You would probably think that sales is the most important thing when it comes to marketing and you are probably right because it directly impacts the bottom line. But imagine a situation if someone actually came to buy your product but it wasn't available and everything that you would have done would be a waste. And that is why distribution which is the biggest driver to sales is probably the second most important thing when it comes to marketing. Hi, my name is Rahul and I run the business of marketing on this channel. I simplify a lot of concepts around marketing and related industries. As you can see, there's a lot of content that I have already posted and I promise to do that in the future as well. So if you haven't already subscribed, you should do that right now. And if you have any thoughts on what else I should cover on this channel, please drop your thoughts in the comment section below. So let me start by explaining what distribution actually is. Distribution is the estimate percentage of stores within a geographical territory setting a particular product or if you want to put it very simply, it's the measure that shows how widely your product is available. So if your product is available in five out of ten stores in a specific region, the distribution is 50%. And this measure of distribution is called numeric distribution. What is numeric distribution? It is simply the percentage number of stores where your product is available in a specific region. And how do you calculate numeric distribution? When you divide the total number of stores selling your product in a particular region, buy the total number of stores in that region and multiply that by 100, you get numeric distribution. So while a numeric distribution is extremely simple to understand, real life is not always that simple. Imagine a situation where you have distribution in a large number of stores, but all of these stores were actually small stores and therefore their total sales in a year was pretty small. And you did not have distribution in the bigger stores which existed in that same region. So what could happen as a result of that is that even though you might be present in a lot of different stores, your power of distribution or the number of customers who are actually able to get access to your product through your distribution which seems pretty high might actually not be that strong. And as a result, your sales would be low. Therefore, let's start getting into the next concept around distribution where the size of the store plays a role. What this means is if a store has higher total sales, it matters more than a store which has lower total sales. And that is where the next measure, ACV, all commodity value comes in. ACV or all commodity value is simply the total sales of a store over a period of one year. Because ACV tells you the total sales of a store, imagine a situation where you knew the total sales of all the stores in a particular region. So using this, you would be able to find out which are the most important stores and which are the least important stores, which is stores with the highest sales as well as the stores with lower sales. And that brings me to the next important measure in distribution which is percentage ACV. It is also called percentage ACV distribution and also sometimes referred to as percentage ACV weighted distribution. You can call it whatever you want. For simplicity sake, I will refer to it as percentage ACV in this video. percentage ACV is simply the weighted size of a store based on its annual sales for all commodities. Let's try and understand this with the help of an example. Imagine there are four retailers, ABC and D, with one, three, two, one, four number of stores, which is total, there are 10 stores in that region. And their respective annual sales value or ACV was 100, 200, 400 and 100 respectively. So the total ACV for that region would be 800. In this, we can find out the percentage ACV of all the stores. When you divide the ACV of a single store or a single retailer, buy the total ACV for that region and multiply that by 100, you get the percentage ACV. In this case, it works out to be 12.5% for retailer A, 25%, 50% and 12.5% for the remaining three retailers. The ACV actually gets importance to stores based on the annual sales instead of the number of outlets that they might have. Therefore, retailer C is the most important retailer where the percentage ACV is 50% while retailer D, despite having twice the number of stores, is the least important retailer. Retailer A and retailer D are of the same importance, even though retailer D has four times the number of stores. So you might ask, what does this have to do with my distribution? Let's look back at the same example to try and understand this a little better. If your product is being sold by retailer A, B and C, but not by retailer D, your product would be available in six out of ten stores and therefore your numeric distribution should be 60%. However, if you looked at percentage ACV for your product, your distribution would be 12.5 plus 25% plus 50%, which is 87.5%. What this means is that the percentage ACV distribution is much larger than your numeric distribution. So in this example, you see how despite the product being sold in a fewer number of stores, your distribution is actually higher because it is being sold in all the stores or all the more important stores. So we've seen two important measures of distribution. The first one being numeric distribution or physical distribution, which is simply the percentage number of stores or product is sold in. The next one that we spoke about is percentage ACV distribution, which is the percentage of stores or product is sold in weighted by all commodity value of each store or ACV of every store. Now let me add another small complication to this conversation. Now what if your product is something which belongs to a category where it doesn't really matter how big the size of the store or how big the ACV of the store actually is. For example, your product is some environmentally conscious brand of shampoo. It appeals to people of a certain type who are also the same people who shop for similar organic or environmentally conscious products. And these people tend to frequent stores which are into selling of these environmentally conscious and sustainably created products. In such a situation, what is more important than the size of the store is the size of the category in which your product operates. In this case, it is environmentally conscious products. And this is where the next measure of distribution comes into play which is product class value of PCV. Unlike the ACV which is the total sales of all products in a store, the PCV is the total sales of a particular category of products within a store in one year. And basically what this means is that the stores where the sales for your category is higher would be more important to you than stores where the sales of your category is lower. And that brings me to the next important concept in distribution which is percentage PCV or percentage product class value. It is simply the weighted size of a store based on the annual sales of all commodities in your category or a particular category. So again, you might ask what does this have to do with the distribution of my product. Let's look back at the same example with some changes to try and understand this a little better. To keep it simple to understand, I have simply changed ACV to PCV in column number 3. Over here you can realize that what matters the most to your category of products is retailer C which has only two out of the 10 stores. Yet it can give you as much as 50% PCV distribution. And if you had to pick one retailer, you should probably pick retailer C. And in the same example, if you wanted to prioritize the retailers that are more important to you, you would put retailer C as number one because it gives you 50% of distribution. And then you would put retailer B which would give you 25% of distribution. And after that you would put retailer A which gives you another 12.5% distribution with just one outlet. So today we learned about three important measures of distribution which is numeric distribution, percentage ACV where we weigh the stores on the basis of total sales and percentage PCV where we weigh the stores on the basis of total sales of particular category. Not sure if you notice this but all three of these measures are measures of width of distribution. To put simply, you can find out how widely your product is being distributed in the market with the help of any of these three measures. In my next video, I will be talking about how do you go about measuring the depth of distribution and also what is the best overall measure for measuring the width as well as the depth of distribution. I really hope you liked and learned something from this video. If you did, please hit the like button. And if you haven't already subscribed to my channel, you should do that now. And click the bell icon so that you get a notification every time I release a new video. And I will see you very soon in my next video on the other measures of distribution.