Distribution Strategy Essay

3956 words - 16 pages

1.0 Introduction

The implementation of a distribution strategy without the coordination of other components of the marketing mix tends to produce a strategy without harmony. A disjointed marketing strategy will not reach the success levels that were expected. Organizations have come to realise the impact of distribution management as a source of competitive advantage with companies like Delta, Lobels and Bakers Inn employing distribution managers and personnel. This is because it has become more difficult to find a unique source of competitive advantage in an era where it is easy to copy strategies and products.

Marketing managers are now looking to coordinate the promotion strategy ...view middle of the document...

According to Rosenbloom (2004) In recent years there has been neglect of distribution as a marketing strategy as other aspects that include price, promotion and product have been concentrated on. However with the greater difficulty that has arisen in gaining a sustainable competitive advantage through the other components of the marketing mix, and the need to reduce distribution costs, there has been much emphasis on using distribution as a sustainable competitive advantage source. To this end Coca Cola in Zimbabwe and internationally has demonstrated a lot of prowess in this regard. It is the move towards distribution as a sustainable competitive advantage and the possible push or pull strategy mixes, within the context of that has also brought the promotional strategies to the fore. When looking at distribution management one thing that has caused an analysis of the distribution strategy and its impact on the organization is the Bullwhip or Forrester effect.

2.1.1 Bullwhip effect
Forrester (1961) described the erratic oscillations of consumer demand that had a ripple effect in the distribution channel as the Bullwhip Effect also known as the Forrester effect. Businesses usually forecast demand to properly position inventory and other resources in relation to the manufacturing, business planning and administration. He described a situation where forecasting is used to predict customer demand based on statistics which are rarely accurate. Because forecast errors are a given, companies often carry an inventory buffer called safety stock. Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock. In periods of rising demand, down-stream participants increase orders. In periods of falling demand, orders fall or are stopped to reduce inventory. The effect is that variations are amplified as one moves upstream in the supply chain. This observed effect is the Bullwhip effect which affects the distribution strategy and order levels of line customers. This effect then provoked the question, whither push or pull.

2.1.1 Channel Management
According to Rosenbloom (2004) a marketing or distribution channel is “the external contactual organization that management operates to achieve its distribution objectives”. They argue that this definition is more of a managerial decision making viewpoint seen through the eyes of marketing management in a producing and manufacturing firm. El-Ansary (1996) define a marketing channel as sets of interdependent organizations involved in the process of making a product or service available for use or consumption. This definition however lacks emphasis on the scope and functionality of a channel member that Rosenbloom gives.

To have an understanding of where Rosenbloom were coming from this paper will look at the key point of the definition that includes: external, contactual organization...

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