance of a product to the consumer is often determined by the price of the product (Boone & Kurtz, 2010). Because the consumer will be comparing the quality of competing products, companies need to employ the use of dealers, distributors and sales people to ensure that customers have all the information about the product that they need. According to Jones, this approach also gives the company added control over the marketing and sale of its product (2007).
On the other hand, companies that make inexpensive products that are used by millions of consumers daily do not require to do their own marketing and sales. The most cost effective way to reach their customers is through advertising as consumers will not be too much interested in the dynamics of the product. The importance of the purchase to the final consumer therefore has a huge impact on the distribution mix a company will use to get its product to consumers. Expensive products require the use of distributors and dealers while inexpensive products only require wholesalers and retailers (Rolnicki, 1998). Companies that produce inexpensive products however, still ensure that their products are well displayed in order for them to become more visible to customers.
The last major factor affecting the selection of a company’s distribution mix is the need to customize a product. This refers to the information about the customer that a company needs to collect in order to create a product that meets the customer’s needs (Jones, 2007). Companies that deal with customized products such as mortgages and health insurance policies require employment of salespeople who are required to collect information about what the consumer requires. This differs from companies that deal with standardized products where collection of information about specific customer needs is not required.
Because collection of specific information is time-consuming and expensive, it can only be used for products whose sale will return the cost of marketing and ensure a profit. Such products are customized products on which customers are willing to spend a lot of money on products that satisfy their specific needs. The need to customize a product therefore has a huge impact on the type of distribution mix that a company will require to get its product to the consumers. The right combination of all three factors ensures that a company gains a competitive advantage through placement, promotion, delivery and sale of its products to as many customers as possible.
References
Boone, L. E., & Kurtz, D. L. (2010). Contemporary Business. Hoboken, NJ: John Wiley and Sons.
Jones, G. R. (2007). Introduction to business: How companies create value for people. New York, NY: The McGraw-Hill Companies.
Rolnicki, K. (1998). Managing channels of distribution. New York, NY: AMACOM Div of American Management Association.
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