BUSINESS ANALYSIS
To many companies distribution of products/services is a big problem.
If you want to sell directly to the consumers it is often hard to find qualified sales channels.
Distribution to private consumers
Picture yourself having found some fair-priced excellent outdoor shoes of superior quality on a trip to Australia. You may even have visited the production facilities who are willing to deliver the shoes. You return back home to where you want to market the shoes. How is this done?
You can go to the local market and get a stand, but you have to sell a lot of shoes to earn an income. You can run advertisements in the newspaper, but it is costly, and who would buy shoes from a complete stranger?
Would it be possible to get a deal with one of the country's shoe chains? Maybe, but most likely they are not going to offer you a 10% margin per sold pair of shoes. They would easily be able to deal directly with the Australian supplier simply because of their sales volume. Here, the internet comes in handy as a distributional alternative – but then again, who would buy a pair of shoes without having tried them on first?
Which distribution channel is the best for you?
Distribution to wholesalers
Offering services to a limited target group makes the distribution more manageable. You may have developed a plastics components manufacturing software for the pharmaceutical industry. Thus, your customers are plastics manufacturers.
In your country there may be 800 such manufacturers supplying to the pharmaceutical industry, and throughout Asia there may be 10.000.
For a newly established company it is somewhat easier to contact, distribute to and service 10.000 companies than several million individual consumers.
If you want to sell directly to the consumers it is often hard to find qualified sales channels.
Distribution to private consumers
Picture yourself having found some fair-priced excellent outdoor shoes of superior quality on a trip to Australia. You may even have visited the production facilities who are willing to deliver the shoes. You return back home to where you want to market the shoes. How is this done?
You can go to the local market and get a stand, but you have to sell a lot of shoes to earn an income. You can run advertisements in the newspaper, but it is costly, and who would buy shoes from a complete stranger?
Would it be possible to get a deal with one of the country's shoe chains? Maybe, but most likely they are not going to offer you a 10% margin per sold pair of shoes. They would easily be able to deal directly with the Australian supplier simply because of their sales volume. Here, the internet comes in handy as a distributional alternative – but then again, who would buy a pair of shoes without having tried them on first?
Which distribution channel is the best for you?
Distribution to wholesalers
Offering services to a limited target group makes the distribution more manageable. You may have developed a plastics components manufacturing software for the pharmaceutical industry. Thus, your customers are plastics manufacturers.
In your country there may be 800 such manufacturers supplying to the pharmaceutical industry, and throughout Asia there may be 10.000.
For a newly established company it is somewhat easier to contact, distribute to and service 10.000 companies than several million individual consumers.
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