Product Distribution: Routes To Market

Distribution

When a product is developed, invented, and the intellectual property behind it protected, the next step is to determine what market routes are best to get it to customers looking for it. This involves two major sets of decisions on the business end. The first major factor to consider is which is are the ideal modes of production to use to bring a new product to market. The second major consideration is which are the ideal sales channels to reach likely customers.

Bringing A Product To Production

Innovate Product Design lists two main general areas for production in the UK: licensing arrangements and start-up arrangements. The first involves effectively hiring a company to handle all aspects of production, from manufacture to marketing. In exchange, the originator of the product gets a percentage of the profits, and the producing company gets the rest. While the original creator of the product gets less of the profits, there is a lot less stress involved bringing the product to market.

While licensing arrangements have their advantages, start-up arrangements are also common, where the inventor handles (or outsources) individual aspects of production, such as manufacture, determining sales channels and marketing, and inventory management (if needed). While this method is often chosen because it ultimately appears more profitable, many would-be entrepreneurs are not as experienced on some aspects of production and should seek experienced counsel through this process.

Bringing A Product To The People: Sales

While determining the use of one (or, in some cases, both) of these production routes will make for a good starting point, the most important step will be determining your ideal sales channels. Marketing Donut has recently produced a good overview of what to look for in choosing sales channels and note the first rule of choosing sales channels is to understand the potential customer for a product.

Some companies do fine by simply advertising on the internet. Some products need shelf space in traditional brick and mortar stores. Ultimately, what type of product it is will help determine precisely who the market is. Product demonstrations at relevant trade shows can provide valuable insight from potential customers and what are the sales channels that they make the most use of.

Sales channels like telesales and direct mail can be potentially profitable, but care must be taken to ensure that these channels are being used properly and following all local laws. Finally, sales agents and franchisees can, depending on the nature of the product, bring it closer to potential customers than handling marketing exclusively in-house.

Choosing the right combination of sales channels can make all the difference as to whether a product succeeds or fails on the market. Again, the ultimate key to success in picking the right sales channels is listening to the market itself.

James Hadley has worked in IT industry for a number of years. He lives in the San Fransisco Bay Area with his wife and two daughters and enjoy hiking, bowling and watching football.

  • Tim

    This is the big questions posed to product design consultancies. The advantage of smaller products that are to be sold locally is that they have a third option for low volume production, especially with 3d printing becoming more popular.

    I suppose it depends on the product. Like you say, advertising online is often more than enough for some retailers, but there are bigger headaches if you want to be in brick and mortar stores!