(This is an excerpt from a book I am currently writing entitled Fundamentals of Distribution Management in the Philippine Setting.)  
 
A study on the basic tenets of distribution management is better anchored on a comprehensive appreciation of distribution as a function of the marketing strategy.  A quick review on the concepts of marketing mix, the market and customer segmentation is therefore important as a segue to the discussion of the fundamentals of distribution management. 
 
Placement in the Marketing Mix
In the light of sound marketing framework, a firm needs to formulate, implement and evaluate a plan that focuses on the elements of the marketing mix that marketing practitioners must find creative ways to control in order to best satisfy target consumer segments. We define consumers here as those who will finally consume or use the product or service.
 
There are the classical four Ps, or elements of the marketing mix to be managed by the marketing organization, namely:

  1. ProductA product is not always necessarily tangible like an anti-dandruff shampoo.  A product could be intangible like an idea, music or information.  Your cellphone load or credit is an intangible product.  It could also be a service (e.g. spa, hotels, resorts), or any combination of the three;
  2. Price: This refers to the value of a good or service for both the seller and the buyer, which can involve both tangible and intangible factors, such as list price, discounts, financing, and likely response of customers and competitors;
  3. Promotion: This is any communication used by a seller to inform, persuade, and/or remind buyers and potential buyers about the seller’s goods, services, image, ideas, and the impact it has to society, to influence buyers to make purchasing decisions.  Promotions are effective tools to increase demand and differentiate a product or service;
  4. Placement or distribution: This refers to the process that ensures the availability, accessibility, and visibility of products to ultimate consumers or business users in the target channels or customers where they prefer to buy.  Distribution decisions include market coverage, channel member selection, channel coordination and conflict management, logistics, and service levels.

 
In addition to the abovementioned four Ps, four other elements are suggested by various authors to form a more comprehensive mix of marketing strategy:

  1. Packaging:a product’s physical container, label, and inserts;
  2. People: fittingly enabled to drive marketing strategies through excellent execution;
  3. Public:the company’s corporate social responsibility (CSR) practices affecting the community where the firm operates;
  4. Profit: the primary goal of a business.



In this new era, distribution is not just about moving the products from the point of producers to the point of consumers.  It involves such functions as gathering and sharing of relevant information that can be used to identify key opportunities for growth and competitiveness in the market.  Most progressive companies utilize their distribution forces to obtain market intelligence that are vital in assessing their competitive position.
 
There are basically two types of distribution: Commercial Distribution or commonly known as sales distribution (the book will delve only on this type of distribution); and Physical Distribution - also known as logistics.  It involves such diverse functions as customer service, shipping, warehousing, inventory control, private trucking-fleet operations, packaging, receiving, materials handling, and plant, warehouse, store location planning, and the integration of information.  Its intent is to efficiently deliver raw materials, parts, partially and completely finished products to the right place and time in proper condition. Physical distribution planning should be aligned to an overall channel strategy. 
 
Distribution Management as a Marketing Function
The fundamental idea is that as a marketing function, you now manage your distribution while considering all of the marketing “Ps”. It is not just selling your product, but it is selling your product while ensuring sufficient stocks in channels, carefully considering your promotions in those channels and their varying requirements. It is ensuring that your supply chain is efficient enough that your costs to distribute are low enough and your product can be sold at the right price, thus supporting your marketing strategy and maximizing profit. Even before considering commercial or physical distribution, you would have to start at the product itself, reviewing its specifications and making sure that it sufficiently tackles a consumer’s needs. In considering distribution management as a marketing function, we step away from “supply-side thinking” and start with a view of the whole picture, the consumer now in the center.
 
Emilio “Bong” Macasaet III is Partner and Chief Distribution Strategist of Mansmith and Fielders, Inc. (www.mansmith.net).  For inquiries, email info@mansmith.net or text 0918-81-168-88.