Place and distribution strategy
The approach used and the process involved by a company to distribute their items or service to the consumer is known as place strategy in marketing mix. The customer must get the product at the right place and at a right time. Efficient and effective distribution is significant when an organisation plans to achieve the overall marketing objectives. The turnover will be at stake if the market demand is taken for granted.
A small video presentation for the is same is here.
Source: (YouTube, 2016)
Distribution channel members comprises of manufacturers, wholesalers, retailers, consumers, etc.
And this channel has been designed involving various combinations of these channel members. There a three types of channels viz. intensive distribution, selective distribution and exclusive distribution
Analysis for Nestlé’s Channels of Distribution:
Retail: It is a distribution centre for a number of products in a particular warehouse or other specialised set up or a store to cater directly to the customers at their nearest vicinity. These, stores could be a general store, a super market or a convenience store.
Online: with the facility of buying products from internet the companies are adapting online marketing for easy and effortless consumer experience, and many other benefits that the customer gets from buying from the internet.Source:(Yorku.ca, 2016)
Nestle has introduced new flavours under Maggi Hot heads specifically for young adults. The product being in a snack industry under the fast-moving consumer goods (FMCG) nestle has naturally opted for intensive distribution. Intensive distribution generally goes with heavy promotion, acute prices, with many products.
Source: (Anon, 2016)
Intensive Distribution deals with the distribution of products priced low or compulsive purchases. Nestle India Ltd. Nestle had announced the launch across India of the fresh variants of Maggi instant noodles. Nestle abides by the FMCG strategy of distributing that engages rupturing the volume. And particularly they have launched the product in a combo deal with an online marketplace retailer namely SnapDeal.
Details of Design Strategy used by Nestle:
Push and Pull strategy make it easy for the flow of products from the suppliers to the manufacturers and ultimately to the end consumer.
Pull Strategy: Nestle induces the customer by offering customers to pull products from the channel. They achieve this by heavily advertising their products to the customers, and by offering discounts or promotional offers or coupons or rebates, etc. Nestle has made a promotional offer on the online launch of Maggi hot heads brands by giving combo packs at discounted prices. From last 5 years nestle has spent each year a $48M USD to $70M USD on advertising and sales, More on this.
The significant benefits of using pull strategy is that it gives the organisation an opportunity to have a direct contact with the customers. Receive an instant payment since the customers do not have a term loan or grace days to payment, instead make an online or in shop at the cashier. The company have more room for margin since the intermediaries’ spot is now vacated. It facilitates the customers to come up with new ideas (Smart Insights, 2013).For disadvantages I’d refer you to this blog.
Push Strategy: Distribution partners are induced by nestle to push the products through the channel. They capitalise it by offering incentives to the sales force, advertising partners, price discounts and offer allowances for marketing activities. However, if there is a major retailer or a supermarket the then the problem of home brands replacing the established product arises.
As markets, the environment and customers are open to change it’s best to use a combination of both strategies.
But by far the best distribution till date is online distribution. The benefits are endless and growing. Thus, the companies must place the product by understanding the customers needs and develop a strategy for the most effective distribution channels and allocate resources across channel options.
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Anon, (2016). [online] Available at: http://i.ndtvimg.com/i/2016-06/hot-heads-on-snapdeal-625_625x437_61466746308.jpg [Accessed 26 Sep. 2016].
Yorku.ca. (2016). [online] Available at: http://www.yorku.ca/lripley/zchtplaceindirect.jpg [Accessed 26 Sep. 2016].
lacobucci, D. (2014). marketing management. 4th ed. mason: cenage learning.
YouTube. (2016). Marketing Mix: Place Strategies. [online] Available at: https://www.youtube.com/watch?v=r2JJYyeKOkk [Accessed 26 Sep. 2016].
oppewal, H., tojib, D. and Louvieris, P. (2013). experimental analysis of consumer channel-mix ue. journal of business research, pp.66 (11), 2226-2233.
Smart Insights. (2013). The Push and Pull product distribution model – Smart Insights Digital Marketing Advice. [online] Available at: http://www.smartinsights.com/marketing-planning/marketing-models/push-pull-product-distribution-model/ [Accessed 26 Sep. 2016].