How to Write a Marketing Distribution Channel Strategy
Creating an effective strategy for distributing your product is a critical step in finalizing your marketing plan. Where you sell your product affects your sales volumes, pricing strategies, distribution costs and brand. Using a step-by-step plan that follows several basic principles of marketing creates an effective distribution channel plan that meets all of your business goals.
Get a copy of your marketing plan and/or gather research or reports that provide you with the following information: customer profile, list of competitors, pricing rationale, branding strategy and distribution budget. Write a short overview of your customer, including objective demographics and subjective assumptions about their buying habits and preferences. Use this information to determine where your target customer is most likely to purchase your goods or services. Write a short overview of your competitors and where they sell their products. Write an assessment of how you think their distribution channels benefit them, based on their brand, price and customer base.
Summarize your pricing strategy rationale and whether or not you can raise or lower your prices, if necessary, based on distribution channels that might benefit you. For example, distributing your product through brick-and-mortar retailers might cause you to raise prices based on your costs of shipping and retailer discount. Selling through wholesalers might allow you to lower your price based on reduced shipping costs and increased volume.
Where you sell your product can affect your image in the eyes of consumers. Review your brand strategy to determine if selling using certain distribution channels diminishes or enhances your brand. For example, selling personal care products in salons and boutiques sends a different message about your brand than selling them in a big box retailer.
Calculate the costs associated with each potential distribution channel, including shipping, commissions, in-store promotions, fulfillment of online or telemarketing sales and other expenses. Each distribution channel will affect your pricing and margins differently, so it is important to have accurate calculations to guide you.
Summarize your options by evaluating each potential distribution channel using the following factors: distribution costs, promotion costs, customer preference, competition, effect on the brand, effect on sale volume, profit margin per unit and total profit on anticipated sales. Rank your choices in order of their perceived benefit to your company. For example, selling through big boxes might give you the biggest profit in the short-term, but might damage your brand long-term, resulting in lower annual sales and profits. It might also result in sales that temporarily exceed your production capacity. Selling fewer items at a higher profit margin might return a lower total profit, but cost you less and give you higher return on investment.
After you have all of your information and have made your conclusions, write an executive summary for your readers, stating your recommendations without significant detail. Place it at the beginning of your report, noting that you will provide detailed information about your recommendations in the body of the report. Include charts, graphs and budgets at the end of your report in an appendix.