Distribution Strategies

Distribution strategy decisions can help you create a product and business image. This image will differ depending on where you sell your products. Four crucial questions will help you set your distribution strategy.

1. What outlets are appropriate for your product?
2. In what regions will your product sell best?
3. How should you limit the number of outlets for your product in one city or suburban area?
4. Given your expected sales and production capacity, at how many stores should you sell your products?

These questions will help you focus or maximize your distribution. Most entrepreneurs will want to focus on a small market to begin with. With limited product offerings and untested production capacity, you will want to be certain that you can fill all the orders you take.

Selective and exclusive distribution strategies are both good options for small businesses.

Selective distribution means that you only distribute to a small number of customers based on

• Type of store, e.g., boutique or specialty
• Geographic location
• Minimum order, and
• The image of the store

Many young designers open small boutiques in New York City neighborhoods to sell their products.

Exclusive distribution strategies are developed to create and enhance a certain image for the products. Limited distribution can create exclusivity. Exclusivity can also be created by limiting the quantity of goods available, such as limited editions. For example, some private label or store brands, such as Nordstrom's and Saks Fifth Avenue, are available only at those stores.

Mass distribution is an alternative distribution strategy. You will use this strategy if you want to sell to as many customers in the market as you can. Mass merchants such as JC Penney and the discounter Wal-Mart are examples of stores you could sell to with a mass distribution strategy. This works well if your production capacity is tested. One of the biggest mistakes a company can make is to take orders for more products than it can deliver. You don't get a second chance with customers who didn't get the products they ordered.

"We had Champion in the name and that allowed our sales force to take us into department stores. So, we were no longer just in sporting goods, we were in department stores in the inner wear department. It had a huge impact on our sales as we had a whole other channel of distribution. " Denni McCann outlines how JogBra's parent company repositioned its products to sell in sporting goods as well as department stores. Expanding distribution channels can lead to increased exposure, customer base, and sales.