Choosing Distribution Methods
Since distribution is the means of getting your product into the hands of your customers, first look at how your competitors’ products are sold. Make a list of any competitors in your marketing area that could compete directly with you for the same list of customers. This list should then be divided into different distribution channels. For example, direct farm markets, farmers’ markets, Internet sales, business-to-business, specialty stores, or niche markets.
- What strengths, weaknesses, opportunities or threats do these and different distribution channels pose for your product?
- What are the barriers or difficulties of selling my product in each of the distribution channels? Can you become a vendor in the farmers market where your target customer shops? What are the costs or ramifications of building or leasing retail space?
- How much do various distribution channels cost to successfully enter? Over what period of time is the money being spent? Does your marketing channel require slotting fees for shelve space or volume discount pricing?
- Should you distribute your product locally, regionally, nationally? Multiple channels or one primary focus?
- Are some or all of my products subject to varying product life cycles? Will the market reach saturation in a few months? Do I only need seasonal distribution?
- What is the size of my competitors and their financial resources? Should I consider tailoring my product to a different audience and move into entirely different channels or concentrate on one channel exclusively?
A key factor in your distribution plan is the availability of your product. Start-ups usually are not geared for large-scale production and need to consider introducing their products in small geographical areas or to one or two select distribution channels. Match your distribution channels to your production capabilities. Overextending yourself and selling to too many outlets too soon, will exhaust finances, can cause quality control issues, exaggerates labor problems, and may cost you hard-sought sales contacts.