When determining through which channels to place or sell a product or service, we talk about using distribution strategy. However, before we start, let us just list the learning goals for this video. The goal is to understand what distribution strategy is, why we need to know about it, and how we could go about using it. We will do this through establishing a general understanding of the actual purpose of distribution strategy and look at what might impact the success of our distribution channel choice. We will also provide an overview of some additional available tools and theories that we as marketers can use when determining the channel choice of a product or a service. So let us start. What is the purpose of distribution strategy? And what is the connection to the rest of the marketing mix? When you are asked to design the marketing mix, you need to make decisions on four or seven core elements, also known as the four or the seven peas. First of all, any issues concerning the product, this would include packaging and all other elements in connection with the product. Secondly, a decision on price. Thirdly, you will need to decide on the place, which is what this video will address. We will also need to make a plan of which promotional activities we will carry out in order to tell our customers about our product and encourage them to buy. If we are dealing with an offering that is better described as a service or perhaps a product that includes large elements of service, we might also want to look at the additional three peas, the people that are involved in delivering the service, the process that our customers will go through in order to receive our service, and the physical evidence, only visible or tangible elements that the customers will see here, or in other ways experience when receiving the service. None of the four or the seven peas should be decided on in isolation. However, place is the pea which we will focus on in this video. So why is it important to make sure we choose the right distribution channels? Let us use an example. This business produces French cakes and desserts. In these modern production facilities, well-educated confectioners develop recipes and create delicious cakes and desserts, ready to be sold and distributed to cake loving customers. What will impact the success of the chosen distribution channels? And subsequently, which considerations are relevant when making their choice of distribution setup? Let us imagine that they had the idea of selling their cakes and desserts in rural areas, through roadside self-service booths, where customers were expected to show up, and purchase the products without any assistance. In this case, we could argue that they should first of all have considered some market factors. Firstly, what is the location and concentration of their customers? Is it likely that they will be able to sell to a suitable amount of customers with this kind of setup? Secondly, do their customers expect to buy these types of cakes and desserts at roadside booths? If not, it could be a challenge to convince them of the value in doing so. Thirdly, we would advise them to consider whether the customers would be able to get the information and service expected when using this type of setup. Our recommendation for French cakes corporation would, amongst other factors, depend on their answers to these questions about market factors. Let us imagine another scenario where French cakes are considering establishing a chain of French cakes' cafes, through which they will sell their cakes and desserts. In addition to the market factors which we have already discussed, we as marketers would also advise them to consider some factors about themselves. Firstly, do they have the required resources to undertake such an investment, regarding both time, money and people? Secondly, what level of work is the market? What level of control do they desire from their distribution channel? Owling the distribution channel gives ultimate control, but it comes at a price. Thirdly, we might discuss with them whether their product range is wide enough to meet customers' needs. So, our recommendations for this company would, amongst other factors, also depend on their answers to these questions about themselves. We could also imagine that the company were keen on creating an online web shop, where their customers could order their cakes and desserts and get them delivered directly to their homes. In addition to the market and producer factors which we have already discussed, we would also advise them to consider some factors about the actual products. Firstly, does the perishability, the fairly short shelf life of a cake or dessert, suit this type of distribution, would they be able to deliver the product while it's still edible? Would there be ways of overcoming this obstacle? Secondly, our cakes and desserts suitable for handling in this way. And thirdly, with other types of products, complexity could be an issue. So, our recommendation for this company would, in addition to the factors already discussed, also depend on the answers to the questions about the actual products. We might also imagine that the company is keen on distributing their products through supermarkets in order to reach a large number of people from their target group in this way. In addition to the previously discussed factors, we would also ask them to consider some facts about their competitors. Firstly, which channels are their competitors using? And secondly, is it possible to achieve differentiation through choice of channel? And it is imagine that in one particular supermarket chain, consumers are not exposed to the competitors' cakes or desserts. Distributing the products through this chain would, therefore, enable them to differentiate from the competition. And ultimately have a better chance of selling their products to the end consumers. So our recommendation for French cakes corporation would, in addition to the other already mentioned factors, also depend on the answers to these questions about the competitors. So when advising the company on their choice of distribution channels, we would look at some market factors, some factors about the French cakes corporation itself, factors about the products, and some factors in connection with the competitive situation. And finally, we would look at the rest of the marketing mix to ensure that the choice of place corresponds with how French cakes corporation wishes to be positioned in the minds of the customers. We have now established the purpose of distribution strategy, what it is, and why we need to know about it. And we have established that there are many factors which we need to look at before we can decide on the best place to distribute our product or service. So let's move on. In addition to the factors we have just discussed, we as marketers have some additional tools and theories we can use to guide us when determining which distribution channels to use. These will not be described in detail in this video, but let us just introduce an overview of some of the tools and theories we might want to use. We would determine whether we are dealing with consumer, B2B, and or service distribution channels. Distribution intensity should be looked at, to what extent and in which context do we want our product or service to be available to the end consumers. Thirdly, we would consider whether to use independent intermediaries, setting up a franchise operation or perhaps go for channel ownership. We should also look at the physical distribution system, which would include decisions on transportation of goods, inventory issues, and order processing procedures. If we are dealing with retail, we could also look at the process of retail differentiation. Finally, we should also look at how we could manage the relationships with our chosen distribution channels so that it remains prosperous for both us and for the different parties within the channel. We have now established an understanding of the purpose of distribution strategy, the different factors that impacts our choice, and lastly we have presented an overview of some additional tools and theories available to us when determining a suitable place to distribute our product or service. To learn more about distribution strategy and how to use the different tools and theories introduced in this video, I recommend that you read chapter 17 in David Jobber and Fiona Elyse Chadwick's Principle and Practice of Marketing Management, 7th edition. My name is Tina Wade, thank you for watching.