A distribution network is a route along which a product or service is transferred from a manufacturer to a consumer. The profit and turnover of the manufacturer depends on how well this route is organized.
Purpose and types of distribution network
Despite the fact that the concept of a sales network has a clear description in the economy, in practice, each manufacturer builds its own sales system. It depends on the characteristics of the product, the scale of the business, and market opportunities. A properly built sales network will provide the buyer with the opportunity to buy goods at any convenient place, and the manufacturer will be given a steady increase in the level of sales of his product. An effective sales network is a network of wholesale and retail stores, warehouses, warehouses, trade and exhibition areas. Today there are three types of distribution networks.
Own network is a sales system organized directly by the manufacturer of the product at the expense of its own resources. They can be located in different economic regions of the state.
China became the largest sales market for Apple products in 2013. IPhone sales growth since 2010 in this country exceeds 100% annually.
An independent, agency or dealer network involves the conclusion of contracts between the manufacturer of products and companies capable of ensuring its implementation. These can be supermarkets, warehouses, small outlets, specialty stores, dealers organizing branded points of sale for a particular brand. The reliability of such a distribution network depends on the quality of partner companies and their business reputation in the market. An important role is played by the terms of the contract between the manufacturer and the seller of products.
The world's largest retail supermarket chain is Wal-Mart. It was founded in 1962. These are 10 thousand stores in 15 countries of the world. Wal-Mart is the largest private employer in the world with over 2 million employees.
The mixed network is a synthesis of the previous two. This form of marketing assumes both the presence of its own departments and the presence of goods in partner stores.
Factors in the formation of a trading network
When forming a product distribution network, an important factor is the target audience of the product. The level of income of a potential consumer, his requirements for the quality of service, behavioral features when buying a product, motives for purchasing, etc. are also important. Also relevant are the competitiveness and uniqueness of the proposed product, features of the competitors' sales network, production volume, demand for products, marketing and advertising activities of the manufacturer.
Another important factor is the ratio of the efficiency of sales channels to their cost and the manufacturer's financial capabilities. And, finally, market characteristics play an important role: capacity, competitiveness, marketing practices for similar products, and so on.
