Managing distribution processes in an enterprise – part 2

Managing distribution processes in an enterprise – part 1

Types of distribution strategies
The concept of logistics strategies encompasses the methods by which logistics fulfills its role and tasks in terms of competitiveness. They provide model solutions for planning material movement, conducting distribution, and shaping relationships with suppliers and customers.

Logistics strategies can be classified as functional strategies because, alongside marketing, production, sales, and finance, logistics is one of the functions of enterprise management. To ensure the proper functioning of the enterprise, logistics strategies should be coordinated with other functional strategies of the company and adapted to both its internal situation and the environment in which it operates.
The decision to choose a distribution strategy is conditioned by many factors. The main factors are:

• type of product manufactured,
• features of the product manufactured,
• type of final customer,
• requirements of the final customer,
• financial capabilities of the enterprise,
• capabilities of the distribution channel.

In the literature on the subject, the following distribution strategies are most often distinguished:

• Intensive distribution strategy. It is often called selling to all customers. The main assumptions of this strategy include placing products in all possible available points of sale at appropriate levels of the distribution channel. Intensive distribution occurs mainly in long and wide channels, which allow for deep penetration of the served market;
• Selective distribution strategy. The selective distribution strategy is used when selling shopping goods, i.e., those that are comparable before purchase and evaluated in terms of quality, price, and functionality; these can be, for example, clothing, consumer electronics, and home appliances. This type of distribution strategy influences the reduction of competition among manufacturers selling the same product and contributes to increasing certainty regarding established prices and expected profits;
• Exclusive distribution strategy. It is characterized by the fact that products are sold by one or at most a few intermediaries. Usually, distribution takes the form of exclusive trading, which is characterized by granting a given commercial intermediary the exclusive right to sell products in a given territory, but this is associated with a simultaneous prohibition on the intermediary selling products from competing companies.

The type of distribution strategy adopted by the surveyed company can be described as a combination of an exclusive and a selective strategy, as it contains elements and features characteristic of both types of strategies. (…)

Types of distribution strategies – PDF file for download