The Importance of Distribution - Essay Example

Soda Analysis of the Retail Market and Distribution Chain for the Product The importance of Distribution Most producers prefer using intermediaries to market and distribute their products and this is normally achieved through the establishment of a marketing channel (distribution channel). A marketing channel is a set of organizations that are interdependent in nature, responsible for availing the products to the final consumer. The intermediaries in the channel are the individuals or organizations responsible for the movement of the product from the producer to the final consumer (Gundlach et al 432). They can be brokers, agents, wholesalers or retailers. Soda can be distributed using different channels of distribution depending on the market segment. Given that the company we are dealing with is a multinational, different strategies are used to distribute the soda depending on the specifications of that particular segment. The channels of Distribution The soda is normally distributed using the five main distribution channels namely: Vending, Food stores, convenience & gas, fountain, and mass merchandisers. Supermarkets being the principal customer for soft drink makers are highly fragmented although it will be one of the main channels we are going to exploit. We will use them as one of the channels to get to the clients because they have a big customer base owing to the heavy flow of traffic. The problem with national mass merchandising is that they have a big bargaining power which significantly reduces on the profitability of soda. This is also coupled with the fact that their loyal clients expect discounts in order to continue using their services. Low prices means less profits although this is a channel that is crucial for us especially in terms of marketing our product and establishing a market niche (Keller 114). The fountain sales are equally less profitable just like the national mass merchandising but we will consider it as paid sampling. This channel is a little tricky because the buyers at major fast food chains often stock products from one producer in order to have a stronger bargaining power. The effect is that the sales volume will be high although the profitability level will be low owing to the relatively big percentage of the sales going to them. However, this is a very important channel for us because it will help us in building our brand and developing customer loyalty. This is the reason why we will invest in fountain equipment and cups used to serve the sodas in these outlets. The most profitable channel of distribution for soda is vending because we will be able to sell directly to the clients without using any intermediaries whatsoever. The machines will do the selling and this is very essential because it reduces the expenses and maximizes the profit levels. The property owners are paid commission on their property and have no strong bargaining powers like in the case of fountain sales and mass merchandising. The final channel of distribution for soda is convenience stores and gas stations (Harvey and Milorad 536). This is also a profitable channel because we will negotiate directly with the gas owners and provide them with our products so they can sell them on our behalf. The aforementioned channels are suitable for specific locations regardless of their levels of convenience. They will therefore be used in delivering the soda to the final clients. It is important at this point to note that the distribution of the soda is purely based on the franchise model. The mother company is only be responsible for the production of the syrup concentrate which is then distributed to bottlers in some certain strategic geographical locations. These bottlers are the ones responsible for mixing the syrup with other ingredients like water and sugar and then sell and distribute it to the retailers and other forms of distribution as discussed above. The delocalization of some of the production activities is important for the mother company because it speeds up the production process and ensures that soda is available to all the segments in time. The product often takes different channels of distribution before it gets to the final consumer as illustrated below. The Distribution Channel for the Soda Company Marketing Strategy for the Soda Company The marketing objectives for the soda company are to promote its brand image and make it more local to the clients. The clients should also be informed on the features of any new product developed by the company in order to gain their trust and loyalty. This will go a long way in boosting the sales of the company and improve the profit margins. The soda company has adopted different strategies in marketing the soda. Pricing is one such strategy because it determines the levels of market penetration. The clients are very sensitive to price so the firm is dedicated to making the soda affordable to them without affecting the organizational objectives. This is the way to pursue in order to attract clients and build a customer niche. Penetration pricing is ideal for the soda company because the demand for soda is highly flexible and price sensitive. The company uses different marketing communication mix to reach the clients. They are all important in reaching different market segments depending on their characteristics. These methods are advertising, personal selling, public relations and sales promotion (Harvey and Milorad 531). Advertising entails paying advertising agencies to market the products on the behalf of the company. It takes the form of billboards, TV advertisements, Magazine/newspaper, public/street furniture and online advertising. It’s a very effective way of marketing and has helped the soda company acquire more customers. Marketing Communications Mix Personal selling includes means such as distributing cooler fridges and vending units to sport halls, shops and community centers. Sponsorship deals and corporate social responsibility are some of the personal selling strategies adopted by the soda company. The success of the soda company was influenced by the strategic marketing policies and the well designed channels of distribution that have ensured that the soda is always available to the clients at all times. The customers have remained loyal to the soda company because it is giving them what they need at the right price and place. Works cited Gundlach, Gregory, et al. "The Changing Landscape of Supply Chain Management, Marketing Channels of Distribution, Logistics and Purchasing." The Journal of Business & Industrial Marketing 21.7 (2006): 428-38. ABI/INFORM Complete. Harvey, Michael, and Milorad Novicevic. "Selecting Marketing Managers to Effectively Control Global Channels of Distribution." International Marketing Review 19.4 (2002): 525-44. ABI/INFORM Complete Keller, Scott, et al. "The Impact of Internal Marketing Efforts in Distribution Service Operations." Journal of Business Logistics 27.1 (2006): 109-VIII. ABI/INFORM Complete. Read More