According to the Director of Distribution, Bill Ferrell, “Chocoberry has never previously offered retail chocolate products for consumers”, because of that I recommend the company to use a distributor as the best option at this point of the process, since the company is able to reach the target market and access all the market desired, without the logistics issues, costs, and decreasing the trade risks. The disadvantage of using distributors is that Chocoberry may not know who is buying the healthy chocolate bar; consequently it cannot establish relationship with them.
Another risk of using distributors is that the product might be advertised and priced in a way that is not advantageous for Chocoberry, causing reaching the wrong target market and losing market share. To find the best distribution option for the new product, as a consultant hired by Chocoberry, I must analyze some factors in order to propose the best options. Nature of the product – Is it a complex product? Is it required special storage? What type of product? It is important to analyze the product itself, for example, if the bar goods products is perishable, it will need the shortest and most direct distribution channel.
In this case, less intermediaries is best. Customer – How are the customers? How much do they buy? Knowing the type of customer, understand their needs, and know where they are willing to buy the new product, are important information to chose the best way to distribute the product. The distribution reflects the end user’s buying habits. Individual consumers have different needs and buying habits than B2B customers. Market – Is it geographically spread? How are and where is the competition?
What distribution channel the competition uses? Bigger the city, easier to sell direct to the consumer, on the other hand, more wide spread the stores more intermediaries needed. Business – What is the size of the company? What are the marketing objectives of Chocoberry? I would propose three options of distribution channels for the new chocolate product: wholesaler, retailer, and direct-to-consumer, as shown in the flow diagram below. Chocoberry must uses B2B and B2C methods in order to achieve its target market in all directions.
Through a wholesaler, Chocoberry’s new product is able to be present all over the country, once wholesalers usually stock products in relative close distance to their retail customers. This option decrease or eliminate the responsibility of the logistics and costs to distribute the product to distant places. This distribution option also has the advantage of less competition, compared to selling to retailers. Using a retailer, such as healthy food stores, specialty candy store, and major supermarkets, Chocoberry is able to be presented nationwide.
Selling the chocolate bar in healthy food stores, the company can reach its main target market, adults who want to eat chocolate but are concerned with health aspects, such as calories, fat, dental etc. , as Candy Marshall, VP Marketing, mentioned. Specialty candy stores give the opportunity for Chocoberry get into the candy market, and reach chocolate fans. Usually candy store customers buy more quantity products than in regular stores, increasing sales profit, and they are less sensitive regards to price, since is known that specialty stores the prices are usually higher.
This type of distribution channel increases the opportunity for Chocoberry gets feedback of its product. Nonstore retailers, such as automatic vending machines or even online sales, are examples of B2C distribution channel that Chocoberry must consider, and some of advantages are: low cost, product is present everywhere and any time, and the direct distribution channel creates a better relationship between the company and customer. Selling the new and healthy chocolate bar to wholesalers and retailers, Chocoberry must evaluate the business through distribution metrics. According to Farris, P. et al. ]. (2010), distribution metrics reveals and measures the availability of products sold, brand’s percentage of market access, and the company’s ability to convey a product to its customers. Through the distribution metrics, the company is also able to measure the performance of the marketing and distribution plan, such as number of outlets, distribution gain, share of shelf etc. As a large company, Chocoberry must aim to be present and available nationally, and the company has two options of distribution intensity to consider, intensive or selective distribution.
The Business Dictionary define distribution intensity as “The level of a product’s availability in a market selected by a marketer. The level of distribution intensity the marketer chooses is often dependent on factors such as the size of the target market, pricing and promotion and production capacity, in addition to the amount of service the product will need after its purchase if applicable. ” Intensive distribution aim to cover the market by using all available outlets, this way Chocoberry new product can be available anywhere the consumer demands them.
In this type of intensity distribution, customers can find the product easily. On the other hand, selective distribution limited the number of outlets, and focuses the product more to its main target market. The advantage is that Chocoberry can choose the best retailer/wholesaler, but customers will not find the product everywhere or easily. In order to choose the best intensity, Terry Hersch with the distribution team of Chocoberry must to decide what is the company’s goal, be present everywhere, or focus only where its target market is.
References Business Dictionary (n. d. ). Retrieved June 2012, From http://www. businessdictionary. com/definition/distribution-intensity. html Crawford, M. , ; Di Benedetto, A. (2010). New Product Management. New York, NY: Paul Ducham. Farris, P. [et al. ]. (2010). Marketing metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, NJ: Tim Moore. N. d. (n. d). Tutor2U – Marketing Distribution Channels. Retrieved June 2012 from http://tutor2u. net/business/gcse/marketing_distribution_channels. html