Distribution Channels

Frage	Antworten
Whats the main point of distribution channels?	Getting your product to the customers - how does it happen?
What are the key questions to ask about distribution channels?	Are there established buying habits in the product category? Does the channel strengthen the sales process? At what cost to the company? What are the price and complexity issues surrounding the sake of this product?
What are the options for getting the product to your customer?	Yourself Through someone else Retail Wholesale Bundled with other goods or services
What PHYSICAL CHANNEL options to startups have?	OEM System Integrator Value Added Reseller (VAR) Direct Sales Independent Sales Rep Firm Dealer Distributor/Retailer Mass Merchant (costco)
Analysis of Original Equipment Manufacturers	+ massive volume potential - typically low margins - no branding effect/visibility for your company
Analysis of System Integrators/Value Added Resellers	+ fast way to get national distribution + whole product integration & installation for a variable cost - loyal to their customer not you - vehicle to use no active marketing - require immense care, hand holding & training
Analysis of Direct Sales	+ Complete oversight and control + Focused and dedicated to your product + continuous learning through feedback cycles - most expensive route - difficult to find talented salespeople
Analysis of Independent Sales Rep Firms	+ fast way to get national distribution - loyal to their customer not you - no active marketing
Analysis of Dealers	+ personal attention to the customer + loyal +can showcase products that sell best locally - hand & costly to build network of them
Analysis to Distributors/Retailers	+ showcase products + pay attention to customers - Expensive - Loyal to customer not you - Pay after they've sold the product & might have right to send unsold products back
Analysis of Mass Merchants	+ massive distribution and advertising potential - long lead times - extremely high costs & slotting charges - rights to send unsold products back - large corporation = slow at paying back (6 months)
What VIRTUAL CHANNEL options to startups have?	Dedicated E-commerce Two Step E-Distributor Aggregator Mobile App Social Commerce Flash Sales Freemium
Analysis of Dedicated E-Commerce	+ basic sites are easy to create + complete control over price, presentation and inventory - startup bears all the challenges & costs > traffic generation & converting users to paid users
Analysis of Two Step E-Distributors	+ fast way to national distribution for a variable cost + little upfront spending - little control of onsite promo and product visibility can pay extra for more though
Analysis of Aggregator	+ fast way to national distribution for a variable cost - hard to get visibility - onsite promo and marketing can be very costly
Analysis of Mobile App	+ massive reach in a growing distribution segment + explosive business opportunity - costly intermediaries - file size constraints -presentation and payment challenges - operational complexity
Analysis of Social Commerce	+ fast and potentially viral distribution + great for product launch + awareness building - platforms can take 50% margins or more - how do you go viral in the first place
Analysis of Flash Sales	+ fast and massive distribution - painfully expensive (up to 90% discounts) - site costs
Analysis of Freemium	+ accelerates trial and adoption at a low cost + good for product launch - if you gain loads of users really fast it can put strain on the system - problematic if the users don't convert to paid users fast enough
How does Solution Complexity affect the type of channel that's required?	Higher solution complexity increases the marketing complexity Higher marketing complexity requires a more sophisticated distribution channel
give an example of a different products that required different distribution channels because of solution complexity	Image: 5af48d16-9075-4fbc-95a6-5284e80821bf.PNG (image/PNG)
How are channels compensated?	Commission Percentage of Sales Discounted Prepurchase Monopolized position eg. Canada Goose only at Harvey Nichols
Explain the distribution channel economics	each distribution channel you use will take away a margin from your profits the more distributors you use, the less margin you have left over
What's the result of long distribution channels?	Lose your profit margins However the trade off is keeping margins and lacking awareness generation and sales volumes Its all about the balance between effective distribution for awareness & position whilst retaining healthy margin

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