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:
- How is the physical distribution of the product organized?
- Through what marketing channels do we reach our customer? i.e. how do our
customers purchase our products.
- What level of availability of our product does our customer require?
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.
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:
Do they know or will they sell to our target market
Is their sales force large enough and trained well enough
to achieve our regional sales forecasts?
Is their regional location adequate in respect of the
retail outlets serviced?
Are their promotional policies and budget adequate?
Do they satisfy customer after sales requirements?
Are their product policies consistent with our own?
Do they carry competitive lines?
What are their inventory policies regarding width depth
Are they creditworthy?
Is distributor management receptive, aggressive and
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
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:
Frequency of delivery
Time from order to delivery
Reliability of delivery
Emergency deliveries when required
Stock availability and continuity of supply
Orders filled completely
Advice on non-availability
Convenience of placing order
Advice on non-availability
Convenience of placing order
Acknowledgement of order
Accuracy of invoices
Quality of sales representation
Regular calls by sales representatives
Manufacturer monitoring of retail stock levels.
Credit terms offered
Customer query handling
Quality of outer packaging
Well stacked pallets
Easy to read use by dates on outers
Quality of inner package for in store handling and display
Consults on new product/ package development
Reviews product range regularly
Co-ordination between production, distribution and
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
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:
Outlet penetration by type of distribution
Inventory range and levels to be held
Distributor sales and sales promotion activities
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
Determine marketing objective
Evaluate changing conditions in distribution at all levels
Determine distribution task within overall marketing
Determine distribution policy in terms of type, number and
level of outlets
Set performance standards for the distribution
Obtain performance information
Compare actual with anticipated performance
Adjustment where necessary
Go back to marketing plan guide
Have you been able to triple your website sales?