Article | August 8, 2022
Are you looking to expand into new markets, boost your sales pipeline, and increase conversions? Whatever your business growth objectives are, a distribution partnership is your answer to all of them.
Why are distributors becoming a vital component of business expansion strategies and what is the importance of distribution in marketing? Let us take a look.
Distribution Marketing Channels: Achieving More with Distribution Partners
The process of making a product or service available to a consumer through a direct channel such as a manufacturer or an indirect channel such as a distributor constitutes a distribution marketing strategy. B2B marketers decide on which type of distributor channel they want to use based on their product and the revenue targets they have in mind.
Global suppliers have eroded margins and created an explosion of products catering to even the tiniest market niches. They have disrupted local markets. Consequently, sophisticated logistical systems have been developed to shorten delivery times. Businesses have expanded their distribution network to get closer to their B2B clients.
The following statistic says a lot about why B2B businesses are keen to embrace distribution marketing and develop their indirect distribution network.
75% of the world’s commerce is transacted indirectly, meaning goods are sold through distribution channels. (Source: Forrester)
In this article, we will be focusing on distribution partners, as channels of distribution marketing, and how they are creating a foundation for businesses like yours to expand and grow while helping you bring your products to your target customers.
Distribution Marketing Strategy: Types of Strategies & Things to Consider
B2B businesses embrace a new channel of distribution marketing or improve their existing one based on their marketing and management requirements. You can consider going down the same road if you have a new customer segment in mind, are planning to release a new product or want to aggressively grow your revenue. Here are the broad types of distribution in marketing:
Direct channel: A direct sales channel is any company or manufacturer that creates its product and sells it directly to customers without the involvement of third parties or intermediaries. The product is sold through a shop, online channels, door-to-door or through any other method.
Indirect channel: An indirect sales channel is comprised of—distributors, wholesalers, retailers, and VARs (value-added resellers)—who sell products made by other companies. At times, there may be more than one middleman between the consumer and the product’s producer.
Apart from these two main strategies, there are other specialized strategies that fall under these categories, like exclusive distribution, intensive distribution, selective distribution, dual distribution, and reverse distribution. Of these strategies, manufacturers use the product distribution strategy that suits their product and revenue goals the most.
Consider the following factors when planning your distribution strategy in marketing:
The Type of Product You Sell
Your distribution channel marketing strategy should depend on the type of product. Purchase decisions that customers make are classified into three types: routine, limited, and extensive, based on the number of times businesses buy a product, its cost, and the time taken by the customer to make a purchase decision. Capitalize on this information and decide on the strategy that will work best to position your product.
Based on the types of purchase methods that your target demographic may use, where they make their purchase decisions, and what kind of technology influences them, you need to choose your distributor. Ensuring that your customer base gets access to your product based on its preference is crucial to attracting customers to make a purchase.
Logistics and Transportation
Whether you sell a software product to streamline business processes or spare parts that automobile businesses require, your product needs to reach your end user safely and on time from locations where your distributor stores it. Understanding a prospective distributor’s logistics and transportation capabilities should be a priority while finalizing a distribution strategy in marketing. Focus on cost-saving and increasing revenue while choosing your distributor.
A Strong Game Plan & Bigger Market Reach with Distribution Partners
Product, place, price, and promotion are the four Ps of marketing. A B2B company cannot successfully sell its product or service unless it determines its four Ps. This is where distribution comes in. It is the ‘place’ part of every marketing strategy. Distributors are channel partners who are experts at getting your products into as many markets as possible as quickly as possible so that they can be used by end customers.
There are tactical and logical advantages to having a strong distribution partner network. Let us explore them in brief.
You Can Focus on Your Expertise
Your expertise lies in creating the product. Setting up a sales system to facilitate end customers doesn’t categorically fit your skillset. With the help of a good distribution partner, you can limit your sales risk and use your time and resources to make your manufacturing processes and techniques more efficient.
Streamline Market Expansion
Selling to a new geographical market with the help of a distribution channel partner who has an established retail network can instantly get you more leads and boost your sales. Especially when entering a new international market, you can trust your distribution partner to take care of international trade law compliance, shipping and customs laws, and the culture of the new market.
Limited Involvement in Customer Service
Distribution marketing reduces your involvement and investment in customer service considerably. All you need to do is be in touch with your distributor partner. You don’t have to think about exercising administrative duties and investing in operations because your distributor will be your face while dealing with end customers.
Distribution Partners Fire-up Your GTM Strategy
In your go-to-market strategy (GTM), your distribution partners can market your product to large numbers of geographically dispersed customers. Distributors, especially VARs customize your product and complement it with prompt support and specialist services. Here’s how you can go-to-market confidently with the help of distribution partners:
After you segment your target market into customers and prospects, identify which of these segments you can reach with the help of distributors. They can utilize their customer base to get you sales in territories with good sales potential.
Distributors with experience can cover the market sectors you want to target. Choose distributors who do not market products that compete with yours. To get the most out of the channel partnership, describe the market opportunities for the distributors and talk to them about what you expect and what you need from them.
Decide on whether you want to share marketing rights with distributors. Create solid and binding commercial terms such as stock levels, discounts, selling prices, and marketing support beforehand so the distributors are motivated to give their best to sell your product.
Distributors develop sales and marketing plans, provide support in the form of marketing collateral, funds, or marketing campaigns. To support their efforts, run marketing campaigns that target your customers and promote your distributor network. Communicate the advantages of buying from your authorized distributors so that you can create and maintain sales leads for your entire distributor network to make your GTM a success.
Distribution Management: Refining Distribution Partner Performance
Just as it is important to set up a distribution network, it is also important to manage it, optimize it through consistent efforts, and make sure it is a smooth-functioning ecosystem. Managing distribution businesses can empower your distribution teams to manage distributors and the way they sell your product. They can also enable partners to do more for the sales.
Distribution management can be streamlined using a distribution management system (DMS). With the help of the following features, this platform helps you run your distribution network well:
Easily deploy partner recruitment campaigns through single or multiple distributors. Target specific groups of partners through these campaigns to get them involved.
Help your distribution partners bring on channel partners for short-term channel programs with high returns and low costs.
Enhance partner competency and development using partner training through the DMS system.
Keep track of how each distributor contributes to your pipeline growth and engage with distributors to increase revenue.
Use your distribution partners to drive multi-partner demand generation activities with co-branded content that your channel marketing teams create.
Deploy partner incentives to motivate distributors and partners they manage. Review their performance and approve their claims.
Get insights into how distribution partners are selling through business analytics and reports so you can accelerate sales, and in turn, boost your revenue.
When you use a good distribution management system, you can manage multiple stakeholders, including resellers, distributors, and partners, along with your internal marketing, sales, and finance teams. Your distribution teams can look at sales through distributors and forecast future performance and partner pipelines. They can also use the system to run different programs and campaigns to meet the changing needs of their business.
A U.S. Manufacturer Uses ZINFI Platform for Efficient and Effective Channel Marketing
VERSATEX, a PVC building products manufacturer, used ZINFI’s partner portal to streamline its marketing so its partners could be more engaged. "We are using the ZINFI portal as our VERSATEX CRM, and it's been working out amazingly. We can track how the salespeople in the field are selling and quickly determine what's working and what's not," said Cassidy Huff, Channel Marketer at VERSATEX.
Summing it Up
A distribution strategy can revolutionize the way you sell your product in different markets. With the correct distribution channel and strategy, your product can reach your buyer considerably more quickly and help you achieve your revenue goals.
What is a distribution channel?
A distribution channel is a network of intermediaries like distributors, wholesalers, retailers, manufacturers, and VARs that a company uses to get its product to its end user.
What is the impact of distribution management on business?
Efficiently managing distribution partners boosts company sales and profitability as it helps businesses streamline how fast and efficiently they distribute their products in the market.
What is the difference between direct and indirect distribution channels?
In a direct distribution channel, a company allows its manufacturer or service provider to deal directly with the end customer, whereas in an indirect distribution channel, a company relies on a network of distributors, wholesalers, and retailers to sell its products.
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