Placing a Product
Once a product has been developed and a pricing strategy has been chosen, the business must consider where it should place the product and how to get it there via placement and distribution. Read this section to learn about product distribution strategies and supply chain management.
- Distribution entails all activities involved in getting the right quantity of a product to customers at the right time and at a reasonable cost.
- Companies can sell directly (from stores or over the Internet) or indirectly, through intermediaries – retailers or wholesalers who help move products from producers to end users.
- Retailers buy goods from producers and sell them to consumers, whether in stores, by phone, through direct mailings, or over the Internet.
- Wholesalers (or distributors) buy goods from suppliers and sell them to businesses that will resell or use them.
- Physical distribution – the process of getting products from producers to customers – entails several interrelated activities: warehousing in either a storage warehouse or a distribution center, materials handling (physically moving products or components), and transportation (shipping goods from manufacturing facilities to resellers or customers).
- A firm can produce better-quality products at lower cost and distribute them more effectively by successfully managing its supply chain – the entire range of activities involved in producing and distributing products, from purchasing raw materials, transforming raw materials into finished goods, storing finished goods, and distributing them to customers.
- Effective supply chain management (SCM) requires cooperation, not only among individuals within the organization but also among the company and its suppliers and dealers. In addition, a successful company provides customers with added value by focusing on and improving its value chain – the entire range of its value-creating activities.