FINDING YOUR DISTRIBUTION CHANNELS
Think Big--Your Product Can Have Several Means of Distribution
By James F. Riordan
PART ONE
Distribution channels consist of all the different individuals and organizations who interface between the producers of the product and the end users, to insure that the product is available when the end user is ready to buy it.
In the case of a consumer product, the channel will most often consist of retail stores or outlets, wholesalers, dealers and brokers. Winning products are those that can be sold on all fronts, from mail order to chain stores.
Any given product may have several channels of distribution to reach a certain target audience. If a product is directed at several different consumer groups, or target audiences, there may be several different channels of distribution for each group. For instance the same product may be sold to one targeted group through retail outlets while being sold to a different group through mail-order catalogs, and a still different group through military commissaries.
In order to maximize profit, the following steps are suggested for determining the proper distribution channels for your product.
1. Identify each group of targeted consumers who will purchase the product.
2. Choose the most profitable channel to reach each group of end users you have defined. Each group may have a different channel, so long as they do not conflict legally with each other. Your choices of types of distribution are:
* INTENSIVE DISTRIBUTION, where many middlemen carry the product.* SELECTIVE DISTRIBUTION, where only a few carefully chosen distributors or middlemen carry the product.
* EXCLUSIVE DISTRIBUTION, where only one VERY carefully chosen distributor or middleman will carry the product in a specific area or "territory."
NOTE: Be very wary of "exclusive" agreements with "reps" or distributors. Many times the individuals or firms demanding that you give them an "exclusive" agreement to sell your product are unable to service all of the territory included in the agreement. If it becomes absolutely necessary that you must sign an exclusive agreement, be sure to:
* Limit the exclusivity to territories that can be well serviced.* Limit exclusivity by including dates for "performance reviews" in the agreement.
When deciding which type of distribution channel you will use to reach each selected group of targeted users, you should take into consideration the degree of difficulty in monitoring and controlling the channel, how well each channel fits with your other channels and your marketing strategy. The channel you eventually choose should provide a balance between the best possible service for the customer, and the most possible profit for you.
NEXT ISSUE: More on Distribution
The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.
The highly-recommended book can be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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