- Writing a Business Plan
- Financial Statements
- Business Forecasting
- Business Checklist
PART B - Distribution Strategy
Distribution refers to the methods used to sell products and the channels in which products pass before reaching the end-consumer. Below discusses our currently planned distribution strategies as well as a variety of future distribution possibilities.
The Company's overall business strategy, pricing structure, marketing objectives, and target market are such that our sales warrant a "person-to-person" selling strategy. With this in mind, the Company plans to eliminate all distribution channels in its initial stages of operation. In other words, J&B will utilize the talents and skills of its sales staff to sell directly to the target audience, rather then hiring an out-of-house service bureau such as "Tele Communications". This decision saves the company, on average, $16.33 per unit sold and over $71,000 during its first year of operation. But the decision is not based solely on monetary considerations; other important factors have been analyzed. For instance, an in-house service bureau enables the Company to monitor and quickly respond to customer questions, concerns and inquiries. It allows us to directly determine the effectiveness of our selling techniques and strategies. It also enables us to ensure customer satisfaction and loyalty, thus allowing us to increase sales and maintain a high profile among consumers. It lessen the likelihood of mis-communication among the channels - something that is of prime importance to new organizations. And finally, by reducing the levels of distribution, the Company can experience a controlled growth.
The Company's main distribution objective is to operate undetected by larger companies whose business training products may not reign superior, but their financial resources do. Until such time as J&B can directly compete with these larger organizations, our promotion will NOT include high "main stream media" nor distribution channels such as computer shops, bookstores and office supply stores. (Sometimes the best offense is a superior defense).
By 200X, J&B plans to expand its distribution channels by signing up distributors. Furthermore, when consumers purchase our training product, they may automatically receive the "right" to sell it to others. In addition, we plan to solicit other distributors through personal selling and direct mail initiatives.
Our current thoughts regarding the signing of distributors are;
In essence, J&B will act as an out-off-house service bureau for the distributors. Moreover, we would receive all calls for each distributor, make sales on behalf of each distributor, and complete the product fulfilment function for each distributor. In addition, distributors would pay J&B a per minute rate for each call they receive, buy the business training course in diskette, cd, Internet, or hard copy form from J&B, pay a flat rate for product fulfillment, and pay a per minute rate for each call they receive regarding customer service.
By signing distributors, J&B would sell its business training product at a lower price and incur higher costs ( i.e. costs associated with hiring additional selling staff, promotional material, and a more sophisticated computer database, tracking system & communication devises). The benefits, however, include increased volume sales, increased revenue on per minute calls, the Company retains full control over our selling practices, we maintain a one-way channel of communications, and J&B increases its market coverage without increasing its promotional expenditure.
Once again, the Company plans to entertain this endeavor in 200X. The forecasted financial statements, however, do not estimate the costs nor the revenues associated with this development.- rather we wish to defer such estimates until further research has been conducted.
The Internet as a Distribution Tool
The Company will also use the Internet as a distribution channel by offering our product to consumers over the Internet. Moreover, individuals interested in the business training course, in Internet form, would be given our web-site address along with an ID number (password). After the consumer "logs" on the Internet, types in our web-site address, and types their ID number, they can begin learning how to own and operate their own business.
This method of product distribution is beneficial to both the customer and to J&B. The customer will have the product immediately and therefore will not have to wait 4-6 weeks for shipping. J&B benefits from this method of distribution since we do not have to purchase direct materials, packaging materials, or shipping. In addition, it reduces the amount of time and money spent on product fulfillment (mainly human resources).
Telemarketing as a Distribution Device:
Another distribution method that may prove feasible in the future is Telemarketing. J&B would purchase a mailing list along with telephone numbers of individuals who made a recent purchase of any type of product relating to "starting a business". During "slow periods" of each day, our selling staff would call these prospective buyers to inform them of our business training course. If chosen as a viable distribution channel, telemarketing will ONLY be used to increase the efficiency of the selling staff. - It will NOT be used as a major selling devise. Once again, further research is needed due to its negative conation. Moreover, J&B's intention is to position itself and its products in the most positive light - any strategy or selling tactic that interferes with this philosophy will quickly be discarded.
One final note: If telemarketing is determined to be an effective distribution channel, it will only be used with those training products geared towards individuals who WANT to start their own business. Furthermore, telemarketing will NOT be used with products targeting EXISTING home-based business owners. The reason is simply; existing business owners frown upon and literally disdain being interrupted by a telemarketer when they are trying to do their work.
Direct Mail as a Distribution Method:
Direct mail will not be used as a distribution channel for our initial product, however it will be one of the Company's main channels for future products that target existing home-based business owners.
According to statistics complied by market research firm The Strategic Network, 36.4% of people who work at home prefer to learn about new home office products and services via direct mail. According to the study, direct mail allows home-based entrepreneurs to sort through the material at their leisure. Interesting enough, the research showed that only 3.4% of home-based business owners preferred telemarketing as a means of learning about new home office products and services (thus supporting our claims made above). These survey results have been taken from the March 1995 edition of Business & You Magazine.
Internet Stores as a Distribution Channel:
More and more companies are establishing Internet Stores. Internet Stores are similar to retail outlets, however Internet retailers are not required to carry any inventory. Internet Users "browse" through these stores by reading brief descriptions and seeing small graphical presentations on the available products. Unlike traditional retail outlets, the consumer does not have to leave their home to purchase any product. Moreover, customers simply order products using the Internet and either pay by check, money order, or over the Internet with credit cards.
One type of Internet store that is of interest to J&B are those targeting aspiring entrepreneurs. For instance, "The Virtual Business Store" promotes a variety of books, manuals, and software relating to entrepreneurship. Consumers purchase these products through The Virtual Business Store (retailer) who, in turn, contacts the producer (wholesaler) indicating that a sale has been made. The wholesaler is given the necessary shipping information and is responsible for delivering the product to the end-consumer.
Most Internet Stores do not charge for placing products in their store, rather they receive a commission on each sale made. J&B is seriously considering this method of distribution since it reaches all Internet Users who want to own and operate their own business.