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Distribution Policy: Definition And Explanations

Definition Of Distribution Policy

The business also refers to the distribution policy as the sales policy. It is part of the marketing mix in a company. This policy decides precisely how the product will be delivered to the end customer. The decisive factor here is how the sales channel and the distribution from the manufacturer to the customer are designed.

Distribution Policy Goals

One of the objectives that play a role in this policy is the availability of each product to potential consumers and customers. In addition, the optimal distribution channel should ensure that transport, staff, and storage costs are kept as low as possible. In addition, the manufacturer of the products can directly influence sales and marketing, which is a significant advantage. However, conflicting goals can also arise here.

Distribution Policy Criteria

Depending on the situation and the company, the decisions are different. A good distribution policy always decides according to the critical factors that have to be considered. These can be, for example, product-related factors, additional services, or the ability to transport and store the product.

The aspect related to the customers is also essential. Above all, these are the requirements that customers place on the product. The needs of the customers and the frequency of shopping should also be considered. In addition, the factor of competition and the factor that affects the company is also essential. These are decisive for the number of articles and sales channels. They also play a vital role in the marketing concept and financing.

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Distribution Channels Of The Distribution Policy

A distinction is made between different sales channels that can be used. A difference is made here between the direct and indirect sales channels.

The Direct Sales

With this sales channel, no intermediaries are needed. This can be, for example, online shops, points of sale, etc. In this way, the manufacturer has complete control over sales, in contrast to indirect sales. He is in direct contact with the customer, and the employees know the customers and their wishes and requirements. Customer loyalty is also greater than indirect sales. You can also precisely control the results of the promotion and price actions.

The disadvantages of direct sales include, among other things, the high costs. This is because the salespeople are also employees; therefore, all processes, such as marketing and logistics, have to be organized. Mass distribution is complicated with this. However, it is usually worth selling technical products directly via the World Wide Web.

Indirect Sales

This distribution is carried out with the help of intermediaries. This means, for example, the chain from the manufacturer via the wholesaler, then via the retailer to the end customer. Especially when it comes to consumer goods, the manufacturers usually only have an indirect distribution channel. Otherwise, this would be associated with high costs. The range is much greater via wholesale and retail and is associated with less effort.

The decentralization allows the manufacturer to concentrate on essential tasks. A disadvantage, however, can be that the manufacturer could lose control over sales. Price control can also be lost. The data on customers’ purchasing behavior is only made available to retail companies. The manufacturer then has to get this data in other ways.

Organs In The Distribution Policy

The sales organs are vital in this policy. On the one hand, these are the employees of a company, representatives, partners, retailers, and wholesalers.

Logistics In Distribution Policy

The logistics in this policy should also not be underestimated. Here it is precisely regulated how the goods reach the customer. This includes, above all, the shipping and packaging of the individual interests, the warehouse, and the means of transport selection.