My first blog as a University of Georgia professor (written in summer 2020). The blog post features an excellent new book on multi-channel distribution. This by my professor when I was at Darden, Paul Farris, and Kusum Ailawadi, another star academic. (She is at Tuck).
Thinking Through Your Multi-Channel Distirbution
The authors tackle multi-channel distribution. The book gives an excellent idea of how it is important to have a well-thought-out strategy. (Not least to make sure if you are working with Amazon you gain at least some of the benefits from the partnership). There are a large number of fascinating insights. There are cases studies, and practically useful frameworks in the book. The authors outline a distinction between communication and distribution channels. Both channels can be key. Still, the important differences need to be considered when developing a marketing strategy.
Consumer Search Loyalty And Channel Power
Many business people could benefit from understanding, as the authors note, that consumer search loyalty is the ultimate source of power in a channel. When a consumer will settle for an alternative the supplier of that product has little power. When negotiating with a retailer for shelf space the supplier needs to be grateful for whatever they get. If the consumer won’t buy anything else the supplier has a lot of power. Finally, if consumers will travel only to buy your product you have (almost) made it as a marketer.
Velocity Graphs
Perhaps the thing that resonated most with me was the clear explanation of velocity graphs. It is clear how incredibly useful such a simple representation can be in managing a distribution strategy.
Velocity graphs simply plot the market share of various brands in the market against their distribution coverage.
Ailawadi and Farris, 2020
Why bother doing this?
A velocity graph can validate the reasonableness of assumptions regarding the distribution a new product is expected to achieve.
Ailawadi and Farris, 2020
The idea is that you can tell what products are under- or over-distributed. Do you have massive distribution and a small market share? You have done a great job of pushing the products into channels. This can work but only for a short period. It really isn’t sustainable. Conversely, you can find a lot about a product that has limited placement in stores but excellent market share. A velocity graph alone can help tell a lot about distribution. It can give some clear insights for action.
A Key Text About Multi-Channel Distribution
Kusum and Paul’s book is a wealth of information about modern distribution. Give it a read.
For more on distribution also see here and here.
Read: Kusum Ailawadi and Paul Farris (2020) Getting Multi-Channel Distribution Right, Wiley.