Types of Distribution Strategies Used by Businesses

A retail store

Generating sales is key to customer satisfaction and revenue growth—all businesses know this. Your company will gain repeat customers given that you deliver products effectively and provide access to item information. This is done using distribution strategies that align with your business needs. The process involves disseminating goods to end-users.


Importance of Distribution Strategies

There are two main types of distribution strategies—direct and indirect. The different types of distribution fall into these categories. It’s important to evaluate the crucial aspects of these strategies to determine which practice will be most suitable for your business. Here are some points to consider before finalizing the distribution method.

  • Item Type
  • Customer Base
  • Purchase Decision
  • Warehouse Capabilities and Logistics

Direct Distribution

This is a strategy where manufacturers sell and send their products directly to consumers. Some organizations adopt a modern approach and create an e-commerce website for users to make an online purchase. This method works for companies having a client base that’s aware of technology devoted to the brand. Catalogs and phone orders, on the other hand, target an old customer base.

Indirect Distribution

Indirect distribution strategies involve intermediaries that provide support in logistics and placing products. The agents or retailers store and display products for customers to buy. They specialize in getting the products into as many markets as possible, and the profit is also shared with distributors.

Most often, customers buy products absentmindedly in a department store without particular brand loyalty. For such products, an indirect distribution strategy places various goods in multiple locations. The types of indirect distribution are:

  • Intensive Distribution: Products are placed in several retail locations. For instance, you will find gum at grocery stores, gas stations, and vending machines. This does not involve a purchase decisionor product research.
  • Exclusive Distribution: Manufacturers make a deal with the retailer to sell a product via a specific storefront only. A business can sell goods directly through its own branded store. For instance, customers can’t buy a Lamborghini at any location. They need to visit the Lamborghini dealership to purchase a new vehicle.
  • Selective Distribution: Products are distributed in multiple locations but not as many as in the intensive distribution strategy.

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