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Enterprises in a market economy pay considerable attention to the problems of optimization of process of distribution goods from producer to consumer. The results of their economic activities largely depend on how well are the selected channels of distribution of goods, on effectiveness of forms and methods of marketing, the range and quality of enterprise services related to product sales.
The study is based on an analysis of the winery product “Wine Valley”.
Relying on the theoretical material the paper presents an action plan to increase sales by increasing distribution network of products: the opening of retail stores and the use of banner advertising.
Sales of products involves identifying and evaluating the market where enterprise operates, and external environment of the enterprise. These enables to make certain important decisions: to identify attractive opportunities, identify problems and weaknesses in the enterprise, the correct choice of effective forms and sales channel, improving the movement of goods, the choice of measures to promote the product. Effective distribution of products is a necessary condition of good operation results, as distribution is the final stage of the production process, and it brings the product to the consumer.
Improving the distribution channel of products
Distribution channel can be interpreted as a path (route) of the movement of goods from producers to consumers. The choice of distribution channels of products is a sophisticated management decisions that affect all other decisions in the field of marketing. Sales of products, in most cases, is carried out through intermediaries, who through their contacts, experience and expertise allow to bring the wide range of goods to the target markets. (Blythe 2001)
Distribution channels can be of three types: direct, indirect and mixed.
Direct channels are associated with the movement of goods and services without the participation of intermediary organizations. They are often established between manufacturers and consumers, who retain control of their marketing program and have limited target markets.
Indirect channels are associated with the movement of goods and services from the first manufacturer to intermediary, and then from it – to the consumer. Such channels typically attract companies and businesses that in order to increase their markets and sales volumes agree to give up many marketing functions and costs and, accordingly, some part of control over the sale, and ready to somewhat weaken the contact with consumers.
Mixed channels combine the features of the first two channels of product distribution.
Merchandise marketing is a system that delivers the goods to places of sale in a precisely defined time and with the highest level of customer service. Foreign authors under the product distribution to understand the systematic planning decisions regarding the physical movement and transfer of ownership of the goods or services from producer to consumer, including the transportation, storage and transactions. (Blythe 2001)
In most cases the choice of distribution channel of product is the most important decision for the firm.
In 2008, the firm’s management decided to create a branded chain of stores, to ensure a certain independence from external factors, against the backdrop of adverse conditions, that have shown the effectiveness of this direction. The step to open branded retail shops was a very profitable decisions based on high performance of brand retailers, when the company needs to increase this capacity by expanding existing retail.
This strategic decision was made due to so important advantage for companies of this profile as the timely receipt of cash at a significant concentration in the retail channel. The main advantage of corporate retail distribution channel is the ability to obtain additional profits by trading margins.
Improving the promotion of products of the enterprise
Promotion is any form of communications used by the enterprise for information, persuasion and reminders about their products and services. (Blythe 2001)
Sales Promotion – short-term incentive measures to encourage the purchase or sale of goods or services, as well as various non-recurring marketing efforts, which are not part of standard procedures for promotion (for example advertising).
The overall objective of promotion is stimulation of demand, so that increasing or maintaining the same level of demand. However, this overall objective can be broken down into two broad purposes: to sell goods, services and to improve the company’s image. Both goals are called to stimulate demand, so that directed to sell the products. However, in the first case, the company stimulates demand for a particular product or service, while in the second case it improves the “image” of the company and its trademark, in the hope that buyers will associate this positive image not with one product of this company, but with all goods. Consequently, in the second case, the goal is not selling a particular product but to stimulate demand for all goods of the company.
Starting from a narrow consumer demand for “Wine Valley” and as a result of illegal market penetration of cheaper products, the company needs to inform the greater number of potential buyers the products, by expanding its brand advertisement through available today new advertising channels.
Nowadays there are new highly effective advertising channel – the Internet and its main service www (world wide web), which any company in today’s conditions should used. The Internet is a first implementation of hypermedia computer-mediated environment, which has a unique opportunity to advertise and serve as the two basic elements:
– Internet is a new means of communication, and is a way of representing hypermedia information, that significantly differs from traditional media interactive by nature, high flexibility and scalability;
– Internet is a global virtual electronic market that does not have any territorial or time limitations, allowing to make interactive advertisement of products without distribution firms.
Such advertising is aimed at:
1. Creating a favorable image of the company or product that is very important for the firm “Wine Valley”, because of the restrictions on advertising of wine production.
2. Ensuring availability of information about the company or products for hundreds of millions of people, including geographically remote regions.
3. Selling products via the Internet is only a virtual representation that do not need not open new shos – that allows to reduce the cost of sales.
In this case, the company uses the following advertising: corporate Web-server – to create web-pages, banners, email, etc.
Enterprise “Wine Valley” has its own Web-server on the Internet, which contains a brief description of the company, prices, delivery terms, etc.
For the firm “Wine Valley” decided that the most preferable would be to use banner advertising. The main aim of this advertising campaign is: to establishment and improve a good image of the company, and in that way to increase the number of customers.
In this paper, we have identified the use of new distribution channels for goods of company “Wine Valley”, as a new distribution strategy and promotion of goods. The study has helped to articulate the main directions of the new distribution channel for the company, and promotion actions. According to the information of the company:
– the use of direct marketing (branded retail stores) by the company “Wine Valley” enables to increase sales and enhance the timely concentration of cash that is necessary for enterprises.
– The company is under certain legal restrictions on advertising of wine production, that is why it uses only permitted methods of promotion of goods to the market;
– the company uses the Internet, and such method of promotion as banner advertising in order to inform new customers about the products, that is to increase the sales and generate more revenue.
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