The distribution policy is a policy of the marketing strategy of manufacturing companies, concerned with the organization of the provision of their production on the market. It is part of the marketing mix.
Service companies and distribution chains have, as equivalent, implementation of policies.
The distribution policy is made in favor of an intermediate dealer, intermediate producer-consumer, purchaser or end user.
It operates effectively as more or less complex mechanisms:
Case of direct circuit or direct sales: the provision connects directly – without intermediaries – the producer-supplier to buyer client;
Case of short circuit: the provision connects the producer-supplier to the buyer customer with the intervention of a single intermediate level of distribution (eg supplier-producer → retailer → buyer customer);
Case of long circuit: the provision connects via a cascade of successive operators (eg producer-supplier → wholesaler → retailer → customer buyer).
The term distribution channel refers to the way of provision in which the products are routed through networks of stores or sales methods of the same type (eg the hypermarket sales channel).
The term distribution circuit refers to the range of distribution channels selected by a producer to get its products from the stage of their production to the stage of consumption.
Issues of distribution management
A distribution point tends to become a product in the marketing direction, characterized by a set of attributes (physical or virtual proximity, choice, convenience, hospitality and know-how) creator of meaning and solutions for the customer universe. In this context, the act of purchase is a societal meaning beyond mere consumption as an end in itself. The management of the distribution thus has a character that has to take into account the specific functional constraints in the distribution activity.
The producer expects the distribution to:
- carry and distribute production
- turn a lot of production in sale (match)
- store products
- finance the sale (often opposite situation)
- make available material (often opposite situation)
- provide advertising and consumer information.
The retailer expects from its supplier:
- a referral fee (depending on the merchandising directed by physical distribution or through a virtual site)
- significant payment delays
- advertising efforts (pull policy)
- budget paid according to the increase in sales (conditional surrender)
- more presence of label on appeal fee.