Product distribution is one of the main element is the marketing cycle after production, product pricing and promotion. Distribution entails the movement of the product from the manufacturer or producer until it lands in the hands of the end users.
In a distribution chain, when a product leaves the manufacturing site, it goes to the wholesaler who then takes it to the retailer who finally distributes it to the end users. Sometimes the product can go directly to the retailers, thus bypassing the wholesalers.
Product distribution can also encompass the movement of services for instance in the hospitality industry where hotels can rent their rooms to travel agents, airliners, or tour operators. There are a number of ways an entrepreneur can distribute his/her products and services in the market.
An entrepreneur can either use direct method where one takes his product directly to his customers using his distribution office. For instance taking the product from door to door, or opening a retail stall where the customers can come and buy the product directly.
An entrepreneur can also use the indirect methods where he/she can use middleman like wholesalers and larger distributors. In this method the entrepreneur sells the product in large quantities to the middlemen, who then ‘breaks bulky’, meaning that they sell the product in small quantities to retailers who also sell the same product in even smaller quantities depending on the end user preference.
Many entrepreneurs use a multi-channel approach in distributing their products. They may use middlemen like agents, distributors, franchised chain stores and wholesalers while at the same time distributing using their own offices that are set to specifically sell directly to wholesalers and even sometimes to retailers.
Besides the traditional methods of product distribution, e-commerce is emerging as one of the modern and most effective way of distributing a product to loyal customers over a wide area, in most across the borders. E-commerce has become a popular trend that is posting excellent development prospects for international manufacturers.
Delivering a product to the market is one of the best ways to retain loyal customers in the increasingly competitive market. Distributing the right product to the right clients at the right time and place without any detail or damage allows an entrepreneur to get ahead of the competition with ease without necessarily investing extra money in making the product more competitive.
Most companies consider the product distribution as a noncore business. For them, the money invested in creating a product distribution department can be used in other areas in the manufacturing process. Such companies have now embraced the idea of outsourcing product distribution companies to carry out the distribution programme on their behalf.
Outsourcing enables companies to cut the operational cost because the money they could have invested in creating distribution departments and other overheads can be used in strengthening the core business of company.
Most outsourcing companies provide many other critical services in the product distribution chain like providing warehouses, distribution networks and transportation. These companies offer customized services that fits well to what a company needs so as to take the product to the market in a cost effective way while preserving the quality.