Distribution Channels, Strategies, and Trade Regulation

Media and Advertising Forms

Advertising is categorized into two main forms:

• Conventional Advertising Forms

  Includes print, radio, television, cinema, and outdoor advertising.

• Unconventional Advertising Forms

  Includes direct mail (mail shots, mailings, telephone).

Distribution Channels: Wholesalers and Retailers

Wholesalers

Wholesalers sell to other wholesalers, retailers, or manufacturers. Those closest to the producers are the wholesalers of origin. Destination and settler wholesalers act closer to the end buyers, such as those involved in central markets.

Retailers

Retailers sell to the ultimate purchaser and sometimes to other retailers. Retail outlets can be classified in several ways:

• Classification by Product Nature

  Examples include greengrocers, fishmongers, etc.

• Classification by Link with Other Retailers

  Includes independent stores, voluntary chains, and department stores.

• Classification by Location

  Includes shopping centers, markets, and malls.

Retail Sales Methods

• Traditional Sale

  Establishments feature a counter where the sale is made by sales assistants. They usually have both a sales area and a small assortment. Non-specialized stores base their strategy on proximity to the customer.

• Self-service Sale

  This method is generally more productive than the traditional sale. The distinction between self-service stores, supermarkets, and hypermarkets is based on size and capacity:

  • Self-service stores: Up to two cash registers and a sales area from 40 to 400 m².
  • Supermarkets: 2 to 5 cash registers and an area between 400 and 2,500 m².

• Sale Without Store

  This includes mail order, catalog sales, telephone sales, and television shopping.

Distribution Strategies

Manufacturers utilize distinct strategies to move products through the channel:

• Push Strategy (Channel Pressure)

  Attractive conditions are offered to the intermediary to pressure other members of the distribution channel and encourage consumers to purchase.

• Pull Strategy (Aspiration)

  The manufacturer directs communication and distribution efforts toward final consumers. The company seeks to position itself better, thereby increasing its bargaining power.

Key Functions of Distribution

Distribution channels perform several essential functions:

• Transport

  Moving goods from the producer to the consumer.

• Product Adaptation

  Adjusting the product offering to consumer needs (e.g., size of the offer, presentation, price).

• Storage

  Managing inventory since production and consumption often occur at different rates.

• Financing

  While distributors often pay for purchases in installments, major retailers that sell for cash and have a quick turnover generate significant funds. These funds are used to finance expansion and allow them to sell at lower prices.

• Reducing the Number of Transactions

  Minimizing the number of transactions is necessary to reduce costs.

• Direct Contact with the Target Audience

  This allows the distributor to understand the public well and gather information needed to guide marketing actions, often performed jointly with producers (e.g., joint advertising, direct marketing, merchandising).

Regulation of Trade Law

Trade law typically regulates four main aspects:

1. The establishment of large commercial areas, requiring municipal and regional licenses.
2. Commercial supply management and sales promotion.
3. Special sales regulations.
4. Offenses and penalties.