Product Distribution Strategies

Overview

• Product distribution strategies are strategic plans to deliver products to consumers through different channels.
• Companies can distribute products directly to consumers or indirectly through retailers, distributors, or wholesalers.
• A distribution strategy should align with the company's needs and market demands.

Defining Product Distribution Strategy

• A strategic plan to deliver products/services to end-users.
• Can involve direct or indirect methods.
• Multiple distribution methods may be used to cater to different customer types.
• Emphasizes an outside-in approach to prioritize market needs/desires.

Types of Product Distribution Strategies

Direct Product Distribution Strategy

• Involves direct transactions between producer and customer without intermediaries.
• Channels include company websites, physical stores, or sales teams.
• Example: Adidas shoes purchased directly from Adidas stores or website.

Indirect Product Distribution Strategy

• Utilizes partners or value-added resellers as intermediaries.
• Third-party partners may bundle or integrate related products/services.
• Example: Adidas shoes sold through Amazon, Zappos, or Kohl's.
• Bundling Example: Kohl's sells Adidas shoes with KIWI Sneaker Cleaner.
• Integration Example: Best Buy sells Dell laptops with Intel graphics drivers.

Exclusive Product Distribution

• Limits sales to specific distributors, stores, or regions.
• Suitable for luxury goods to maintain brand equity.
• Example: A celebrity podcast available only on Spotify Premium.

Intensive Product Distribution

• Uses numerous distribution partners for extensive market reach.
• Aims to maximize brand awareness and market penetration.
• Example: Coca-Cola partners with various stores and platforms worldwide.

Selective Product Distribution

• Selectively chooses channels to optimize profit and efficiency.
• Similar to exclusive strategy but with multiple channels.
• Example: CAT construction equipment sold through direct teams or authorized dealers.

Disruptive Product Distribution

• Introduces new ways to distribute familiar products, creating market disruption.
• Example: Amazon's direct-to-consumer model with free shipping.

Setting a Product Distribution Strategy

• Companies should leverage market intelligence to guide their strategy.
• Key questions to consider:
  1. How does the market prefer to purchase products?
  2. How do they prefer to receive products?
  3. How do they prefer to use products?
• An outside-in approach aligns distribution with market preferences.

Author Information

• Written by the Pragmatic Editorial Team, experts in product, data, and design training.
• For inquiries, contact: [email protected]