Product Distribution Channels: Getting Your Launch Started On The Right Foot
How do you get your new product to the person who needs it most? It’s an age-old question. The product distribution channels that you use achieve the most fundamental goal: enabling customers to buy your product. While you can review them at any time, they’re especially important when targeting a new audience, or bringing a product to market.
Product Distribution Channels
Whether your new item is geared towards consumers or other businesses, you can (and should) use many different channels of distribution to reach those who need it. Consider:
- Direct retail distribution channels – If your business already operates out of a retail space, this would be the logical place to sell your product. Even if you don’t, opening a retail store as a way to exclusively sell your products can be a viable option for businesses.
- Direct by means of the internet or catalog – Using your own e-commerce site or a catalog is a fantastic way to engage consumers directly and repeatedly.
- Direct by means of a sales team – This would be your own internal sales staff. You could use one team or many different teams that focus on different segments of your market.
- Outside sales reps – Another option for your product distribution channels would be to use an outsourced sales force. Typically this would be a company that handles multiple manufacturers’ products for sale in a specific geographic location.
- Wholesaler or distributor – Companies that buy bulk quantities of products from manufacturers and then resell them in smaller amounts to retailers or other resellers.
- Value-added resellers (VAR) – VARs add features or services to existing products. They then resell them to consumers as one integrated or “turn-key” solution. For example, HP buys processors from Intel when putting together a PC. In doing so, they add value to the cost of the Intel components; customers who lack technical experience rely on HP to put it together for them.
- Dealers – People or businesses who buy inventories of products from manufacturers or wholesaler/distributors, and then sell that inventory to consumers by means of a retail space.
The Needs of Your End Users
The different distribution channels that you use when launching a product need to properly service their end users. Consider the following questions:
- Where and how do they want to buy your new product?
- Is any education required to use your item?
- Are there other services or products that may be needed to use yours?
- Does your product need to be installed by a professional?
- Will the product need any maintenance or service on a regular basis?
Tying Your Distribution Strategy to End Users
Determining the needs of your end users, by means of the above questions, directly correlates with the strategy that you should employ. For example, if the product requires a lot of information or additional servicing, you might consider using your own sales team or qualified dealers. If your product is easy to use and the purchasing process is fairly streamlined, think about selling it through your website, catalog or retail space.
Building Your New Product Distribution Channels
Look at other companies that already have relationships with your new product’s end users. There may already be an existing distribution channel that you can partner up with. When discussing this partnership with potential channel members, be sure to discuss its value. Establish goals and the requirements of everyone who’s involved, and determine if any training will be needed.
You’ll also want to make sure that your pricing is structured in such a way that regardless of the channel that you’re using, the price of your product is the same to the end user. This eliminates customers going back and forth from one channel to another trying to secure a lower price. It also eliminates an unfair advantage that one channel might have over another.
Remember too, you want the product distribution channels that you have selected to consistently sell your new items and not those of your competition. Talk with your channels and find out ways to drive them to recommend your brand. Provide as much support for them as you can. Channels of distribution that work for you are a huge advantage. On the other hand, ones that ignore you or work against you can be a massive disadvantage.
Product distribution channels make up one of the “4 P’s” of marketing – product, promotion, price and placement (distribution). They comprise one of the most important parts of marketing and launching your product. After all, getting your items to those who will pay for them is how you make money.
The use of multiple product distribution channels lets you zero in on exactly what your consumers need. Wholesalers, distributors, VARs, dealers and selling direct are all channels that need to be treated with respect. Remember, whether your newly launched product is being resold to someone else, or used by the consumer directly, it’s still being purchased by a customer.