Redefined Distribution


By

Sandeep Saxena
Research Associate (Marketing)
ICFAI, INC-HQ
Hyderabad
 


We all know that, the products fall into three categories- convenience, shopping and specialty.

Convenience goods are those for which the consumer before the need arises posses a preference map that indicates willingness to purchase any of a number of known substitutes rather than to make the additional effort required to buy a particular item.

Shopping goods are those for which the consumer has not developed a complete preference map before the need arises, requiring him to undertake search to construct such a map. Specialty goods are those for which the consumer, before his need arises, posses a preference map that indicates a willingness to expend the additional effort required to purchase the most preferred item rather than to buy a more readily accessible substitute.

Convenience goods/stores are those for which the consumer, before his need arises, possesses a preference map that indicates willingness to buy from the most accessible store. Shopping stores are those for which the consumer has not developed a complete preference map before the need arises requiring him to requiring him to undertake search to construct such a map. Specialty stores are those for which the consumer, before his need arises, posses a preference map that indicates a willingness to buy an item from a particular establishment even though it is not the most accessible one.

The above categorization of products and stores results in nine unique category of consumers who subscribe to a particular product-store mix. The product-store matrix along with the resulting consumer categories that fall in the various categories of the matrix is given below.

The characteristics of consumers that fall under each category are given below.

1. Convenience good-

- Convenience store: Consumer prefers to buy the most readily available brand at the most accessible store.

- Shopping store: Consumer is indifferent to the brand but shops in different store to get the best service/price.

- Specialty store: Consumer prefers to trade at a specific store but is indifferent to the brand of the product purchase.

4. Shopping good

- Convenience store: Consumer selects the purchase from an assortment available at the most accessible store.

- Shopping store: Consumer makes comparisons among both retail controlled factors and product related factors.

- Specialty store: Consumer prefers to purchase from a specific store but is uncertain as to which product to purchase and hence searches the assortment of products available at the store to make the purchase.

7. Specialty good

- Convenience store: Consumer purchases his favored brand from the most accessible store that has that item.

- Shopping store: Consumer has a strong preference with respect to the brand of the product but shops among a number of stores in order to secure the best retail service/price.

- Specialty store - Consumer has both a preference for a specific brand and a particular store.

Now we have find the various forms of promotion that will ensure that the channel performs the function of brand communication as well as brand experience along with the function of product availability for the above mentioned consumer category.

The concept of convenience, shopping, specialty good/store varies with every consumer. Perhaps the best method of design the promotion for a product would be to evaluate where the product is most likely to lie in the product-store matrix.

The consumer undergoes four basic stages for his consumption. They are as follows-

i. Need recognition
ii. Information search and alternative evaluation,
iii. Purchase and
iv. Post purchase use and evaluation.

The various forms of promotions that are at a company's disposal are - mass advertising through electronic and print media, merchandising at the purchase point, word of mouth advertising, inducing usage (through samples) etc. These promotions impact the consumer at various stages of his consumption cycle and thereby create a brand image of the product in his mind.

In the case of category 1, 2 and 3, the consumer is indifferent to the brand of the product but preference for which outlet he will make a purchase in a given area will depend on which category of the product-store matrix he falls in. Hence product availability and product visibility at store is best way to ensure brand communication as well as brand experience.

In the case of category 4, 5 and 6, the consumer is willing to shop around for the best available brand. The outlet where he would make the purchase would again depend on his position at the matrix. Merchandising at the store, push strategy by the retailer, sales promotions, mass advertising, product visibility and product availability would be major influencers in his purchase decisions.

In the case of category 7, 8 and 9, the mass communication, word of mouth advertising, previous experience with brand would be the major influencers in his purchase decisions.

The position of the consumer on the product-store matrix would also determine the king of distribution strategy, which a company should adopt in terms of whether the company should go for intensive, selective or exclusive distribution.

If the consumer of the product were most likely to fall in the categories 1, 2 or 3, then intensive distribution, which aims to provide saturation coverage of the market by using all available outlets, would yield best results. If the consumer falls in the categories 4, 5 or 6, then selective distribution which involves a producer using a limited number of outlets in a geographical area to sell products would be optimum strategy and if the consumer falls in the categories 7, 8 or 9 exclusive distribution, an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area would deliver the desired goal of brand communication and brand experience along with ensuring product availability.

Direct selling as a marketing tool, which is used in the rural India through Project Shakti, is another method of imparting brand experience and communicating the brand message to the consumer.

The three-pronged objectives of distribution will no doubt result in consumer making a more informed purchase and greatly reflect the success/failure of a company's marketing strategy, however to map the entire product range on the matrix as well as tailoring the promotion to the specific requirements of each category in the matrix would be a Herculean task. HLL as always has become the first in the country to initiate a paradigm change in its distribution strategy.

References-

1. The paper 'The distinction between convenience, shopping and specialty goods', By Richard H. Holton

2. The paper ' The retail strategy and classification of consumer goods', By Louis P. Bucklin
 


Sandeep Saxena
Research Associate (Marketing)
ICFAI, INC-HQ
Hyderabad
 

Source: E-mail July 14, 2006

     

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