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What Is a Distribution Mix?

Max Freedman
Max Freedman

Your company's distribution mix is an important part of the marketing mix, ensuring that the right product gets to the right place at the right time.

The distribution mix is an important part of the marketing mix, ensuring that the right product gets to the right place at the right time. There are five major components in the distribution mix: inventory, warehousing, communication, unitization (including packaging) and transport. Each of these steps will involve different things depending on your type of business.

What is a distribution mix?

The distribution mix is vital to marketing. Some details of your distribution mix may vary depending on the nature of your business. The five major components of the distribution mix are inventory, warehousing, communication, unitization and transport. Here is a breakdown of each component:

  • Inventory: Your inventory depends on what you are selling. For instance, if you are selling physical items such as T-shirts, then your inventory will be the number of T-shirts you have available for sale at one time. On the other hand, if you deal with digital products, you may not have to deal with inventory as the ability to sell digital products does not require having a set amount of inventory for sale.

  • Warehousing: This is also more a matter of dealing with physical inventory. If you have a large amount of inventory, you may need to have your own warehouse space to store the inventory. Moreover, you will have to implement a process that makes it easy to locate the products and ship them to the customers in a reasonable time. Warehousing is highly important when dealing with inventory. If there is a breakdown in any area of the warehousing sector, it can destroy your business.

  • Communication: Communication involves things such as marketing, sales, direct marketing, social media marketing, email marketing and event sponsorship, to name just a few facets. This includes all the necessary communications that are involved in launching a product, promoting and selling the product until it becomes successful. Whether you spend your energy on social media or making calls, this is all a part of communication. Additionally, maintaining strong communication is vital to finding and maintaining investors as well as finding and maintaining loyal customers, among many other things.

  • Unitization: Unitization is the pooling of assets by various parties in order to form a single operation.

  • Transport: Once the product has been promoted, processed through the warehouse and sold, it must be transported. Transport and warehousing affect every aspect of the distribution mix.

What is the marketing mix comprised of?

The marketing mix is comprised of the 4 P's: price, product, promotion and price.

Price

This refers to the value that is placed on the product. This is based on numerical and demographical data such as the cost of production, the segment being targeted, the ability of the market to pay, and supply and demand.

Non-numerical factors such as consumer perceptions of a product's value may also play a part. For example, a company that wants to make its products seem like luxury items may set its prices higher. On the other hand, a company interested in providing luxury quality on a budget may set its prices lower to match its desired image.

FYIFYI: An example of the above might be an organic food brand that sets its prices lower than its many higher-cost competitors. This price dip is a subtle form of agricultural marketing.

Product

This is the actual product or service being sold. The product or service must be functional enough to allow the other elements of the marketing mix to be effective. It must also meet an existing need that many consumers share, or convince consumers that it meets a need they didn't know they had.

Many of the most successful home improvement devices have made excellent use of the product component of the marketing mix. Take the Roomba for example. Upon its introduction, few people were explicitly asking for a robot that goes around the house vacuuming everything in its path. However, iRobot (the company that makes Roombas) has sold 30 million robots – including Roombas – to date.

Place

This refers to the point of sale. This means you must be able to attract consumers and make it easy for the consumer to purchase the product or service. It also refers to where within a point of sale, such as a storefront, a product is placed. It's the component of the marketing mix that determines which clothing item you first see when you walk into a retailer such as H&M or Old Navy.

Place can also refer to product placement, which is the use of a branded item in a movie, television show or other forms of media. Beats by Dre is quite effective at marketing itself via place: Watch enough music videos, and you'll see the company's instantly recognizable "b" logo on all kinds of items. Someone who sees one of their favorite musicians using Beats might get the social proof they need to feel convinced that it is a trustworthy brand.

Promotion

This refers to all the methods necessary to make the product or service known to the public. It's the component of the marketing mix that's most obviously marketing-related.

Advertising, public relations and digital marketing are a large part of promotion, which aims to introduce consumers to products and explain why they're worth buying. M&Ms have achieved both these goals successfully for decades with their near-ubiquitous "melt in your mouth, not in your hand" slogan. Everything you need to know about these chocolate candies and what makes them superior is right there in the slogan.

Did you know?Did you know? These days, the marketing mix may also involve the 4 P's known as packaging, positioning, people and politics.

How to implement all components in the marketing mix

While you do not need to be a distribution mix expert, you do need to see your business operation as a whole and understand how each part relates to the other, including the distribution mix. Establishing a supply chain team can improve customer service and increase profits.

Communication across traditional boundaries to include external participants in the chain is integral to this concept. You will be able to create a distribution mix that is effective, efficient, economical and flexible. A flexible distribution mix allows you to adapt to changes within your business or external changes affecting your business, such as technology changes or rising transportation costs.

To begin implementing a sound distribution mix strategy, there are three steps involved, comprising the following:

  1. Start by gathering distribution mix information pertinent to your business.
  2. Next, obtain distribution mix advice through networking, professional organizations and research.
  3. Finally, establish strong distribution mix management.

Transportation and warehousing will affect all aspects of your distribution mix. Regardless of whether you outsource these services or they are an internal part of your company, you should make sure communication lines are strong. 

Select appropriate technology (hardware and software) to enhance your distribution mix

Technology changes quickly. Making sure that not only your systems are up to date, but also those of the intermediaries you contract with is very important for efficiency and increased profitability. Your company will have different stages of growth. Remember to maintain the right mix of customer capture and retention as your company changes. Analyze your data periodically as this will affect your distribution mix.

Last, thinking "outside the box" for ways to get your product to your customers can set you apart from your competition, but you must also understand your market, competition, finances, and internal operations and how they relate to each other, and above all, your customer.

Image Credit: Sushiman / Getty Images
Max Freedman
Max Freedman
business.com Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.