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Distribution is the channel through which products reach the hands of consumers. In order for a firm to distribute its products successfully, it must use the most suitable distribution channel for its product. Distribution channels and strategies chosen depend on a number of factors. The factors include the individual company, the product, the business plan and the target market.
Overview of distribution channel
Food For Life Baking, Co has relied heavily on its products as a main factor in developing the distribution channel. The company began as a small producer and did not employ large-scale production method. This meant that it begin by distributing its products in a small geographical area. With a five-year plan was adequate for introduction of the products locally. After this period, the distribution of the products expanded to reach the entire nation. Consideration of the potential customers was important during this stage. Other factors considered were shelf stability of the products and transportation cost. Brokers and distributers provided an alternate way of penetrating distant markets (KnowThis LLC, 2010). The six basic methods of distributing products include; direct sale to consumers, direct sales to retailers, direct sales to food service, contracting with distributors, co-packing for private labels and contracting with a broker. The distribution of the products grew smoothly. The company realized that overextending of distribution channels to many outlets too soon is not wise. Growth was gradual so that orders were fulfilled in time. This prevented straining of the distribution channels. The company did not sign contracts with distributers, brokers or retailers until it was confident to fill all orders in time (Pgreenfinch, 2009). Food For Life Baking, Co began by selling bread directly to retailers since there was a high competition for shelf space. Until the company was able to demonstrate that the products sold well, distributors and brokers remained skeptical. At the beginning, it was very difficult to get some space. The strategy used during this period was to make rounds, displaying bread and other all natural baked goods at gift shops and other retail locations.
Target market needs in distribution channel
There were two important factors that the company considered while selecting a target market. The attractiveness of the segment. After the five-year plan, there was re-evaluation of the company's objectives. It was projected that size of the market include the entire U.S. and to extend globally. Though there has been economic downturn since 2008, growth rate of the segment has remained stable. This resulted since bread, other all-natural baked goods are basic needs, and customers demand them regularly. Competition in the segment has been stiff, but through the years, the company has built and maintained strong distributor relationships (Baker, 2008). Another method employed is creating and maintaining social awareness which has resulted in the customers in the segment to be loyal to our brand. The other factor is how the segment fits with the objectives, capability and the available resources.
Determining channel members.
Food For Life Baking Company employs two methods to close the gap with the end users. Selling directly to consumers and reselling. Intermediaries, dealers or distributors purchase the products and re-sell them with an aim of making a profit. This is known as reselling. Resellers employed by Food For Life Baking Co. include retailers and wholesalers. Other distributers are agents, distribution service firms and brokers. They assist in distribution of bread and related products without taking the ownership of the same.since distribution channels are vital to the growth of any firm. Careful assessment of the channels employed should be made. The best way to evaluate a distribution channel is by analyzing the ones used by the competitor. Other factors include the available resources and pricing policy. When the number of intermediaries is high, the company loses control of its products. It also pays more to the intermediaries. The benefit is that it obtains greater market coverage. The channel seleted should be close to the targeted market. It should be able to advertise and promote the product locally.
The number of channel members.
The management analyzing the distribution field for a long period. It became obvious that the higher the number of effective distribution channels used, the greater the volume of products sold. The various channel members are chosen because each one of them is unique in their own way of distributing the products. Selling products directly to consumers is suitable when the company is targeting a small number of customers locally. One of its advantages is the elimination of intermediaries hence making it cheaper. The company does the marketing and distribution by itself. A direct sale to consumers is through the following ways: mail orders, in special events, craft shows, at farmers' markets and the internet. Wholesalers purchase in large quantities hence lead to reduction in the cost of handling the products (KnowThis LLC, 2010). Agents and brokers are essential when exploring new territories. Distribution service firms assist with transportation, storage, and order processing.
Channel structures can take a number of forms. Most of Food For Life Baking Company products are perishable. This creates the need for quick availing of the product to the end user. The best method is to send the products directly to the customer's preferred delivery site. Retailers are the second most preferred distributer. As the need for variety increases, a wholesaler is introduced. Finally, the longer channels like brokers and agents are involved.
The success of a firm is dependant on the distribution channel's competitive edge. Quick market responsiveness is vital component for any distribution channel. A company must therefore analyze first in order to choose an efficient and effective distribution channel. A channel with experience and working with closely related but not competitive products.