Distribution Policy 1

Meaning of Distribution Policy Part 1


Technological change and increasing globalization do not stop at the classic distribution policy. This fact means that the selection of the right sales channels is becoming more and more difficult.

Nowadays distribution policy not only has to keep up with technological change, but also manage the balancing act between traditional and new sales channels and constantly develop and optimize them. New online and offline interfaces are required in order to meet changing requirements and to establish and expand long-term customer relationships and business partnerships.

Only with the help of a smart and thorough channel strategy and innovative solutions can it be guaranteed that, despite the increasing complexity, the product will be delivered to the desired consumer at the right time and at the right price. But what exactly is distribution policy, how do you find the optimal sales channel and how do new technologies influence existing sales channels?

What is distribution policy?

According to photionary.com, the term distribution policy is understood to mean all measures and decisions that affect the sale and distribution of goods and services. In the area of ​​distribution policy, it is not only about the selection of the right sales channels , but also about the entire planning and control process through which the product or service reaches the end customer.

The distribution policy in detail

The distribution policy determines how the goods get from the manufacturer to the customer. The process thus encompasses the entire handling of the business case and includes the selection of the distribution bodies and the physical distribution logistics. In addition, the distribution policy also influences sales, pricing, marketing, warehousing , shipping, transport and the safe packaging of the product.

The aim of the distribution policy is always to design the entire flow of goods in such a way that the product or service arrives at the right place at the right time, in the right quantity and in the right condition.

Classification in the marketing mix

Distribution policy is one of the four pillars of the marketing mix , which is made up of the core areas of product policy (Product), price policy (Price), distribution policy (Place) and communication policy (Promotion).

In the context of business administration , distribution policy focuses on all management activities that deal with the sale of the product. In particular, it is about determining the logistical system and the distribution strategy, which determines whether the goods or services are sold directly, indirectly or through a combination of both approaches and which distribution channels are used for this.

Distribution policy in transition

Due to the changing framework conditions, there is now more and more overlaps between classic sales and marketing.

While sales were once an independent department that could largely make decisions independently of other departments, nowadays sales is more and more influenced by marketing. Personal sales as a communication channel with customers are extremely important for marketing.

You also have to coordinate the reputation of the sales partner and the presentation of the goods at the retailer with the marketing department. It is obvious that these new circumstances create organizational conflict potential. And an overarching management strategy is required to bring the competing departments into harmony.

Logistic sales vs. acquisitive sales

Logistics sales are primarily about the transport and storage of the product. In contrast to this, sales through acquisitions include the sales strategy, sales processes, the choice of sales channels and the acquisition methods used. This area, which is often referred to as sales policy in the literature, is becoming increasingly important. The reason is that it includes optimization steps as well as customer contact and the associated customer loyalty.

Does the product determine the distribution channel?

Not every distribution channel is suitable for every product. Product-related properties as well as customer-related factors and the company’s position on the market must be taken into account. Only then can a decision be made about the distribution channel.

Product-related factors

The product-related factors include the transportability and storability of the product as well as the need for explanation. For example, goods that require a lot of advice are better suited for direct sales and perishable goods can usually be sold more easily directly, without long transport routes. In addition, possible additional services or optional accessories are among the product-related factors that should be included in the decision-making process for the right sales channel.

Customer-related factors

In order to realize the greatest possible sales and thus also turnover, customer-related factors must also be taken into account. In this context, the question arises as to what requirements and expectations the target group has of the product. Shopping habits and the amount that can be sold per purchase play just as much a role as the geographical distribution of the target group and expectations with regard to product quality and delivery time.

Competitive factors

The competition-related factors include, for example, the number of competitors on the market and the market position of the existing competitors compared to their own market position. The pricing and the selected sales channels of the competing companies should also be taken into account when choosing the sales strategy. If, for example, indirect sales are chosen through a dealer who also sells products from the closest competitors, this can have a detrimental effect on one’s own sales.

Legal factors

In a globalized world, the legal situation is playing an increasingly important role. Regional bans must be taken into account as well as possible discrimination or the protection of sales relationships. In addition, one must consider potential compensation claims and existing legal regulations.

Distribution Policy 1