How the distribution system works and how to organize the sales of products

A direct distribution system was once called a unilateral distribution system, which consisted of selling a product directly to consumers by the manufacturer of the lump (Figure 82). So, this is the shortest vertical distribution channel (zero level channel, direct marketing channel). This type of distribution is used by enterprises of air, rail, bus, water transport, hotels, restaurants, etc. The widespread use of direct selling is based on the fact that tourism services can only be consumed in the process of their creation.

Direct implementation has significant advantages when it is focused on single services that are in high demand. More complex measures (for example, foreign excursions) with the proposal to purchase a package of ambassadors require, as a rule, the use of the services of intermediaries (travel agencies, travel agencies). Most of the global manufacturers have national or regional sales offices (especially the union of air carriers, shipping lines, large hotel chains). The points of sale of their products (own, shared with other distributors or on a lease basis) are located at airports, railway stations,

bus stations, in business centers and other places of congestion of track. Customers can buy the services they want with the intention of immediate use or order for further consumption. Many services are purchased through tickets.

In recent years, automated direct distribution methods have become widespread. Vending machines for various tickets are installed at airports, buses and railway stations and in the central cha. Astin cities. Automation has embraced cooking, currency exchange, cash withdrawal from bank accounts through ATMs. Various computer networks and databases are used to obtain information on the timetable for the movement of aircraft, as well as the arrival and departure times of the various vehicles. Computer networks are designed for different purposes, including teleshopping.

A big advantage of direct distribution is its simplicity, since the travel agent communicates directly with the supplier and avoids unnecessary information, and often takes advantage of additional benefits (for example, many carriers reduce the chains for return tickets, airlines change economy class seats to tourist class seats). At the same time, if the terms of corporate deals are fulfilled, direct distribution will provide high revenues for producers. As already mentioned, the price of such a tourist product for the buyer does not depend on his purchase at all.

832 Indirect distribution systems

Opportunities for the development of direct distribution are limited for two main reasons: firstly, for many manufacturers, selling a product through their own network is ineffective, and secondly, for many tourists it is more profitable to buy a niche from an intermediary than a manufacturer.

The concept of an intermediary encompasses the various institutions of intermediaries that exclusively or predominantly serve consumers directly, in scientific literature commonly referred to as retailers. The main group of retailers are travel agencies that represent the interests of various manufacturers through the sale of their services. In some countries, manufacturers use social (union) distribution channels in the iddils of enterprises and corporations. Supermarkets and chambers of commerce are increasingly acting as intermediaries in the sale of services.

Travel agencies can be considered "clean" retailers. They also dig up the functions of producers, since, independently of the intermediation, they are engaged in the formation of their own product offerings (like hell, bypass tours with rich cultural programs), selling them directly to consumers. Large agencies, when selling their compositions, use numerous other intermediaries, acting in the role of a wholesaler of a grocer.

The presentation and delivery of products from the manufacturer to the consumer is only one of the many tasks of the distribution channel, because its role is to facilitate the flow of both material flows (money, product) and information (negotiations, ordering, popularization.

The advantages associated with the functioning of intermediaries in distribution channels can be viewed from the point of view of the manufacturer of the tourism product and from the point of view of its consumer.

The cooperation of the manufacturer with intermediaries is an increase in the possibilities for the expansion of additional markets. Creation of its own sales network can be an irrational decision for a manufacturer, especially in the context of a small volume of services and a small capacity of the local market. Then you should give the right to sell the product to an intermediary who is already engaged in such activities with other products in this territory. ISP is a network of a specialized intermediary who owns information on the formation of demand in different segments market and wide contacts with various institutes, a distribution network built in the country and abroad, often for the manufacturer with a more efficient crocoque.

The intermediary firms also provide many different amenities to the tourists themselves. Making a decision about travel is associated with the need to search various information, the receipt of which from many manufacturers requires a significant investment of time and money (correspondence, telephone conversations, etc.). A good vacation requires the effort of locating an interesting area, providing yourself with accommodation, meals, excursion programs and additional services. Contacting the agency makes it easier to obtain various information, reducing the frequency of contacts between the manufacturer and the consumer, has special meaning for both sides (Figure 83) 8.3):

b) frequency of contacts = 3 3 = 6. Fig. 83. Influence of intermediaries on the frequency of contacts

Access to wide travel information (brochures, price lists, oral information), which is owned by intermediaries in the place of permanent residence of the consumer, allows not only to save time and costs, but also to make the right choice of place and time and method of travel. The agency offers alternative compositions and service standards in different countries and in different territories. Intermediary chains at distribution channels thus bring closer the territories in which services are created and consumed, thus causing economic and entrepreneurial activation of the local population.

As the role and economic potential of intermediaries increase, the relationship between participants in the distribution channel changes. If earlier the manufacturer independently chose an intermediary, then in market conditions large travel agencies of the world scale were formed as independent entities that perform the functions of channel integrators. They independently choose co-operators and performers who offer certain after-gi, considering them to be integral parts of the distribution mechanism used in various ways.

A multilevel distribution system allows two or more intermediaries to function (Figure 84). Such channels are typical for the sale of service packages. Individual manufacturers drop their products to wholesalers (wholesalers or tour wholesalers) as well as tour operators who bundle service packages and offer retail. Sometimes additional organizations with a specific specialization are involved in the distribution process; organizers of congresses, conventions, competitions, travel consultants, public organizations, local history societies, hunting clubs etc .. Helping a travel agency, for example, organizing a scientific congress, it is necessary to establish not only a set of basic services, such as accommodation, food and transport, but also the type and equipment of local round tables, information support , the selection of a team of translators, the organization of a press conference, etc. The second part of such events is the knowledge of the cultural and local history features of the surroundings, requires the cooperation of the travel agency with various organizing committees.

Fig. 84. Tiny distribution channels of a tourism product: a - direct distribution channel b - distribution channel a with one intermediary (one-stage) c - distribution channel with two intermediaries (two-stage non-linear) d - distribution channel with three intermediaries (three-stage)

A multi-level distribution system (see Fig. 84, b, c, d) provides consumers with the same conveniences as a two-level one. Additional benefits arise from the participation of wholesalers in the channel, who, by buying products from manufacturers together, cause an expansion of the offer for consumers. Bulk sale allows wholesalers to apply low prices... It should be noted that, unlike retail, the wholesaler does not receive any commission from the proceeds from the sale of services, and the source of his income is the share in the price of the product.

Choosing a distribution channel is a decision that will have an impact on the future activities of the enterprise, and changing it can be difficult. The choice of distribution channels is associated with the convenience that constant contacts with certain market partners bring (short negotiations, knowledge of needs and strategies, knowledge of customs, great mutual trust, etc.). However, in different periods (as well as at the same time), a reception may use different distribution channels. Each channel can also promote the sale of the product to other sales systems that are not specific to a particular firm. Members of the article b channel also sell products from other manufacturers at a level with their own. Many air and bus companies, as well as some rail carriers, sell tickets for other carriers, shipping lines are promoting not only certain routes for sea excursion enthusiasts, but also air transport tickets, car rental companies, book hotels. Wholesalers and retailers are not only transport and accommodation services, but also the services of tour guides and entertainment organizers that a tourist can buy on occasion, while in a certain area. So, cutting services and their packages are available in one link of the distribution channel.

Stage 1 - until 1993

• Decrease in production volumes in Russia
• A large number of wholesale companies import everything from oil to computers from abroad.
• Huge turnover, the market is not structured

Stage 2 - 1993-95

• Domestic manufacturers are still weak
• Foreign companies open representative offices in Russia
• Competitions for the right to exclusive distribution, market structuring

Stage 3 - 1995-98

• Strong domestic manufacturers begin to emerge
• Expansion of foreign manufacturers to the regions with the help of distributors
• Refusal from the services of one exclusive distributor, creation of a system of several distributors

Stage 4 - 1998 -2001

• Development of domestic producers, leaving the market of many foreign companies
• Reduction of the number of distributors, development of the remaining
• Creation of your own distribution system
• Formation of relationships with retail chains

The growth of the share of sales through chain retail and the increase in their market power will require manufacturers to develop new distribution strategies

The following changes are taking place in the consumer goods market today:

Saturation of markets and local crises of overproduction make the distribution system one of the decisive factors for success.

3. Strengthening competition, consolidation of players

National leaders have emerged on the market, who largely determine the strategy of their smaller partners and competitors.

• Washing powder market
  P&G, Henkel
• Juice market
  WBD, Multon, Lebedyansky
• Milk market
  VBD, Petmol, Danone, Parmalat, Ostankino

4. Share growth retail sales through the networks

The share of sales through retail chains in Russia will increase

Key challenges in the consumer goods market

Change and adaptation of the distribution system is becoming one of the main factors of competitiveness manufacturers

The key question in the field of distribution: what to do in the field of distribution on your own, and what to give "outside"?

Business choice becomes a key issue for distributors: qualitatively change the current business or develop other areas of activity?

Answering the challenges of time

Manufacturers' answers

1. Reducing the number of distributors

• Sun Interbrew from 430 to 12
• American Tobaco under 3
• Ochakovo from 300 to 6
• P&G - from 3 to 1

2. Creation of a system of distributors

• Kalina abandons its own regional warehouses and develops dealers
• The baker forms a dealer network

• Mars has created a position of sales personnel manager in St. Petersburg
• Liggett-Ducat has refused the Moscow distributor "Megapolis"
• Wrigley independently operates 30 - 40% more efficiently than any of its distributors
• For WBD, developing its own distribution channel and strengthening independent work with retail is a strategic priority

4. Creation of a vending machine for working with key clients

• "Baker" - creates the KAM apparatus
• P&G - only work with key customers, a separate department for work with networks
• "Gradient" - develops the KAM division as the main strategic direction

Distributors Answers

1. Creation of own retail chains

• Temp First - a network of small wholesale stores "Nakhodka" 2002 -17mag, 2003 - 36mag
• Thunder - about 400 mag. South and Center of Russia, a shift in focus from the wholesale business
• Image stores: Perfume - "Perfume", Gradient - "Beauty" k "
• Uniland - 3 retail formats: Dixie, Unisam, Megamart

2. Marketing or manufacturing your own brand

• Oil production "Anna Maria"
• MBK - "Three Little Pigs"

3. Strengthening logistics, building own terminals

• "TD Era" own logistics center

4. Creation of departments for work with professionals

• "Perfume" - hygiene department

5. Creation of a staff of merchandisers and promoters

• "Soyuz - Quadro" and "Perfume" - create promotion departments

II. Alternative models of distribution abroad and in Russia

The economy in Russia developed in non-market conditions until 1991. Now in Russia there is a business and a market. All over the world, business and market have evolved in natural conditions... It follows that the development of business, the organization of industries, as well as the practice of doing business and managing companies will strive to take the same forms and develop under the same laws as in other countries. At the same time, long-term competitive advantage there can only be "unique assets" or "skills" that are difficult to copy. This means that the desire to introduce new products, technologies or management methods used by foreign leaders is not always expedient and justified.

FMCG market abroad: manufacturers' models

Logistic company Exel

Exel - full range of supply chain management services

1. Warehouse services and distribution
2. Road transport
3. International operations and customs
4. Integrated IT solutions for supply chain management
5. Service for electronic business (e-fulfillment)
6. Additional services
   - Assembly and packaging
   - Home delivery
   - Quality control
   - Returns processing
   - Customer service center

• Annual turnover (2001) $ 6.5 billion
• 60,000 employees
• Operations in 120 countries

Access Business Group is a national logistics and distribution company

Supervalu is the largest distributor in the USA

The number of employees is 54,700 people.

Development models

3 drivers of change in China

1. With the accession to the WTO, it became possible to acquire local distributors by foreign companies
2. Increase in the share of retail chains. The emergence of "clubs".
3. Growth in the share of direct distribution, development of 3PL companies.

Distributors' specifics

The main component of the business of Russian distributors and wholesalers is commerce, and in the west - logistics.

III. The logic of identifying and choosing development alternatives

Alternatives for the manufacturer

• Higher quality product release
• Brand promotion
• Entering the national and international market
• Private label production for retail

• Disclaimer of distributors and independent work with retail
• Changes in the quality and number of distributors, as well as their motivation
• Creation of own distribution centers
• Creation of your own retail network

Distributor development alternatives

Corporate and business level strategies

• Other business: manufacturing, retail
• Marketing your own brand

Level of product-market strategy and distribution strategy

• Logistics: transfer and storage, retail inventory management
• Remote and hard-to-reach regions
• Exclusive distribution of goods from foreign manufacturers wishing to enter the Russian market
• Specialized customers (airlines, restaurants, etc.)
• Specific groups of goods (frozen food, etc.)
• Expansion of the range beyond FMCG
• Alliances with national distributors and wholesalers: consolidation
• Alliances with manufacturers and retailers
• Transfer of control to international companies

Topical issues

General logic of strategy development

Strategic Analysis: Internal Factors

• How does demand work?
• How does the industry work?
• How do companies work?

Business arrangement abroad: distribution model

1. How are distribution channels arranged?
2. What players are there in the market?
3. What are the principles of relationships between players?
4. How do the players work?

Strategic forecast: product-market and distribution strategy

1. Forecasts of demand development

• How will our consumer behavior change?
• How will the structure of demand in the market as a whole and in a specific segment change?
• How will the demand in the market change quantitatively?

2. Forecast of the development of distribution channels

• How will the share of sales in different channels change?
• What channels will be priority for us?

3. Forecasts of changes in distribution models

• How will our direct competitors develop?
• How will manufacturers, distributors and retailers change?
• How will the relationship between the participants in the distribution system change?

Formulation and selection of alternatives

Formulating strategic alternatives is more of an art than a clearly formalized procedure

1. Prerequisites for the formulation of alternatives

• WHAT TO SELL?
• WHOM TO SELL?
• WHERE TO SELL?

2. Formulation of distribution alternatives

3. Formulation of criteria for choosing a strategic alternative

• RESOURCES
• CAPABILITIES
• CURRENT DISTRIBUTION SYSTEM

Example: decision tree

The approach to solving the question "oneself - not oneself"

Example: strategic choice

Detailing of the selected alternative

Organization

• Sales, promotion and logistics divisions of the company and contractors: trading house, sales department, VS
• Organization of logistics: regional warehouses, distribution centers, own retail delivery
• Positions: KAM, sales representatives, merchandisers, sales representatives for HORECA

Rules of the game

• Pricing rules
• Rules for dealing with intermediaries. Motivation of channel members: distribution agreement
• Internal sales regulations

Staff

• Personnel selection criteria
• Principles of training your employees and employees of partners

Typical problems

At the stage of strategic analysis:

1. Russian and foreign markets and competitors are strictly differentiated and evaluated differently ("double standard"). Analysis dominates within the Russian market.
2. Competitors are underestimated. The competitiveness and market prospects of its own products are being reassessed.
3. Weak signals (threats and opportunities) are not taken into account, which in the future can play a decisive role in the development of the company.

At the stage of strategic forecasting:

1. Non-critical extrapolation of the current situation and trends to long term, in particular, a formal trend approach.
2. Inconsistency of forecasts with limitations and trends identified at the analysis stage
3. Rejection of "bad" forecasts. For example, if it turns out that we are becoming unprofitable, then the forecast is wrong and it must be "improved"

At the stage of formulating strategic alternatives:

1. The formulated alternatives have no qualitative differences, the spectrum of the considered alternatives is initially narrowed
2. Alternatives are an uncritical reflection of the views of company leaders
3. The alternatives are difficult to compare, their advantages and disadvantages have not been formulated

At the stage of strategy implementation:

1. Inconsistency of the final development program of the company with the chosen strategic alternative - evasion from the most fundamental decisions in favor of operational improvements
2. Declarativeness of the development program, absence of rigid deadlines, measurable results and specific responsible persons
3. Declaring the developed strategy outdated due to the emergence of new circumstances and the transition to the operational management mode

© Research and Consulting Firm "ALT"

The indicator of the distribution of services or goods in a certain territory or taking into account the distribution channel. There are two main types of distribution: weighted and numerical (quantitative). If earlier the producer's market came to the fore, that is, the companies producing goods set their own conditions, now the consumer's market is in the first place. Shopping location and convenience are becoming more important. Which, in turn, is reflected in the cost of the product.

Weighted and numerical distribution

Weighted, or high-quality, distribution - that the indicator displays the share of product sales in a certain category. To calculate the weighted distribution, only those outlets in which there is at least one SKU product.

Numeric, or quantitative, distribution is an indicator that reflects the percentage of outlets in which at least one SKU product is represented.

Today, the place in which a particular product is presented is of particular importance. After all, products of one category are practically the same, and their cost and packaging. We must not forget that without distribution, the buyer will not be able to purchase the goods physically. Moreover, if it is incorrect, the goods will be bought much less people than if it is correct.

Distribution of goods is necessary in order for the products to reach the end consumer from the manufacturer. As a rule, marketing channels are used for this purpose: transport, logistics, warehousing and retail trade. Unexpected moves at this stage can lead to a significant selling breakthrough.

Product positioning

Many companies, in order to enter large supermarkets, are ready to sell their products at practically a loss. Positioning obliges them to cooperate with such stores, that is, physical distribution is carried out. What is it and how does it depend on positioning? How and where the product will be presented determines the physical distribution indicator. Whether it will be selective, intense or exclusive. For example, representatives of companies of a reputable and fashionable brand are obliged to ensure that their brand products are not sold in markets or in shopping centers, consisting of small pavilions, as this affects the position of this brand.

Multilevel Marketing

An approach to sales like multilevel marketing allows you to achieve colossal turnovers. But such distribution (which is in marketing, we have already defined) occupies a special position in the minds of consumers. On the one hand, many people in this position are deprived of the opportunity to purchase products sold only through the chosen distribution system in ordinary stores. But, nevertheless, the loss of this part of the target audience is compensated by attracting additional buyers, who, thanks to this method of distribution, get the opportunity to arrange whole presentations on product promotion.

It should be noted that mediation, in principle, is not approved by the public, and not only in Russia, but also in almost all countries of the world. It is believed that intermediaries make money on the air, and because of them, the final cost of the goods is several times higher than

The phenomenon of distribution arose immediately after the first trade relations between the manufacturer of the goods and the buyer were formed. Probably, for many centuries, sellers and buyers were engaged in the delivery of manufactured products and their sale / purchase, and did not even imagine that all these processes are described by such a word as "distribution". After some time, when economic processes underwent scientific rethinking, the phenomenon of distribution was realized, described and classified.

Below I will try to summarize the main points related to this phenomenon. It should be understood that this article will focus on distribution in the broadest sense of the word. Distribution - a set of independent market participants involved in the production and distribution of a product or service. So, the product is produced; in order for it to make a profit, it is necessary to sell it to the consumer. The main problem that the manufacturer faces immediately after producing the product is HOW TO DELIVER the produced product to where the consumer is located. As a rule, consumers are geographically unevenly located. And in the event that a manufacturer does not want to limit his sales (and, accordingly, profits) to consumers located in the immediate vicinity of production, he needs to build his own distribution model Distributors (participants in the distribution process) provide the manufacturer with logistic services, ensuring the delivery of manufactured products to remote areas. In addition, distributors bear the costs and risks associated with selling and / or resale to other channels and with the storage of products. Distribution channels allow the consumer to purchase many different products in one place. Compare the two charts where the consumer wants to buy salt, toothpaste and bread.

• When there is no distribution channel:

And when there is a retail distribution channel (for example, a store):

Distribution channel functions:

1. Sorting: The intermediary, receiving goods with similar consumer characteristics, groups them based on various features (for example, price, size, functionality).

2. Accumulation: To ensure uninterrupted supply of consumers, the distributor keeps the estimated stock of the product on the leftovers.

3. Crushing: This implies a reduction in the minimum purchase lot; for example, the sale of loose goods received in 50-kg packaging in lots of 500 or 250 grams.

4. Expansion of the range: Intermediaries have the opportunity to offer products with similar characteristics from different manufacturers; also, distributors get the opportunity to form several product groups. For example, sell both meat products and cheese.

5. Promotion of products: as a rule, the manufacturer is the initiator of promotional activities aimed at increasing sales; however, the reseller is also involved in promoting the product. For example, a wholesaler can focus on the sale of a specific product group or SKU, and a retailer can place promotional materials in a store.

6. Negotiation of conditions: intermediaries participate in pricing, discussing guarantees and quality of products / services, presenting their requirements and offering their conditions to their own customers or the end consumer.

7. Taking risks: intermediaries assume some of the distribution risks. This includes the risks of damage in transit from / to the warehouse, risks of non-return Money for delivered products and others.

What are the distribution channels.

From the point of view of the vertical organization of the product promotion process, there are two types of distribution channels: (1) direct and (2) indirect (indirect).

1. Channel of direct distribution or zero level channel.

Distribution, in which the manufacturer sells the product directly to the consumer, bypassing any intermediaries. Such a channel is the simplest and shortest from the point of view of product distribution, but the most difficult from the point of view of its organization.

Methods used in organizing direct distribution:

1. Selling for sale (apartment sales);
2. Internet sales;
3. Postal orders;
4. Telemarketing;
5. Own trade networks of the manufacturer.

2. Channels of indirect (indirect, multilevel) distribution:

This includes all channels with more than two participants (producer and consumer). Indirect distribution channels vary in the length of the distribution chain.

• Manufacturer-Retailer-Consumer (l level):

The distribution chain of the first level, unlike direct distribution, contains one intermediary. In our example, this is a retailer. A retailer can be either a single store or a large federal network, the only difference is in market coverage.

The most striking example of such a distribution channel is the relationship between car manufacturers and their dealers: for the sale of products, car manufacturers in the overwhelming majority of cases involve dealers who work with the end consumer.

• Manufacturer-Wholesaler-Retailer-Consumer (2 levels):

In this channel, an additional link emerges between the manufacturer and the retailer in the form of a wholesale buyer. The need for a wholesaler may be due to a significant assortment and / or a significant distance from the distribution area from the place of production. The retailer does not have the ability to accumulate the necessary balances in its own warehouses, and the manufacturer is not able to deliver at the frequency that the retailer needs, which leads to the risks of a situation of lack of goods.

In this situation, a logical solution is to include an additional element in the channel: a wholesaler that provides the necessary stocks and logistics in the serviced area.

Distribution channels of this type are typical for perfumery, food, light industry.

• Manufacturer-Agent-Wholesaler-Retailer-Consumer (3 levels):

In addition to the Producer and the Consumer, this channel has three more links: the agent, as a rule, providing the representative and managerial functionality of the producer; a wholesaler, whose tasks include the formation of balances and delivery of goods to the retail outlets of a retailer working with the end consumer.

An agent in a given distribution channel can be understood as either a single intermediary, or a limited number of large intermediaries who purchase products directly from production, and then organize interaction with other links of the channel within the area of ​​responsibility. Accordingly, the chain also (and in Russia most often) can take the following form:

Manufacturer-Large wholesale-Small wholesale-Retailer-Consumer

The three-level distribution channel allows you to quickly establish sales in the territories due to the fact that the product passes through intermediaries with a formed client base and work model.

Among the shortcomings, it should be noted a low impact on the end consumer and a decrease in the margins of products due to the need to pay for the services of several intermediaries.

Factors determining the choice of a distribution channel:

• Factors determined by the specifics of the manufactured products:

(a) Product functionality: In the event that you produce specific products of heavy industry (for example, machine tools or turbine blades) in connection with a narrow circle of consumers, it would be logical to opt for direct distribution. In this case, production will be carried out within the framework of individual orders, and the need for urgent delivery, as a rule, does not matter.

Consumer goods (such as televisions or refrigerators) that have a significant number of consumers can be sold through distribution channels with more links.

(b) Product shelf life:

It is logical here: for the sale of perishable products, one should choose the shortest distribution channels or strive to minimize the existing ones; for products with long shelf life, the length of the distribution chain will not be a critical factor.

(c)Production / sales volumes:

Products of mass production and consumption require significant storage areas, respectively, it is necessary to organize the distribution channel in such a way that the necessary residues are formed at the points of consumption. If a manufacturer is unable to organize its own distribution centers, then he is forced to transfer this functionality to intermediaries (small or large wholesalers), lengthening the chain.

In those cases, when production and sales volumes do not have significant volumes, a channel with a minimum number of participants is used. An example would be jewelry manufacturers' own stores: they create direct distribution channels, working directly with the consumer.

(d) Technical complexity of the manufactured product:

The more complex the product or service, the closer the manufacturer should be to the consumer. For simple products, the absence of a manufacturer at the place of consumption is not essential.

• Factorsdetermined by the characteristics of the manufacturing company:

(a)Manufacturer's financial stability: Companies with large quantity free funds and generating profits, can allow the organization of shorter distribution channels. If a manufacturer does not have significant resources that he can spend on organizing direct distribution channels, he should lengthen the chains, since it is cheaper.

(b) Chain control by the manufacturer:

Short channels are better and easier to manage than longer ones.

• Competitive factors: When organizing a supply chain, a manufacturer must always consider how competitors are marketing. You need to implement the risks and benefits of your own model and your competitor's model.
  Thus, it should be understood that long chains are cheaper, but less well managed; Direct distribution channels require significant investments, but provide the manufacturer with a direct impact on the consumer.

• Market factors:

(a) Market size:

The less potential consumers on the market, the shorter the distribution chain should be, and vice versa: the more consumers, the longer the chain a manufacturer can afford.

(b) Market density:

The higher the concentration of consumers in a particular territory, the higher the marginality, the more intermediaries can be used in the chain.

(c)Sales market size:

If the territory is planned to sell significant volumes of products, it is necessary to use a longer chain. For example, in order to provide the necessary stock.

• Other external factors.

Distribution channels(Engl. channels of distribution, COD) - structures connecting the internal divisions of the manufacturing organization with consumers, incl. with the participation of external wholesalers and retailers through whom the sale of products and services is carried out.

Distribution channels perform three groups of functions:

1. organization of purchase and sale;
2. physical distribution - transportation and storage of stocks;
3. service support of sales - financing, insurance, information support, pre- and after-sales service.

Distribution channel members- organizations, divisions and individual employees united in distribution channels and engaged in the distribution process - creating consumer value of products (“value chain”). With their help, the spatial, organizational-temporal, service and financial conditions of accessibility necessary for the consumer are formed. Synonyms for the term "members of distribution channels" - "partners in distribution channels", "members of distribution channels" (channel members).

Organizational form of distribution channels- a set of characteristics of the distribution channel that determine the type and stability of partnerships between channel participants, the nature and vector of their interaction. In a competitive environment, the manufacturer wins whose distribution system is able to provide required level intensity and quality of distribution. One of the most important factors affecting these parameters of distribution efficiency is the organizational form of the channels, which depends on the level of the distribution channel, the type and vector of integration of its participants, and other parameters. Their combination determines the variety of organizational forms of distribution channels.

The choice of the organizational form of the distribution channel is an important strategic decision. Under the influence of this decision, power and stable partnerships in the channel are formed, network forms of channels are developing, which make it possible to manage distribution, prevent conflicts and, on this basis, achieve strategic market goals.

All distribution channels can be roughly divided into two types:

1. direct distribution channels;
2. indirect distribution channels.

This typology of channels gives an idea of ​​the length (or level) of the channel - the number of different-order channel participants located between the producer and the consumer, who, performing their inherent wholesale or retail functions, "bring the product closer" to the consumer. The level of the distribution channel reflects its formal vertical structure, which can be represented as a zero-level channel, short and long channels, depending on the number of different orders of intermediation links.

Direct distribution channels- these are the zero-level channels. They come in two flavors, direct marketing channels and personal (personal) sales channels, and are formed by the manufacturer's sales force and non-resellers. The structure of this channel may contain service intermediaries providing services for delivery, mailing, lending and insurance transactions, etc. Resellers are not included in this structure.

The modern organizational form of a horizontal marketing system is cross-marketing, in which one company uses the production capacity, marketing resources and sales network at its disposal to market and sell the goods of another company.

They actively use the possibilities of cross-marketing when they form their partnership programs, for example, together with car dealerships, gas stations, service and repair companies, with state registration authorities of cars and with other participants interested in partnership. This allows them to increase the added consumer value of the main product, expanding the range of additional ancillary services that the buyer can purchase at the same time at points of sale (for example, cars).

For various expert assessments, in the domestic practice of distribution, corporate and managed vertical marketing systems still prevail. The contractual Navy and SMS, which require maximum responsibility from the participants in the distribution channel, the stability of partnerships, contractual discipline and the quality of supplies, are developing less dynamically. This circumstance, which limits the potential for regional growth of domestic industry, is promising direction the formation of controlled marketing systems based not on financial investments in the supply, production and distribution chain, but on the marketing of partnerships and customer relationships.