BIZ SPONZORS
popular biz reading
Marketing Mix: Promotion
Employee Turnover
Marketing Mix: Price
Planning and Organizing
Maslow's Hierarchy of Needs
Key Performance Indicators
Sustainable Competitive Advantage
Ishikawa Fishbone Diagram
Price Determination
Supply Chain Concept
Employee Induction
3 Basic Finance Statements
Sales Forecast Accuracy
FMCG Sales Boosting
OTIF - On Time In Full
Merchandising at the Point of Sales
Promotion Mix: Advertising
Employee Motivation
Porter's 5 Forces
CHECK ON BIZ DEVELOPMENT
biz sponsors
BrainCast Relaxation
Advertise on Biz Development
My BrainCast
Energy Booster
Twitter
biz archive
2012
2011
2010
2009
2008
2007

My Introspective

by Laurus Nobilis
My BrainCast

Marketing Management

Marketing Mix: Product Distribution (B)

Marketing Mix: Product Distribution

 

What is the effect of product distribution to the marketing mix? Learn about relation between numeric and net weighted distribution.

 

Posted: Dec 2011


The marketing mix is composed of four components: Product, Promotion, Price and product Distribution. Product it is first prerequisite for the company to run their Business. But product also needs to be shipped to the sales outlets, in order to be sold to the consumers. This means that the product needs to be at the reach oh the consumer's hand. This is segment of marketing mix is called the distribution of the product. Simply, the product needs to be delivered to specific outlets, in order to be at disposal to the consumer to buy it.

The extent of product distribution is the part of the company strategy. The strategy of the company can be to capture only some channels. Even, not all outlets need to be supplied necessary. It all depends of the distribution strategy that needs to be aligned with marketing and sales from commercial aspect, and with finances from cost perspective.

Also, the product distribution can be limited by competition and saturation of the market. If the competition is blocking shelf space and credit potential of the customers, than entrance could be difficult.

Choosing the right distribution strategy is the matter of balance between intention to maximize presence in the market and cost of doing that. This strategy must take into account the expense of distribution. The success of the company is measured with market share that need to be as higher as possible, and cost related to distribution and commercial fees that need to be as lower as possible.

There are several ways of measuring distribution. The measurement can expressed as numeric distribution and net weight distribution.

 

Numerical Distribution

The numeric distribution is the percentage of outlets that have specific SKU or portfolio on stock, out of total relevant number of outlets in the market.

Dn = Supplied Outlets / Total Number of Outlets x 100%

This indicator is measured based on sales data history. In case that market is supplied by distributors, without exact distribution data, the market surveys conducted by market research agencies can be used. The numeric distribution is expression of range of distribution.

 

Net Weighted Distribution

The weighted distribution is considering ratio between total volume of the company that is sold in the market, versus total sold volume of the relevant category.

Dw = Volume Sold / Total Market Volume Sold x 100%

 

Choosing the right distribution strategy is the matter of balance between intention to maximize presence in the market and cost of doing that. This strategy must take into account the expense of distribution.


The volume is presented in relevant unit of measure ( liter, oz, kg, pound, piece, etc ). The calculation can not be done directly, since company do not possess exact information about total volume sold in the whole market.

Therefore, market research agencies are necessary again to complete the picture related to weighted market share.

The weighted distribution is expression of quality/relevance of distribution.

The relationship between numeric and volume distribution is not directly related. The example below explains how these two types of distribution measurement can fluctuate:

 

 

 

Numeric and Weighted Distribution

 

In this particular case, the market universe contains three outlets, with their market share A–50%, B-30% and C-20%. "X" sign represents the numeric distribution. Both brands own numeric distribution of 66%. Still, Brand A possesses 80% of weighted distribution, while Brand B own 50% of weighted distribution, since market share of outlets is not the same.

 

More About:

Marketing Mix 
Marketing Mix: Price
 
Marketing Mix: Promotion
Marketing Mix: The Product
Marketing Mix: Product Distribution
Promotion Mix: Public Relationships
Promotion Mix: Advertising
Promotion Mix: Personal Sales ( Soon )
Promotion Mix: Sales Promotion ( Soon )

 

 

My BrainCast Self Improvement
blog comments powered by Disqus
 
     
My BrainCast My BrainCast energy Booster My Braincast Deep Sleep
My BrainCast Mandala Meditation My BrainCast Relaxation
my-braincast