Distribution policy

Distribution policy describes the strategic decisions and measures that a company takes to bring its products or services to the end customer. This applies to both production and distribution policy service companies.

Basics of distribution policy

• Selection of distribution channels: The decision on how and through which channels the products or services reach the customer.
• Designing the distribution network: The planning and organisation of the sales process from the manufacturer to the end customer.
• Determination of warehouse locations: The determination of warehouse locations for the efficient provision and distribution of goods.
• Selection of sales outlets: The selection of suitable points of sale, whether online, offline or through partner companies.

Principles of distribution policy

• Efficiency: Efficient distribution ensures the smooth and cost-effective provision of products.
• Customer orientation: The distribution policy should be geared towards fulfilling the needs and expectations of customers in the best possible way.
• Flexibility: The ability to adapt quickly to changing market conditions and open up new distribution channels.

A successful distribution policy plays a key role in boosting sales, increasing customer satisfaction and securing long-term competitive advantages.

Distribution policy: definition and examples

Distribution policy encompasses all decisions and measures that a company takes to successfully bring its products or services to the end customer.This includes the selection of suitable sales channels, the organisation of the distribution network, the determination of warehouse locations and the definition of sales outlets.

Example 1

A manufacturer of luxury watches decides to sell its products exclusively through selected jewellers in order to maintain the exclusive image of its brand.

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Example 2

An online fashion retailer opts for a multi-level distribution channel that includes direct sales via the company’s own website and indirect sales via online marketplaces in order to reach a broader target group.

By organising their distribution policy correctly, companies can strengthen their market presence, increase customer loyalty and build long-term business relationships.

The role of distribution policy in the marketing mix

The distribution policy plays a decisive role in the marketing mix, as it is directly linked to the other P’s (product, price, promotion) and has a significant influence on the success of a marketing strategy.

By integrating the distribution policy into the marketing mix, companies can effectively position their products or services on the market, ensure availability and thus optimally fulfil customer needs.A well-thought-out distribution strategy can strengthen brand awareness, increase market penetration and ultimately boost sales.

The choice of distribution channels, logistics planning and the organisation of the sales process are therefore crucial elements in supporting a company’s overall strategy and achieving a sustainable competitive advantage.

Distribution policy measures

Within distribution policy, there are various measures and approaches that companies can take to effectively distribute their products or services and increase sales.

• Selection of distribution channels:Companies can decide which distribution channels they want to use, be it direct sales, retail, online sales platforms or partner companies.
• Logistics optimisation: Optimising logistics processes such as warehousing, transport and goods handling can improve the efficiency of the distribution chain and reduce costs.
• Pricing and conditions:Setting prices, discounts, payment terms and delivery conditions plays an important role in shaping distribution policy.
• Establishing distribution partnerships:Working with distribution partners such as wholesalers, retailers or online marketplaces can increase reach and create new sales opportunities.
• Choice of location for sales outlets:The selection of suitable sales outlets, be it physical shops, online shops or pop-up stores, has a significant influence on customer accessibility.

Designing effective sales channels:Distribution policy in action

The practical implementation of distribution policy decisions plays a decisive role in designing effective sales channels.

• Market analysis and target group identification: By conducting a thorough market analysis and identifying target groups, companies can better understand the needs and preferences of their customers and develop suitable sales channels.
• Selection of suitable sales channels:Based on the market analysis, companies can select the optimal distribution channels that will enable them to distribute their products or services effectively and maximise their reach.
• Optimising logistics: Efficient logistics planning and implementation is crucial to ensure the smooth supply and distribution of goods and minimise delivery times.
• Implementation of sales and distribution strategies:The implementation of sales and distribution strategies, including pricing, promotional activities and sales promotion, helps to strengthen sales channels and increase market penetration.
• Monitoring and adaptation: Continuous monitoring of distribution activities and regular adaptation to changing market conditions help companies to continuously improve their sales channels and ensure long-term success.

Through the targeted implementation of distribution policy decisions, companies can design effective sales channels that enable them to successfully position their products or services on the market and optimally fulfil customer needs.

Distribution policy direct and indirect distribution – strategies in distribution policy

The distinction between direct and indirect sales plays an important role in a company’s distribution policy.

In direct distribution, the company sells its products or services directly to end customers without intermediaries.Strategic considerations include

1. Establishing a direct customer relationship
2. Control over the sales process and brand presentation
3. Opportunity for customised customer service

In indirect distribution, the company uses intermediaries or distribution partners to bring its products to the end customer.Strategic considerations include:

1. Extending reach through existing distribution channels
2. Reduction of logistical efforts and costs
3. Access to specialised sales partners for different markets

Hybrid strategy

Some companies pursue a hybrid strategy that combines both direct and indirect sales.The strategic considerations here are

1. Utilisation of the advantages of both sales channels
2. Flexibility depending on the product or market segment
3. Spreading risk through diversification of sales channels

The choice between direct and indirect sales depends on various factors such as product type, target market, competitive environment and company objectives.Sound strategic planning with regard to the distribution channel is crucial in order to design an effective and successful distribution policy.

Developing distribution policy strategies

The development of successful distribution strategies is crucial for the long-term success of a company.

• Multi-channel distribution: Utilising different distribution channels such as physical shops, online shops, marketplaces and social media.Objective: To address a broader target group and increase market coverage.
• Selective distribution: Targeted selection of specific sales partners or points of sale.Objective: To maintain the exclusivity of the products and strengthen the brand image.
• Franchise model: Integration of franchisees as independent sales partners.Objective: Rapid expansion into new markets and establishing a local presence.
• Click-and-collect: Combination of online ordering and collection from a bricks-and-mortar shop.Objective: More flexibility and convenience for customers; promotion of customer loyalty.
• Direct sales through social selling: use of social media platforms and influencers for direct sales.Objective: To intensify customer interaction and increase sales figures via social channels.
• Dropshipping: Collaboration with dropshipping partners to expand the product range without own warehousing.Objective: To reduce storage costs and shorten delivery times.

Through the targeted application of these successful distribution strategies, companies can optimise their sales channels, increase customer satisfaction and secure long-term competitive advantages.It is important to continuously monitor and adapt strategies to meet changing market conditions.

Summary: The key role of distribution policy in a company’s success

Distribution policy is a central component of the marketing mix and plays a key role in a company’s success. It determines how products and services reach the end customer efficiently and effectively.
A well thought-out and strategically orientated distribution policy can make the difference between a successful and a less successful company.

Overall, it can be seen that a strategically orientated distribution policy not only increases efficiency, but also contributes significantly to the achievement of corporate goals and is therefore an indispensable component of a company’s success.

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