Dogosh

Today I want to promote of problem about Distribution Strategy, especially for the New product. Which a little literature about this. In one literature I got the problem:
"For the New product, because not all that was glanced at by the big Distributor then better use the producer Strategy directly --> Retailer, later after the behaviour product just used-->Wholesaller--> the big Distributor" (the Sun Tzu , Creating Distribution Strategy).

1. if could distribute directly, after the behaviour it was recommended used the Distributor? as the UKM more happier to follow the Direct route moreover Direct Marketing.
2. a product/the producer better use the Direct strategy ?

There were those who gave input and the answer as follows:

1. spreading was more equitable and fast, moreover also minimized cost.
2. depended the policy of the company, you wanted sold mass or peered niche

To minimizing cost here its only to pay the margin around 20-30%, depended the policy, have we been could to cover the big territory in Indonesia. Whereas if we sold personally, we must prepare the seller's power or sales force term quite big enough the amount to sell, the operational cost (the use of the most united system), etc.. Whereas if we used the distributor's service, we only prepared sales force that the amount around 1/10 . That not to mention, if having outstanding cost around 1-3 months from respectively the shop (retailler and reseller). But if being centred in 1 or 2 distributor, we could count the rhythm of the sale and the debt.
And certainly any several lacks also:

1. possibility of the leaking of the marketing "plan" & sale.
2. If having the problem with the distributor, usually our "merchandise" would be stack in the warehouse.
3. Must be beautiful with the determination discount.

The matter that could attract the distributor to co-operate was:

• The product that the "behaviour" in the market.
• The quite competitive margin. Usually, if for their new product asked around 5-10% from the competitor's product.
• Outstanding / was due the debt more than 45 days, or older than the competitor's product.
• Good Relations with the producer.

So when we could do direct selling, was kept depending of sale capacity same not with the market size, mass market ( free market) or niche market .
This strategy direc of Distribution , could be seen from the example: Dell Computer, where Dell to market the computer and received order through the internet, afterwards carried out the sale and the direct delivery of goods to user.
The direct strategy could be at once applied in condition where customer wanted a product that was customization (in accordance with the wish customer) and the company could satisfy the requirement this customer.
There was other example as our reference from the application of this direct strategy that is the marketing strategy to carried out by the MLM companies (Multi Level Marketing) where being formed by one networking that was assigned as marketer (downline), afterwards customer bought the direct product to counter that was provided by this company. The profit from the strategy at once was to be able to carry out efficiency in distribution cost (the distribution cost of goods and services).
Reference: Supply Chain Management, Strategy Planning dan Operation, Sunnil Chopra and Peter Meindl
I agreed with the product that customized (made to order) its most appropriate used the short distribution system. But, did not agree when MLM could give efficiency distribution cost.
Like the insurance, the product that was sold by MLM was difficult to be sold generally with various reasons, and finally must give the quite big commission, also bonus (went out overseas, etc.. ). IBO Principal (the term in Amway)/the insurance agent /whatever the term -->end user, price could be more expensive than the distribution of traditional route.
I heard information the commission of an insurance agency could 30% of the premium a year during the first year and could reach 100% premium a year in stages when participants in the insurance continued to go along to the certain year. For MLM, because has been how long began to receive product entrusted goods was not the production personally (and several of it was not customized for this MLM), could be compared by price with the price in the supermarket or travel agent, etc.. Although MLM distribution was short, but had the service like intermediate fee in B2B or winning fee in the big tender or for the commission in the team of the land broker.
especially in MLM, because of having the pyramid with the rank up-line that was so long (distrbution still direct from the producer - sales/the agency -the buyer, but the sale gave the commission to upline-upline in accordance with the current provisions), fee was unlimited, like the potential claim for production of 'Sky Is the limit', differed from the other commission that appointed, when the team was big each receiving fewer. The addition operation expense in MLM was hidden because of being the personal issuing the agency without being entered in a book (telephoned, the visit trip, stock, consumption personally, etc.).
Please saw in the FMCG business, apparently previously the producer so happier to have direct access by having personally distributor, only for their 'new' area be forced with the agency previously, but now the trend was opened in each regency, the cost and risk will be too big to be opened personally. That was clear, with the agency was glad able to borrowed the facilities (the warehouse and transport), funding (although being given by credit was placed by them previously the guarantee), also the risk of market, but consequences could not arrange at will as having the employee personally (wanted to be complained to, was dismissed, etc. liked Principal's owner).
According to me, if indeed the spent of effort by your company to direct selling must be comparable with the market that was gained and the profit that obtained, distribution strategy still was enough with direct selling with resources that was had by their company. this condition will become different when the company will widen the market and for the sake of guaranteed the available stocks in market.
If the effort was spent became quite big to make the company's profit descend or even again inappropriate with the aimed at just distribution channel was straightened out. Moreover when the product has been enough to be known good by the market and with the request that turn over was high enough. However the several point its so important to paid attention concerning the distribution channel, that is the partner's election and the control from the partner.
If bargaining position from the company's product has been strong enough, usually to be marked with the high request response, then the company could push this partner so that in managed market increasingly good. However was the reverse when bargaining position the company was not yet so somewhat strong will be difficult in controlled distribution channel (the partner).
So in other words the election distribution strategy its really depended with the effort to spent and the turnover that will be achieved.
Was based on our friends's experience in the world of distribution an I thought most of this product that sold we must develop distribution in a massive manner because with increasingly the spread of a product then our opportunity to increasingly of sell will be very big to compared when to stacking stock in some outlet.
To spread the distribution its needed quite a bit of fees because we needa very big investment (the Building, car, SalesForce, etc.) so as by giving few of our margins to the Distributor will be cheaper compared with direct investment.
Better the distribution strategy was seen from the goods kind and segmentation that will be taken. Indeed if the new product was not all that glanced at by the big Distributor, because so many personally to distribution, but that not 100 % true, for the product its depended many factors to be received by market or big distributor, because the distribution was some part of the strategy marketing, if the other strategy marketing so good (the price, the product, the promotion, segmentation, brand, etc.) then the big distributor will be glance our new product,
Moreover if the distributor was given the big profit their must wanted, the basically the distributor then looked for the profit, If we distributed personally and quick-selling afterwards we looked for the big distributor to help us, for this indeed to have correctly but to have to not be wrong to choose the distributor, because our aim searched distibutor to widen the market, looked for the distributor/the person that really understood the similar product market or product competitor so as to be able to increase the sale turnover of your product and to speed up the rotation of the product.