The transaction will not have taken place until value – the physical product or the service – has passed from the vendor to the purchaser. If you see yourself primarily as the developer of a product that you hope to sell, you won’t worry too much about delivery – your main job is to get the product made. If you see yourself primarily as a salesperson your concentration will be on getting sales agreed. If you see yourself as primarily a marketer, you must closely consider every link in the chain from development to delivery and indeed maintaining relationships after delivery.
Artefact wants to encourage you to look beyond the obvious. Anyone can see the obvious – success comes to those who see more than that. Obviously the delivery channels you must put in place to get refrigerators to your customers will be different from those necessary to get a software program to them. In the first case you need storage, heavy goods transport arrangements, wholesale and retail distribution networks with wide geographic coverage. In the second case your customers can take delivery by downloading the product direct from your website to their PC. This page, then, is not about listing the distribution and delivery channels available. It is about the principles you need to apply and the thinking you need to do in figuring out exactly what approach will work best for your product/service. And you can take it that, in common with the approach advocated throughout our Strategic Marketing Model, the approach that works best for your customers is the one that will work best for you in the long run.
Direct Distribution V Middlemen
One of the key decisions you will have to face, both in terms of marketing reach and delivery, is whether you should operate and control all aspects of the business yourself or use others both to sell and deliver for you. In the offline world, we are used to seeing banks control all their own distribution and delivery over far reaching geographic areas through proprietary branch networks while, in a quite different business model, McDonalds and other businesses get that kind of reach and greater through a franchise system. In the online world, we see companies who try to do the lot through their own website and others who use the online cousin of the franchise operation – the affiliate program. So you need to ask yourself some questions:
* Do you need global reach or is your product/service essentially for a local market
* Is your product/service amenable to sale by affiliates? For example, does explaining it require a degree of expertise that affiliates will not have, or is it a book:-)?
* Will an affiliate program bring down the cost per transaction for the customer, and will using affiliates add value to the customer relationship?
* What about the relative costs of going it alone/using affiliates?
* Can you realistically put the amount of time, effort and cost that may be necessary to bring relevant traffic in sufficient volume to your site to render affiliates unnecessary?
You are not confined to affiliate programs, of course. It is possible to distribute and deliver through third parties by putting in place strategic alliances and partnerships of various sorts with other providers of related, complementary, or substitute products. Such partnerships are quite common and if you and a partner can find mutually advantageous ways of co-operating, it can be a win-win situation for you, the partner and the customers.
Think of the process of getting your product to the customer in terms of a channel.
Are there strategic factors that need to be considered in designing your channel? For example, if you have a direct competitor, would a means of getting your product to the customer a lot quicker than the competitor can do it give you a strategic advantage? How could you achieve that?
Are there product factors that have implications for designing your channel? For example, if you are selling fresh fish over the internet – people do it you know! – a monthly delivery to a number of distribution centres nationwide will hardly do the trick! So what can you do? Special sealed ice-packed containers assembled same day and despatched by fast courier direct to the ordering customer with delivery guaranteed within 24 hours? Now we’re getting somewhere – but is the cost now prohibitively expensive? These are the kind of things we have to figure out. So cost considerations are important too in channel design. If you are selling fast moving consumer goods you don’t hang about waiting for orders – if you are selling bread it needs to be available locally fresh every morning. How can you achieve that?
Are there environmental factors that will affect your channel design? For example, are your customers concentrated or dispersed geographically? Does that matter? It depends what you are selling of course. What about the kind of customers you deal with? If you have written ‘The Iowa Rancher’s Guide to Dry Stock Management’ how do you distribute it? Through a bookstore on 5th Avenue, New York? How many Iowa Ranchers are online anyway, and what sites do they visit? You need to research that. Maybe there’s an Iowa Ranchers Association – could a partnership deal be done? There’s no such association? Well, maybe there’s a Butchers Guild there – something! Think outside the box!