Distribution strategies in the consumer goods market. How the distribution system works and how to organize product sales

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

Direct implementation has significant advantages when its subject is single services that are used in great demand. More complex measures (for example, foreign excursions) with an offer to purchase a package of personal services require, as a rule, the use of the services of intermediaries (travel agencies, travel agencies). Most global manufacturers have state or regional sales offices (especially air carrier unions, shipping lines, large hotel chains). Sales points of their products (own, shared with other distributors or on leasing terms) are located at airports, railway stations,

bus stations, business centers and other places of travel congestion. Customers can purchase the services they need with the intention of immediate use or order for later consumption. Many services are purchased through tickets.

recent years have become widespread automated methods direct distribution. Vending machines for various tickets are installed at airports, bus and railway stations and in the central cha. Astin cities. Automation has covered cooking, currency exchange, and receiving cash from bank accounts through ATMs. To obtain information on aircraft schedules, as well as arrival and departure times of various vehicles, various computer networks and databases are used. Computer networks are designed for various purposes, including booking (teleshopping).

The great advantage of direct distribution is its simplicity, since the traveler directly communicates with the supplier and avoids unnecessary information, and often takes advantage of additional benefits (for example, many carriers reduce prices for return tickets, airlines change economy class seats to tourist category seats). At the same time, if the conditions of corporate transactions are met, direct distribution provides high income to manufacturers. As already mentioned, the price of such a tourism product for the buyer does not depend at all on its purchase.

832 Indirect distribution systems

The possibilities for developing 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 from an intermediary than the manufacturer.

The concept of intermediary covers various institutions of intermediaries that are engaged exclusively or primarily in direct service to consumers; in the scientific literature they are usually called retailers. The main group of retailers are travel agencies representing the interests of various manufacturers by selling their services. In some countries, manufacturers use social (trade union) channels of distribution in enterprises and corporations. Supermarkets and retail outlets are increasingly acting as intermediaries for the sale of services.

Travel companies can be considered “pure” retailers. They also unearth the functions of producers, since, regardless of intermediary, they are engaged in the formation of their own product offers (for example, hell, excursions with rich cultural programs), selling them directly to consumers. Large agencies, when selling their compositions, use numerous other intermediaries, acting as a wholesaler for the wholesaler.

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

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

Cooperation between the manufacturer and intermediaries increases the opportunities for expansion of additional markets. Creating your own sales network may be an irrational decision for a manufacturer, especially in conditions of a small volume of service provision and small capacity 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. The use of a network of a specialized intermediary who has information on the formation of demand in various market segments and extensive contacts with various institutions, a built distribution network in the region and abroad, is often a more effective product for the manufacturer.

Intermediary firms also provide many different amenities to tourists themselves. Making a decision to travel is associated with the need to search for various information, obtaining which from many manufacturers requires a significant investment of time and money (correspondence, telephone conversations etc.). A good vacation requires effort in choosing 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, and is of particular importance for both parties (Figure 83)8.3):

b) frequency of contacts = 3 3 = 6. Figure 83. The influence of intermediaries on the frequency of contacts

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

As the role and economic potential of intermediaries increases, the relationship between participants in the distribution channel changes. If previously the manufacturer independently chose an intermediary, then in market conditions large global travel agencies were formed as independent entities that perform the functions of channel integrators. They independently select cooperators and performers who offer certain after-gis, considering them components distribution mechanism used in various ways.

A multilevel distribution system allows two or more intermediaries to operate (Figure 84). Such channels are typical for selling service packages. Some manufacturers sell their products to wholesalers (wholesalers or tour wholesalers) as well as to tour operators, who package them into service packages and offer retail. Sometimes additional organizations with a certain specialization are involved in the distribution process: organizers of congresses, conventions, competitions, travel consultants, public organizations, local history societies, hunting clubs, etc. In order for a travel agency, for example, to organize a scientific congress, it is necessary to establish not only a set of basic services, such as accommodation, food and transport, as well as the type and equipment of venues for holding round tables, information support, selection of a team of translators, organization of a press conference, etc. The second part of such events is knowledge cultural and local history features of the surrounding area requires 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 (single-stage) c - distribution channel with two intermediaries (two-stage) d - distribution channel with three intermediaries (three-stage)

A multi-level distribution system (see Figure 84, b, c, d) provides consumers with similar conveniences as a two-level one. Additional benefits arise from the participation of wholesalers in the channel, who, by purchasing products from manufacturers together, expand the supply for consumers. Bulk selling allows wholesalers to apply low prices. It should be noted that, unlike retail, the wholesaler does not receive any money from the revenue from the sale of services, and the source of his income is a share in the price of the product.

The choice of 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, greater mutual trust, etc.). However, in different periods (as well as at the same time), the acquisition may use different distribution channels. Each channel can also promote the sale of a product to other sales systems not related to a specific company. Channel participants also sell products from other manufacturers at the same level as their own. Many airline and bus companies, as well as some railway carriers, sell tickets from other carriers; shipping lines offer not only certain routes for sea excursion lovers, but also tickets for funds air transport car rental companies book hotel rooms. Wholesalers and retailers provide not only transport services and accommodation, but also the services of tour guides and organizers of entertainment events that a tourist can buy on occasion while in a certain area. So, all services and their packages are available in one link of the distribution channel.

Nestle, MARS, MTS, MegaFon and many others well-known companies invest considerable funds to maintain thousands of jobs related to distribution. What is meant by it? Why is it so important for business? What methods does he use?

Many faces of distribution

The term itself comes from the English word distribution, which means distribution. This key moment. However, its definitions vary greatly.

In accordance with the first approach, distribution is a set of marketing activities aimed at distributing goods to the widest possible range of potential buyers.

Other definitions draw attention to its analytical side. According to such views, distribution is an indicator that evaluates the promotion of a product in a certain territory or through a distribution channel in question.

The types of distribution are also distinguished by the method of its construction. For example, direct sales through your own network and through intermediaries (distributors). And the last method can be divided into short with one or two links and long.

Analytical component

How to soberly assess the state of affairs in the distribution of goods? How to optimize the work of the sales department? The following indicators have been developed to evaluate sales:

Such calculations show what distribution has achieved. This allows you to identify shortcomings in the work and areas in which efforts need to be made.

Predominance of numeric distribution

Let's consider how you can apply the obtained data when developing sales strategies and tactics.

For example, the numeric distribution is 80%, and the weighted distribution is 15%.

Judging by the numbers, the product is presented in most retail outlets. However, sales are relatively low. Why did this situation arise and what can be done? Here are some possible reasons:

The product is on display, but there are no available stocks. In such a situation, the consumer cannot buy it. Various solutions are possible: organizing a clear order system, taking initiative in working with buyers, training retail sellers, training or changing sales representatives.

The sellers don't know the product. They are unable to show its benefits to the client. Solution: holding free seminars, telephone consultations and providing visual aids.

Poor display of goods. It doesn't catch your eye. By placing it in a more advantageous manner, you can improve the situation.

Big competition. There are quite a lot of alternatives on the nearby shelves. This requires marketing activities aimed at individualizing it and making the brand attractive.

Predominance of the weighted indicator

Numerical score - 20%, weighted - 70%.

A qualitative indicator indicates that the product is clearly in demand. Where it exists, it is preferred. However, it is represented in only a fifth of the possible points. This shows how huge potential, and the same lost profit. Why might this happen and what should I do?

The impossibility of covering the entire territory requires the involvement of subdistributors.

The insufficient number of sales agents requires urgent recruitment and training.

The inactivity of agents raises the question of their motivation and qualifications.

Poor work with inactive clients requires monitoring of managers' work with this group.

It should be noted that numbers alone are not enough to determine the quality of work of a company’s sales department. For example, chronic shortages of goods on stock can reduce the quality indicator, and the distributors themselves have nothing to do with it. Analytics is carried out based on local conditions, which helps to identify real tasks and determines the development of distribution.

Passive and active distribution

These types of distribution show the attitude of the seller towards the distribution of his goods. In the passive form, a minimum of effort is applied. The seller releases the goods under the developed conditions, and the wholesaler undertakes all the work on promoting the goods.

In active distribution, the seller and wholesaler enter into a distribution agreement, which stipulates a much closer relationship. In this case, the supplier undertakes:

Participation in sales to consumers.

Receiving information from the distributor and assistance in solving specific problems.

Motivate the wholesaler and his employees with bonuses, cost compensation and awards.

Conducting training for distributor employees, helping to find clients and conduct negotiations.

With increasing competition, properly organized distribution is extremely important. Sales of players under the old rules will invariably decline. Today, even industries that traditionally use passive distribution (for example, the banking sector) are looking for ways to reach and attract customers.

Such distribution of goods requires a clearly defined relationship between supplier and distributor. The following aspects are usually covered:

The distributor is assigned the right to a monopoly in sales in a certain territory. The supplier cannot sell its products through another channel.

The list of SKUs is clearly specified.

Elimination of competitive actions of the supplier in relation to the distributor.

Territory so that there are no disputes with the supplier or other distributors.

Methodology for supplier control of sales processes.

By concluding such a distribution agreement, both parties benefit. The supplier receives a distributor of his products, who takes on the lion's share of the work, gaining the opportunity to control the process and method of sales, and the distributor gets the opportunity to trade without competitors.

Distribution levers

When planning to cover a specific region, a company must decide on its methods. The following promotion methods can be distinguished:

Office. Through the Internet, telephone, fax and emails, managers collect a client base and conduct negotiations. All aspects of work are subject to strict control: the number of calls, meetings, shipments.

Business trip. Regional representatives travel from the office to find dealers, interest them and motivate them to carry out marketing programs aimed at selling specific company products.

Working with regional partners. Companies that play this role are tasked with achieving sales volumes and product promotion activities.

Regional representative permanently working in the region. It maximizes sales by coordinating local distribution systems, increasing the number of partners, controlling product breadth, identifying bottlenecks, and planning and executing marketing programs.

Regional office. Performs the same function as a representative. Therefore, it is necessary when the latter cannot cope with a large amount of work. In addition, it increases the rating of the promoted brand.

The company chooses its own implementation method or a combination of them, based on the prevailing conditions and assigned tasks.

Common distribution errors

When developing product distribution activities, most companies make the same mistakes. Management puts pressure on internal resources, setting sales volumes for managers, the number of cold calls, meetings and sales.

All this is effective to a certain extent, but such a system loses sight of the end goal - the consumer, who feels that something is being forced on him. For example, excessive balances at the end of the season will drag the client down. How much will he buy next season? And will he buy at all?

By developing too large a distribution network, a company may lose control over important indicators such as retail price, product presentation, and product quality. As a result, the product may lose its reputation and sales will fall.

Therefore, the purpose of distribution is not only to achieve immediate goals, but also to take into account development prospects.

To summarize, we can say that distribution is a complex system that includes analysis and practical actions aimed at effective sales. Its improper organization significantly reduces the success of the company. In conditions of growing competition, the work will only be possible for those players who learn to use its modern methods to the fullest.

Features of modern distribution systems in international marketing

Distribution in marketing - complex logistics activities, which consist in promoting products from manufacturers to end consumers, organizing the distribution of products in the segment, in the territory, organizing sales, pre-sales and after-sales services.

1. Traditional system distribution existed until the mid-80s (country warehouses). The chain was as follows: enterprise -> enterprise warehouse -> country warehouses -> regional warehouses -> local warehouses -> consumer (final).
System characteristics:

a) Large number of supply chain participants

b) High price delivery

c) Long time delivery

d) High delivery risks.

There was a need for customs clearance in Europe, that is why there were country warehouses, and the imperfection of the transport system also played an important role.

Factors in the emergence of the new system:

a) Opening customs borders in Europe

b) Increasing the efficiency of transportation, unifying European transport.

c) Development of foreign trade

d) Logistics Operations Agents – Supply Chain Management

e) Improving delivery efficiency

2. New distribution system (late 80s)– chain: enterprise -> enterprise warehouse -> trans-European warehouses (90% of goods) -> retail warehouses (10% of goods).

Elements:

· Trans-European warehouses – ease of delivery organization

· Retail warehouses – quantity decreased

· Direct deliveries from trans-European warehouses to the consumer have appeared.

Order through service centers, Internet.

System characteristics:

a) The number of participants in the delivery system has decreased

b) Delivery time, costs and delivery risks have been reduced

c) Consolidation of trans-European warehouses

d) The number is growing service centers

e) Warehouses (large) acquire new functions, in addition to storage, now also demand forecasting, customs processing, and delivery functions.

f) It is now possible to optimize delivery throughout Europe.

g) This is no longer just a warehouse, but a distribution center.

The old and new systems have different principles for delivering goods from the warehouse to the consumer.
In the old system, the closer the warehouse is to the consumer, the goods will come from there (geographical location of the consumer) - the basic principle of the movement of goods.
The main principle in the new system is time. Availability of goods in a trans-European warehouse and speed of delivery.

There are two main types of distribution in the retail market - direct distribution and indirect (indirect). The first type includes direct sales, pre-sales and telephone sales. The main types of indirect distribution include sales through distributors, wholesale or transport companies, central warehouses and small wholesale bases. Both types and their varieties have a lot of their own characteristic features, which we will try to sort out.

Direct distribution

Direct sale– the driver and forwarder represent the company and are responsible for each outlet. The client communicates directly with them in person or by telephone. There is always the opportunity to sell the client more product than he expected. The system is very economical for clients with relatively small sales volumes, and also does not require an extensive management and management system. With a commission system for remunerating drivers and forwarders, they are always interested in increasing sales volumes. The disadvantages of the system are the potential for products to be returned back to the warehouse, and the cost of loading and unloading them significantly reduces the overall profit. Transport may also become empty in the middle of the route or sales may begin to be limited, which in both cases leads to a loss of sales volume and profit. The appearance of each new item or type of product packaging significantly complicates the load forecast vehicle. Loading on board is always easier when the number of product types and their packaging types is limited.

Pre-sale– vehicles are used with maximum efficiency and economy, since they are loaded on the basis of customers’ pre-orders. In this case, cases of returns and limitations of products are reduced to a minimum, since they are delivered only to customers to whom they were pre-sold and who placed an order for them. It is much easier to introduce new products, equipment, packaging or marketing program/promotion. The approach to each client is individual, especially the key ones, so with this type of sale the service is at a much higher quality level. Sales and delivery functions are separated and carried out at different times. Delivery is delayed by 24 hours or more, depending on the system, which can be a significant advantage for competitors with a direct sales system, as customers prefer to buy when they have money. The ultimate responsibility for the client and his outlet is largely scattered among a group of people, which in turn requires much more management control, and the sales method itself is the most costly of all those described.

Telemarketing- the cheapest type of sales - you can call up to 100 - 120 clients per day, and the call itself costs less than any other type of sale. With this method, the use of vehicles is much more efficient, as is forecasting its potential load, that is, dispatch operations. Sales and delivery functions are separated. The disadvantages are delivery delayed by 24 hours or more, lack of visual and personal contact with the client and his outlet. It is difficult to introduce new types of products and react to the actions of competing companies. This method of sales requires a highly efficient and reliable communication system.

Indirect (indirect) distribution

An indirect distribution system does not require large capital investments in the form of vehicles, in which the manufacturer needs to buy and maintain a fleet of cars, which he is happy to transfer to the shoulders of the distributor. The system itself is much more flexible and relatively low-cost, requiring only a few small warehouses. In general, this system is economically beneficial for customers with small orders, remote retail outlets and distribution territories, very close retail outlets and for customers to whom delivery could potentially be difficult for a number of reasons.

On the other hand, this system also has a number of significant drawbacks - with it, control over part of the market and distribution of products is significantly lost, and therefore information about potential clients. Customers do not have direct information from the manufacturer about discounts, promotions and advertising campaigns, the benefits of which in this case can only be enjoyed by wholesale distribution companies. The indirect distribution system itself may ultimately be less beneficial to the manufacturer and less profitable, even at lower prices.

Delivery schemes – distribution systems.

When choosing a logistics scheme for the delivery of goods, it is taken into account, first of all, that the shorter the time the goods are in transit and in inventory, the less money and labor is required to complete the circulation process. The choice of logistics schemes for delivery of goods involves the following sequential stages:

1) determining the volume of demand for a specific product and identifying the nature of this demand;

2) planning the volume of production or sales in the relevant regions by period;

3) determination of delivery schemes for goods;

4) determination and analysis of the commodity flow turnover ratio;

5) calculation of the volume of inventory that ensures the implementation of the planned volume of production or trade;

6) definition total costs for each alternative schemes delivery of goods;

7) selection of the most economical delivery scheme that ensures optimal overall costs for users of this scheme.

Let's consider modern systems distribution:

1. SPD (System Distribution Planning) system(planned delivery program) - an improved JIT system. Demand planning system for streamlining transportation and providing forecasting. The main position of the system is planning closed system transportation The entire transport cycle “loading - transportation - unloading” is carried out according to schedules. In SPD, strict obligations are imposed on partners: in the morning the corporation transmits information about needs, the order of cargo delivery and a ten-day forecast. Routes are coordinated with the corporation. The driver checks the load against the list when loading and immediately reports if there is a discrepancy. Advantages: inventory volumes are reduced from 2 days to 4-6 hours.

2. DRP (Distribution Requirements Planning) system- distribution management system. Key Features:

1) control over the state of inventories;

2) formation of connections between production, supply and sales. Work on this system has the following stages:

· planning using forecasts and data on actual orders;

· formation of a production schedule indicating specific dates, quantities of products, products;

· calculation of the need for material resources, production facilities.

An important function is transportation planning. Planning of supplies and inventories at various levels of the distribution chain (central - peripheral warehouses), information support for product distribution, as well as transportation planning. The main production schedule is formed in accordance with independent demand data (demand forecast). Thus, DRP allows you to link the functions of production and sales of products, as well as optimize logistics costs by reducing transport costs and distribution costs.

3. DRP II (Distribution Resource Planning) system is considered as the second generation of DRP. The difference is that forecasting can be medium- and long-term.

4. LRP (Logistic Reguirements Planning) system- a system of planning and control of input internal and output material flows at the enterprise level. The system provides an integrated approach to inventory management, forecasting transport services, and demand for the company's goods.

5. Method rapid response- QRM (Quick Response Method) system- a method of planning and regulating the supply of goods to retail and wholesale trade enterprises through distribution centers. The method involves close interaction between the trading enterprise and suppliers, optimization of trade inventories, ensuring immediate satisfaction of customer requests.

6. CRM (Customer Relationship Management) system- an e-commerce subsystem that provides a full cycle of interaction with the consumer. CRM is e-distribution. Includes: marketing; sales; services (service).

7. Company resource management system ERP ( Enterprise Resource Planning System), . ERP systems are being implemented in order to unite all divisions of the company and all the necessary functions in one computer system that will serve the current needs of these divisions. The ERP system maintains a unified database for all departments and tasks, so that access to information becomes easier, and most importantly, departments are able to exchange information. An ERP system automates tasks built into the execution of business processes. This eliminates repeated errors in information entry, loss of documents and similar incidents. As a result, orders are processed faster and without errors.

The implementation of an ERP class system gives the following possibilities:

• plan the requirements for materials and components, timing and volumes of supplies to fulfill the production plan;
• regulate the availability of products and reduce storage costs;
• regulate the production process in a timely manner responding to changes in demand;
• optimize business processes in the company by reducing material and time costs;
• control deliveries and quality of service for customers.

The need to develop a distribution system as a strategic task directly depends on the degree of competitiveness of the market: when supply once again exceeds demand, manufacturers have to adjust their distribution channels to the end consumer more than before, since it is he who chooses the product (the manufacturer of the product). This means that we need to understand exactly how the distribution system, or, in other words, the system for delivering goods to the end consumer, should take into account his needs in order to meet new conditions.

In America, only 20% of goods reach retail through distributors; the main share is made up of sales through online retail. In Russia the situation is the opposite: 80–85% of goods go through a distributor. The situation is much the same in China. Europe occupies an intermediate position: 40% of trade turnover there falls on the distribution link. Thus, the likely development path Russian market- increase in direct sales and reduction in sales through distributors.

JIT (Just in Time) – “Just in Time” system: that the production of products is carried out in small batches, the supply of the required products to the place of the subsequent production operation is carried out when it is needed.

Stage 1 - until 1993

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

Stage 2 - 1993-95

• Domestic producers are still weak
• Foreign companies open representative offices in Russia
• Competitions for exclusive distribution rights, market structuring

Stage 3 - 1995-98

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

Stage 4 - 1998 -2001

• Development of domestic producers, withdrawal of many foreign companies from the market
• Reducing the number of distributors, developing the remaining ones
• Creating your own distribution system
• Formation of relationships with retail chains

An increase in the share of sales through online retail and an increase in their market power will require manufacturers to develop new distribution strategies

Today the following changes are taking place in the consumer goods market:

Market saturation and local crises of overproduction lead to the distribution system becoming one of the decisive success factors.

3. Increased competition, consolidation of players

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

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

4. Growth in the share of retail sales through networks

The share of sales through online retail in Russia will increase

Key challenges in the consumer goods market

Changing and adapting 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 yourself, and what to outsource?

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

Answers to the challenges of time

Manufacturers' responses

1. Reducing the number of distributors

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

2. Creation of a distributor system

• Kalina abandons its own regional warehouses and develops dealers
• Baker forms a network of dealers

• "Mars" has created the position of sales personnel recruitment manager in St. Petersburg
• Liggett-Ducat abandoned the Moscow distributor Megapolis
• Wrigley independently works 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 sales apparatus for working with key clients

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

Distributors' responses

1. Creation of your own retail networks

• Temp First - chain of small wholesale stores "Nakhodka" 2002 -17 stores, 2003 - 36 stores
• Thunder - about 400 magic. South and Center of Russia, shift of emphasis from wholesale business
• Fashion stores: Perfume - "Perfume", Gradient - "Beauty"k
• Uniland - 3 retail formats: Dixie, Unisam, Megamart

2. Marketing or production of your own brand

• Production of Anna Maria oil
• MBK - "The Three Little Pigs"

3. Strengthening logistics, building our own terminals

• "TD Era" own logistics center

4. Creation of units to work with professionals

• "Perfume" - hygiene department

5. Creation of a staff of merchandisers and promoters

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

II. Alternative distribution models abroad and in Russia

The Russian economy developed under non-market conditions until 1991. Now business and a market have appeared in Russia. All over the world, business and markets developed naturally. It follows that business development, the organization of industries, as well as the practice of doing business and managing companies will tend to take the same forms and develop according to the same laws as in other countries. At the same time, long-term competitive advantage 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 appropriate or justified.

FMCG market abroad: models of manufacturers

Logistics company Excel

Excel - a 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
   - Processing returns
   - Customer Service Center

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

Access Business Group - national logistics and distribution company

Supervalu is the largest distributor in the USA

Number of employees: 54,700 people.

Development models

3 drivers of change in China

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

Distributor specifics

The main component of the business of Russian distributors and wholesalers is commerce, while in the West it is logistics.

III. Logic of identifying and selecting development alternatives

Alternatives for the manufacturer

• Releasing a higher quality product
• Brand promotion
• Entering the national and international market
• Production of a private label for a retail chain

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

Distributor development alternatives

Corporate and business level strategies

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

Level of product-market strategy and distribution strategy

• Logistics: movement and storage, retail inventory management
• Remote and inaccessible regions
• Exclusive distribution of goods from foreign manufacturers wishing to enter the Russian market
• Specialized customers (airlines, restaurants, etc.)
• Specific product groups (frozen foods, 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

Current issues

General logic of strategy development

Strategic analysis: internal factors

• How is demand structured?
• How does the industry work?
• How are companies structured?

Setting up a business abroad: distribution model

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

Strategic forecast: product-market and distribution strategy

1. Demand development forecasts

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

2. Forecast for the development of distribution channels

• How will the shares of sales in different channels change?
• Which channels will be our priority?

3. Forecasts for changes in distribution models

• How will our direct competitors develop?
• How will manufacturers, distributors and retail change?
• How will the relationships between 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 formulating alternatives

• WHAT TO SELL?
• TO WHOM SHOULD I SELL?
• WHERE TO SELL?

2. Formulating distribution alternatives

3. Formulating criteria for choosing a strategic alternative

• RESOURCES
• CAPABILITIES
• CURRENT DISTRIBUTION SYSTEM

Example: decision tree

An approach to solving the problem “oneself - not oneself”

Example: Strategic Choice

Details of the selected alternative

Organization

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

Rules of the game

• Pricing Rules
• Rules for relationships with intermediaries. Motivation of channel participants: distribution agreement
• Internal sales regulations

Staff

• Recruitment criteria
• Principles for training your employees and partner employees

Typical problems

At the stage of strategic analysis:

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

At the strategic forecasting stage:

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

At the stage of formulating strategic alternatives:

1. The formulated alternatives do not have qualitative differences; the range of alternatives considered is initially narrowed
2. Alternatives are an uncritical reflection of the opinions of company leaders
3. Alternatives are difficult to compare, their advantages and disadvantages are not formulated

At the strategy implementation stage:

1. Inconsistency of the company's final development program with the chosen strategic alternative - avoidance of the most fundamental decisions in favor of operational improvements
2. Declarative nature of the development program, lack of strict deadlines, measurable results and specific responsibilities
3. Declaring the developed strategy obsolete due to the emergence of new circumstances and switching to operational management mode

© Research and consulting company "ALT"

The concept of “distribution” comes from the English word « distribution", what in literal translation means distribution, location of objects.

Considering this definition in the context of business processes, it is worth noting its narrower use. Yes, for business distribution is the effective distribution of goods sold throughout the distribution network . A competent distribution policy is characterized by the use various instruments, completely covering the sales network.

The importance of distribution for business:

Distribution is an integral element of the marketing mix concept, better known as the 4Ps. This fact underscores the critical importance of this process for any company that wants to succeed in building a successful marketing policy. Distribution is also a key part of any marketing program. Relationship described “product – pricing – distribution – communication” Once again emphasizes the importance of the process of competently constructing distribution processes within the company.

What is distribution? Definition

Distribution represents a clear and effective organization of logistics, supply chain management, physical delivery of goods to points of sale, merchandising, etc.

All the processes described above, properly established, help to minimize the costs associated with presenting the product to potential consumers, and also provide for proper positioning of the product on store shelves. This term can be considered as a combination of process establishing the entire sales process and geographical distribution of the product in sales markets . Thus, distribution covers the entire process of delivering goods from the seller to the final buyer.

In understanding the essence of distribution, the concept of distribution channel plays an important role. This term is used to describe the entire chain of firms that are involved in the process of delivering a product to the final consumer. It includes the total number of all firms through which a product passes before it is purchased. This may include various intermediary companies, sales offices, sales agents, etc.

Types of distribution

Because of large quantity various characteristics of both the concept of distribution itself and the concepts associated with it (distribution channel), modern marketing discipline identifies several types of distribution. Below are the classification properties and distribution types corresponding to these properties.

• Interaction with the end buyer – direct and indirect.

In the first case, the product is sold by the supplier to the final buyer, in the second case, the product is sold to intermediaries.

• Distribution channel length – short and long.

Short-term distribution is characterized by working with one intermediary, while long-term distribution requires a multi-level distribution organization.

• Geographical feature – local, national, transnational.

Local distribution is aimed at regional impact, national distribution - within the state. Transnational distribution covers a specific region.

Sometimes you can come across phrases like active and passive distribution . They do not carry a conceptual load. The use of these definitions is only a subjective attitude towards the activities of the intermediary on the part of the supplier. Active distribution involves effective, clear and coordinated actions of the intermediary, while passive distribution reflects the less zealous desire of the intermediary to sell the received shipment of goods.

Ownership of the product being sold

It is also worth paying attention Special attention ownership rights in the process of product movement through the distribution channel. In the classical sense of distribution ownership passes only to the final consumer during the purchase process . If, moving along the distribution channel, any of the intermediaries acquires ownership rights to the goods, we are talking about purchasing the goods as a wholesale buyer. In this case, this process cannot be described as the movement of a product through a distribution channel.

Integrated distribution

The essence of integrated distribution is to create close ties between supplier and distributor. In this case, it is possible to ensure a certain independence in decision-making for distributors when they follow a strategy developed jointly with the supplier. In an ideal case, all work of the distribution channel is controlled by an intercompany management team, which only directs and coordinates the actions of distributors.

Distribution efficiency

The effectiveness of using distribution tools is reflected in the following characteristics:

• speed of delivery of goods to the end consumer,
• degree of customer satisfaction with the presented product,
• information awareness of the buyer about the characteristics of the purchased product.

Competent implementation of the distribution process is characterized by a number of costs, but the benefits obtained from effective organization this process, covers all costs incurred. First of all, this is achieved due to greater coverage target audience, presentation of the product in many different markets, and, as a result, a multiple increase in sales.