Customer Service and Distribution Plan

The subject of distribution involves three main areas each will be examined here for your distribution plan:
The subject of distribution involves three main areas each will be examined here for your distribution plan:

  1. How is the physical distribution of the product organized?
  2. Through what marketing channels do we reach our customer? i.e. how do our customers purchase our products.
  3. What level of availability of our product does our customer require?

Physical distribution

If the product is not available when and where the customer demands it indicates the business will fail. The physical distribution function of a firm provides the place and time dimensions which constitute the third element of the marketing mix.


The distribution mix

In a typical organization different functional departments are responsible for the product at different stages – for example purchasing, warehouse, production and marketing. It is important to ensure that the all these departments have a common goal in the distribution policy of the final product to the customer. All the departments are responsible for ensuring that the product reaches the customer in the best possible condition.


Marketing channels

Any business will use one or more marketing channels to distribute products to the customer. Some organization resources will be used in the marketing channels through which the company product passes on to the hands of the customer. Marketing channels perform the function of transferring title of the product to the customers.

Many companies use multiple marketing channels through which to reach their customers, often involving one or several intermediaries. The role of an intermediary is to provide the means of achieving the widest possible market coverage at a lower unit cost. Many intermediaries hold stock and therefore carry some of the financial risk with the supplier. Use of intermediaries carries benefits to the supplier but it also carries one important disadvantage and that is the loss of control. Also there are situations where the suppliers objectives differ from those of the distributor leading to conflict.


Evaluation criteria for channel intermediaries

The following factors should be considered on deciding on an efficient channel intermediaries:

  1. Do they know or will they sell to our target market segment?

  2. Is their sales force large enough and trained well enough to achieve our regional sales forecasts?

  3. Is their regional location adequate in respect of the retail outlets serviced?

  4. Are their promotional policies and budget adequate?

  5. Do they satisfy customer after sales requirements?

  6. Are their product policies consistent with our own?

  7. Do they carry competitive lines?

  8. What are their inventory policies regarding width depth and cover?

  9. Are they creditworthy?

  10. Is distributor management receptive, aggressive and flexible?

Customer service

Customer service is a system organized to provide a continuing link between the first contact with the customer, through to the time the order is received and the goods and services delivered and used, with the objective of satisfying customer needs continuously. To provide excellent customer service the firm will have to invest heavily in business infrastructure. So there has to be a trade off between customer satisfaction and product delivery. If the firm decides to hold large stock of inventory to meet the demands of customers the related costs of holding large amounts of inventory increases exponentially.

Many companies are however blissfully unaware of the level of service being offered i.e. there is no written customer service policy and the levels of service are more than not arbitrarily set and are not the result of careful market analysis.


Customer retention and profitability

Acquiring new customers is expensive. Usually it involves certain one off costs such as advertising, promotion, the salespersons time, and even the cost of processing the transaction. Thus every customer represents an investment the level of which will vary from business to business.

If the customers are loyal and repeat purchase there is evidence to suggest that the business will generate more profits over a longer period of time.


Developing customer service package

The following list contains some of the major components of a good customer service package which should be used for your own business:

  1. Frequency of delivery

  2. Time from order to delivery

  3. Reliability of delivery

  4. Emergency deliveries when required

  5. Stock availability and continuity of supply

  6. Orders filled completely

  7. Advice on non-availability

  8. Convenience of placing order

  9. Advice on non-availability

  10. Convenience of placing order

  11. Acknowledgement of order

  12. Accuracy of invoices

  13. Quality of sales representation

  14. Regular calls by sales representatives

  15. Manufacturer monitoring of retail stock levels.

  16. Credit terms offered

  17. Customer query handling

  18. Quality of outer packaging

  19. Well stacked pallets

  20. Easy to read use by dates on outers

  21. Quality of inner package for in store handling and display

  22. Consults on new product/ package development

  23. Reviews product range regularly

  24. Co-ordination between production, distribution and marketing

Developing a distribution plan

In the business sense it is important to make marketing responsible for distribution, since it is probably it is in the best position to make the difficult trade off between very high levels of customer service and the high inventory carrying costs associated with high customer service.

It is also important to note that labour relations, wage bargaining, the technical aspects and so on of distribution also demand specialist attention and may take up too much time of the chief marketing officer.

Integrated distribution management

Integrated distribution management is an approach to distribution whereby two or more functions involved in the moving of goods from source to user are integrated and viewed as an interrelated system or sub-system for purposes of managerial planning, implementation and control.

Distribution objectives can be many and varied, but the following are considered to be the most important:

  1. Outlet penetration by type of distribution

  2. Inventory range and levels to be held

  3. Distributor sales and sales promotion activities

  4. Other specific customer development programs e.g. incentives for distributors.

When taking the integrated distribution management process it is important to remember that there are a number of decisions/ trade offs which need to be specified in the plan. Of course one person or department will not make all the decisions, but they need to be documented to ensure that there is no conflict in the future.

The following are the steps that should be followed for distribution planning:

  1. Determine marketing objective

  2. Evaluate changing conditions in distribution at all levels

  3. Determine distribution task within overall marketing strategy

  4. Determine distribution policy in terms of type, number and level of outlets

  5. Set performance standards for the distribution organization

  6. Obtain performance information

  7. Compare actual with anticipated performance

  8. Adjustment where necessary

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