Distribution Plan for Chocoberry Company - Essay Example

Chocoberry Distribution Plan Introduction For a business to be successful, its distribution strategy is one factor that plays a significant role. Product distribution involves three key factors. These include physical distribution, the distribution mix and marketing channels (Ross, 2004). In the case of Chocoberry (CB) Company, their main focus is on developing a distribution plan whose main aim is to depict some of the distribution alternatives for their products. Therefore, when developing the distribution plan in relation to the distribution alternatives, the main focus is on the distribution channels. Distribution Plan for Chocoberry Company In this distribution plan, the major focus in how CB’s products are to reach the intended customers. In order to be able to sell products to customers, the first significant factor that CB ought to consider doing is carrying out a market research. Market research helps in providing the company with information about the customer; what the customer normally purchases and where the customer does the purchase (Debelak, 2005). For CB to also successfully reach its customers it must also determine how their product will reach the intended customer. Additionally, the company must have the knowledge on whoever will be involved in the product delivery process right from the company’s warehouse to the consumer. This is what is called the distribution channel or chain. Therefore, defining distribution channel and the role that the company plays in distribution process are some of the significant components of CB’s marketing plan. Moreover, through analyzing the distribution channels and evaluating them to the resources of the company, it is possible to determine which distribution alternative is best for the company. There exists four types of distribution channels these include (Dent, 2011); Direct selling, Sales through intermediaries, Reverse channels, and Dual distribution. From these the CB Company can therefore select three distribution alternatives that it can consider implementing. These include; Direct selling; Indirect channel/Sales through intermediaries Dual distribution. Direct Selling This is one of the distribution alternatives that CB can consider using. Direct selling is a form of product distribution whereby the producer directly sells the product to the customer. One of the oldest direct selling forms’ is peddling; however, currently there are modern forms of direct selling, which include party plan sales, personal contact arrangements, one-on-one demonstrations, and internet sales (Debelak, 2005). Therefore direct selling can also be defined as the direct personal demonstration, presentation, and products’ sale to customers, usually at their places of convenience. Since CB is a company that makes sales to various companies worldwide, it needs to consider direct selling. One compelling reason for this is the report that was recently revealed by the World Federation of Direct Selling Associations (WFDSA). The report stated that in the retail sales, the regional member associations of WFDSA accounted for over US$114 Billion, in 2007. This was as a result of the activities of over 62 million direct sales representatives. The Direct Selling Association (DSA) of the United States, on the other hand, reported that over 55% of American adults had at one time bought goods or services presented to them by a direct selling representative (Dent, 2011). From this statistics, one can easily note the wonders that direct selling can do. In other words, the CB Company can consider taking these facts as an opportunity that can push them into direct sales. CB Company should also consider this channel of distribution because through it they can ensure that their customers benefit because direct selling brings about convenience and service benefits. Other benefits of direct selling include; It is the most effective when a company wants to enter into a new market with somewhat low cost, especially in the case of providing new and unique products. It does not need a high capital investment. Through it a company can shun additional intermediaries in distribution thereby invest the money saved elsewhere. It does not call for any significant previous business experience. It does not require specially educated workers. It is efficient in obtaining the attention and initial interest of a potential customer. It is a unique competitive strategy, for instance, there is no need for extensive advertising. However, direct selling also comes about with certain disadvantages. Once the CB Company has decided to adopt this distribution channel it must be ready to face these challenges. The disadvantages of direct selling include (Ross, 2004); It is time consuming. It can at times be inconvenient or obtrusive. It is limited in coverage. Sales through Intermediaries CB Company can also distribute its new product through the use of intermediaries. This is whereby, the company can use intermediaries like the wholesalers and retailers in the provision of the product to their intended customers. The intermediaries simply assist the company by ensuring that the product is made available to the customer. The most common type of the indirect channel that CB can consider using includes; (Producer --> broker --> wholesaler --> retailer--> customer) (Debelak, 2005). This distribution channel is beneficial because; It ensures good customer relations. The company is sure of reaching the potential and intended customers since the intermediaries have a good knowledge about the market. It ensures wide market coverage. However, when CB Company decides to use this distribution method, they must be ready to face the challenge of increased costs and lack of control in the market. Dual Distribution This is whereby the company can reach a customer by using more than one channel simultaneously. Through it, the company is capable of attracting the same target market using different channels (Dent, 2011). The main benefits that CB Company can experience when they use dual distribution include; More control over functions in the channels used. There is surety of lower costs with higher returns. It is more responsive to the needs of the market therefore it easily satisfies the needs of the customer. The major disadvantage of dual distribution is that it can lead to channel conflicts since different distribution channels are used at the same time. Conclusion In summary, the Product distribution channels create the “4 P’s” of marketing, which include product, placement (distribution), promotion, and price (Ross, 2004). CB Company should recognize that these factors comprise the most vital parts of launching a product and marketing. By using one of the above discussed distribution channels to sell their new product, they can be sure of gaining profit. However, the company must acknowledge that the use of multiple distribution channels can make them gain more profits. References Debelak, D. (2005). Bringing Your Product to Market ... In Less Than a Year: Fast-Track Approaches to Cashing in on Your Great Idea. Hoboken: John Wiley & Sons. Dent, J. (2011). Distribution channels: Understanding and managing channels to market. London: Kogan Page. Ross, D. F. (2004). Distribution: Planning and control : managing in the era of supply chain management. Dordrecht: Kluwer Academic Publishers Group. Read More