Effective Product Distribution and Promotion Strategies

Understanding Product Distribution

A distribution policy ensures that a product is available at the right place and time for consumers to purchase it. Distribution encompasses all processes that move a product from the company to the consumer. This creates what is known as "place and time utility." The process that a product follows from the production chain until it reaches the customer's hands is as follows:

1. Storage: Since products are not always sold immediately after manufacturing, companies must store them. Efforts should be made to minimize this period to reduce storage costs.
2. Physical Distribution: This involves the transportation or transfer of the product. Customers must receive the product in perfect condition and within the stipulated timeframe. The product can reach the consumer directly or through intermediaries (wholesalers, retailers, etc.).
3. Billing and Collection: The act of charging is the primary objective of a sale, as it generates revenue for the company. A good marketing policy must include efficient invoice payment processes. In most companies, billing and collection functions are handled outside the commercial department.

Distribution Strategy

Depending on the number of outlets where a company decides to place its products, three possible strategies exist:

• Exclusive Distribution Strategy: This involves selling a product in a particular area through a single intermediary. The dealer agrees not to sell competing products and to meet a minimum sales quota. This strategy is typically applied to products requiring significant sales effort, repair services, or technical information. Examples include certain car manufacturers with exclusive dealerships or specialized production equipment dealers. This strategy usually involves a short distribution channel.

Alternative Distribution Channels

• The Franchise: It is now common to find a single company with numerous locations across a wide geographical area. In a franchise model, the producer (franchisor) maintains control over retail outlets (franchisees), making them specialized sales points. The franchisee provides a location meeting specific requirements (minimum size, decoration, location in a city with a minimum population) and handles local advertising. The franchisor provides the product, brand, and general advertising. Examples of franchise distribution include Benetton and Jamaica Coffee Shops.
• Teleshopping: In this case, sales are made through television. Orders are typically placed by phone, and payment is made by credit card or cash on delivery.
• E-commerce: Sales are made through a personal computer connected to a network, such as the Internet. Payment is processed by credit card, cash on delivery, or other means. This distribution method is increasingly popular.
• Vending Machines: Vending machines are widely used for selling tobacco, beverages, and other products. Tickets for various shows are also sold through ATMs.

Product Promotion and Communication

The aim of a promotion policy is to increase sales by showcasing a product or service, promoting the company's image, or encouraging product purchases. This is achieved through various communication strategies, including advertising, sales promotion, personal selling, public relations, and merchandising.

Advertising

Advertising involves transmitting a message through a mass communication medium, paid for by a specific company, to influence consumer behavior. Advertising has two primary functions: to inform consumers about a product's characteristics and to persuade them to buy it. The basic principles of advertising are:

• Capturing and maintaining consumer attention.
• Creating a desire for the product.
• Driving action (purchase). This is the most challenging principle to achieve.