Strategy and Distribution Network
2022
Anne-Marie Willi-Bueno
Who am I?
- Business school
- 12 years of experience in marketing
- Small and big groups
- Cosmetics / beauty / well-being sectors
- Owner of a marketing agency
- Founder of DIY Workshop related to Zero Waste
Anne-Marie Willi-Bueno
amwillibueno.ext@iscparis.com
Framework
Share opinions
Feedback
Respect
Positive as well as improvements
Goodwill & humble attitude
active learning
CONFIDENTIALITY
Questions Share experience
Objective of the class
To develop and manage distribution channels
Elaborate the best strategy of distribution network given the operational constraints and businessopportunities
Understand the importance of choosing a distribution network into the product / service positioning
Understand the operational constraints linked with a choice of a distribution network
Schedule
See next slide updated schedule
Schedule
Assessement
- 50% individual written exam: short cases studies and questions - 50% group work
Group work
- choose your teamate(s) - groups of 2 or 3
- choose a small brand
- oral presentation
- task: analyse the current distribution network of this company + build recommandations for the future
- due for last session
Recommended methodology - Analysis
Competitors
- What are their distribution channels
- How you can differenciate
Product
CONSUMERS
- Desired margin
- Marketing mix
- Perishability
- Handlability
- Complexity
- Location & concentration
- Needs (information, assistance, service)
- Behavior
Organisation
PESTEL
PORTER
Macro-environment factors
Micro-environment factors
- Ressources (time, money, people)
- Desired degree of control
Internal
External
Recommended methodology - Strategy
- Product development strategy
- Market development strategy
- Market penetration strategy
- Diversification strategy (vertical integration or internationalization)
Pros & cons of each option
Which Mode?
Direct or Indirect?
- Intense
- Selective
- Exclusive
Distribution impact
Growth strategy
Additional reading
- Amazon.com's European Distribution Strategy by Janice H. Hammond, Claire Chiron (Harvard Ressource)
- Honest Tea: Sell Up or Sell Out? By Andrew Hoffman (Harvard Ressource)
- Google Glass, by Thomas R. Eisenmann, Lauren Barley, Liz Kind (Harvard Ressource)
- Developing and Managing Channels of Distribution, by V. Kasturi Rangan (Harvard Ressource)
- The Promise of Channel Stewardship
by V. Kasturi Rangan and Marie Bell
Introduction and definitions
Distribution network impact
Growth strategy and impact on distribution network
Table of Content
Cosmetics case study
Focus on DNVB brands
Section
Introduction and definitions
Distribution network
A distribution channel is the flow that a good or service follows from production or manufacturing to the final consumer/buyer. Defining a good distribution strategy is both a matter of marketing as well as logitics / supply chain.
Your value chain is part of a larger value system, the set of activities involved in creating value from the end user (including activities that are outside your company, like in suppliers or distributors). Ultimately, you bear responsibility to your customers for all steps of the value system.
PORTER's VALUE CHAIN
TYPES of DISTRIBUTION CHANNELS
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
Classification of retailers types (brick & mortar)
Role of intermediaries
Physical distribution
Information
Transfer
Negotiation
Financing
Risk taking
Payments
Communication
Ordering
INDIRECT CHANNELS
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
MONEY & STOCKS FLOWS
Same flows as in the wholesale channel as the agent is only an intermediary business (10% fees on transactions)
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
Should you choose direct of indirect channels?
Size and distribution of end consumer
01
Nature of product or service
02
Role and position of the product / service in the end consumer's basket
03
Nature of the producer firm
04
Relative size of the producer firm
05
Busines strategy of the producer firm
06
Source: Developing and Managing Channels of Distribution, by V. Kasturi Rangan (Harvard Ressource)
https://www.youtube.com/watch?v=fvLGcdp7FbA
MULTI-CHANNEL DISTRIBUTION
You can mix simultaneously or alternately different channels for the marketing of your product / service. Multi-channel distribution requires:
- Consistency of messages on each channel. Unless you use several channels to reach several customer segments, in this case, you must adapt your messages to the profile of each segment. Training of the actors of your sale
- Centralization of contacts generated by each of the channels: It's up to you to organize the collection of contact details from buyers outside the main sales channel so that you can contact them again for a promotion
- Management and coordination of the different channels to avoid channel conflicts in price / service levels / rewards. An healthy channel system assures rewards & compensation for the various channel members, consistently with their efforts and evolves with their changing roles.
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png https://business-builder.cci.fr/guide-creation/les-strategies-operationnelles/la-strategie-de-distribution-lemplacement
Distribution modes
INTENSE
SELECTIVE
EXCLUSIVE
Large number of points of sale
According to some criteria, select a number of points of sale
Limit the number of points of sale
Source: https://www.rjce.fr/strategie-de-distribution/ https://cours-gestion.com/distribution-intensive-selective-exclusive/
Channel stewardship
Ensuring that the roles of the various channel partners evolve continually in keeping with the needs of the target customers
Aligning and influencing the channel system
Mapping the industry channels
Researching & understanding the roles of all the external forces at play, including what competitors are doing
Building and updating the channel value chain
Defining how a firm carves out a channel strategy (linked to its customers needs & requirements)
PORTER's 5 forces: definition and goal
The goal of the PORTER analysis is to determine whether your industry is likely to be profitable or not.
The micro-environment of your company is composed from 5 forces:
- Competition
- Substitution
- New entrants
- Suppliers
- Consumers
The more powerful these 5 forces are, the less profitable your industry is supposed to be. If these 5 forces have little power, your industry should generate more profit.
Read more: https://yourfreetemplates.com/wp-content/uploads/2019/03/Porter%e2%80%99s-five-forces-e1552181129804.png https://www.comindwork.com/images/weekly/five-forces-analysis-porter.png
INFO
Read more: https://vimeo.com/461727823
Source: https://uhurunetwork.com/buyers-journey-stages/
Where is your target?
Offline
Online
Catchment area: geographical space surrounding a point of sale, in which potential customers live, work or pass.We distinguish :
- a primary zone, where potential customers take less than three minutes on foot or by car to reach the store;
- and a secondary zone where this journey time remains less than ten minutes.
The ideal location is the one with the lowest installation costs while satisfying the greatest number of project constraints and making the best use of environmental resources.
Web to store
Store to web
Cross channel
Source: https://business-builder.cci.fr/guide-creation/les-strategies-operationnelles/la-strategie-de-distribution-lemplacement
Customers' desired service level
Service backup
Spatial convenience
Lot size
Waiting time
Product variety
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
https://www.youtube.com/watch?v=uZEa9RXRAzI
The 4P's must be:
- Clear
- Coherent between themselves
- Coherent with your company business model (for profitability)
Source: https://www.youtube.com/watch?v=Mco8vBAwOmA
To Go further:
Section
Distribution network impact
INTERNAL IMPACTS
SUPPLY CHAIN
HUMAN RESOURCES
Logistics Transportation facilities Inventory Paletization data sheet
Salespeople After-sales department Training department
MARKETING
REAL ESTATE
Advertising Assortment Service
Warehouse
CASH & STOCKS FLOWS
Same flows as in the wholesale channel as the agent is only an intermediary business (10% fees on transactions)
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
FINANCIAL IMPACT (price waterfall)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer (direct sales) --> what final price?
30% of margin for producer, retailer and distributor --> what final price?
30 % of margin for retailer, final price $10 --> what margin for the producer?
Exercice Financial impact
30 % of margin for distributor and retailer, final price $10 --> what margin for the producer?
$10 final price --> what margin for the producer?
30% of margin for producer and retailer --> what final price?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer, retailer and distributor --> what final price?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
Exercice Financial impact
30 % of margin for distributor and retailer, final price $10 --> what margin for the producer?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30 % of margin for retailer, final price $10 --> what margin for the producer?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer and retailer --> what final price?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer (direct sales) --> what final price?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
$10 final price --> what margin for the producer?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
FINANCIAL IMPACT (P&L)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/066_channel_profiles/Launch.html
FINANCIAL IMPACT (P&L)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/066_channel_profiles/Launch.html
Section
Growth strategy and impact on distribution network
4 classic Growth strategies
Growing your MS by developing new customer segments, expanding your user base, or expanding your current users' usage of your product.
Market penetration strategy
Product development strategy
Growing your MS by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market.
Growing your market share (MS) by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
Growing your MS by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
Diversification strategy
Market development strategy
Source: https://www.appcues.com/blog/growth-strategies
Growth strategies - impact on distribution
Growing your MS by developing new customer segments, expanding your user base, or expanding your current users' usage of your product.
Market penetration strategy
Product development strategy
Growing your MS by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market.
Diversification strategy
Growing your market share (MS) by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
Growing your MS by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
Market development strategy
Internationalisation
vertical integration
Source: https://www.appcues.com/blog/growth-strategies
Vertical integration
Backward integration: gaining control of the supply-side of a company. Forward integration: moving through the production cycle and giving a company more control over its distribution
+ Info
Read more: https://www.researchgate.net/profile/Subasgar_Kumareswaran/publication/335079623/figure/fig2/AS:790017676935169@1565366300332/Micro-and-macro-environmental-forces-Blythe-2005.ppm
To anticipate changes, use the PESTEL model
Image source: https://blog.threeandahalfroses.com/wp-content/uploads/2020/04/diagram-pestel.png
Factors that may influence your distribution strategy:
Image source: https://blog.threeandahalfroses.com/wp-content/uploads/2020/04/diagram-pestel.png
Tesla distribution strategy:
DELL distribution strategy (1985):
In a nutshell....
Section
Cosmetics
Methodology: cakes factory
2:40
Recommended methodology - Analysis
Competitors
- What are their distribution channels
- How you can differenciate
Product
CONSUMERS
- Desired margin
- Marketing mix
- Perishability
- Handlability
- Complexity
- Location & concentration
- Needs (information, assistance, service)
- Behavior
Organisation
PESTEL
PORTER
Macro-environment factors
Micro-environment factors
- Ressources (time, money, people)
- Desired degree of control
Internal
External
Recommended methodology - Strategy
- Product development strategy
- Market development strategy
- Market penetration strategy
- Diversification strategy (vertical integration or internationalization)
Pros & cons of each option
Which Mode?
Direct or Indirect?
- Intense
- Selective
- Exclusive
Distribution impact
Growth strategy
Cosmetics industry - one of the most challenging for logistics
HUGE complexity in STORAGE conditions
EXpiration date
many options
240 colors
0% margin: direct ditribution (website, social selling, door-to-door sales, concept stores, ephemeral shops, own shops) 35%: mass market (supermarkets, discounters, e-commerce plateforms) 40%: pharmacies beauty institutes, professional wholesalers, 50%: specialized distribution networks (Sephora)
- 3 years after production
- PAO
HUGE complexity in portfolios
Section
E-commerce
E-commerce turnover increase
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce and Brick & mortar can be complementaries
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
US Comparison between brick & mortar and e-commerce
E-commerce evolution according to product category / France
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce evolution according to product category / US
TOP 20 e-commerce websites
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce platformes still an attractive business
Source: https://www.eu-startups.com/2022/01/ankorstore-secures-e250-million-with-a-e1-75-billion-valuation-to-become-frances-latest-unicorn/
Digital Native Vertical Brands
Source: https://www.digitalnativegroup.com/articles/panorama-2022-des-dnvb-francaises
Some aspects you need to pay attention when going on e-commerce
Display products
Showrooming
Easy (& free) return
Visualization tools
Consumer reviews
THANKYOU!
Building and challenging a channel value chain
Source: Developing and Managing Channels of Distribution, by V. Kasturi Rangan (Harvard Ressource)
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French speaking useful websites
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Transcript
Strategy and Distribution Network
2022
Anne-Marie Willi-Bueno
Who am I?
Anne-Marie Willi-Bueno
amwillibueno.ext@iscparis.com
Framework
Share opinions
Feedback
Respect
Positive as well as improvements
Goodwill & humble attitude
active learning
CONFIDENTIALITY
Questions Share experience
Objective of the class
To develop and manage distribution channels
Elaborate the best strategy of distribution network given the operational constraints and businessopportunities
Understand the importance of choosing a distribution network into the product / service positioning
Understand the operational constraints linked with a choice of a distribution network
Schedule
See next slide updated schedule
Schedule
Assessement
- 50% individual written exam: short cases studies and questions - 50% group work
Group work
Recommended methodology - Analysis
Competitors
Product
CONSUMERS
Organisation
PESTEL
PORTER
Macro-environment factors
Micro-environment factors
Internal
External
Recommended methodology - Strategy
Pros & cons of each option
Which Mode?
Direct or Indirect?
Distribution impact
Growth strategy
Additional reading
- The Promise of Channel Stewardship
by V. Kasturi Rangan and Marie BellIntroduction and definitions
Distribution network impact
Growth strategy and impact on distribution network
Table of Content
Cosmetics case study
Focus on DNVB brands
Section
Introduction and definitions
Distribution network
A distribution channel is the flow that a good or service follows from production or manufacturing to the final consumer/buyer. Defining a good distribution strategy is both a matter of marketing as well as logitics / supply chain.
Your value chain is part of a larger value system, the set of activities involved in creating value from the end user (including activities that are outside your company, like in suppliers or distributors). Ultimately, you bear responsibility to your customers for all steps of the value system.
PORTER's VALUE CHAIN
TYPES of DISTRIBUTION CHANNELS
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
Classification of retailers types (brick & mortar)
Role of intermediaries
Physical distribution
Information
Transfer
Negotiation
Financing
Risk taking
Payments
Communication
Ordering
INDIRECT CHANNELS
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
MONEY & STOCKS FLOWS
Same flows as in the wholesale channel as the agent is only an intermediary business (10% fees on transactions)
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
Should you choose direct of indirect channels?
Size and distribution of end consumer
01
Nature of product or service
02
Role and position of the product / service in the end consumer's basket
03
Nature of the producer firm
04
Relative size of the producer firm
05
Busines strategy of the producer firm
06
Source: Developing and Managing Channels of Distribution, by V. Kasturi Rangan (Harvard Ressource)
https://www.youtube.com/watch?v=fvLGcdp7FbA
MULTI-CHANNEL DISTRIBUTION
You can mix simultaneously or alternately different channels for the marketing of your product / service. Multi-channel distribution requires:
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png https://business-builder.cci.fr/guide-creation/les-strategies-operationnelles/la-strategie-de-distribution-lemplacement
Distribution modes
INTENSE
SELECTIVE
EXCLUSIVE
Large number of points of sale
According to some criteria, select a number of points of sale
Limit the number of points of sale
Source: https://www.rjce.fr/strategie-de-distribution/ https://cours-gestion.com/distribution-intensive-selective-exclusive/
Channel stewardship
Ensuring that the roles of the various channel partners evolve continually in keeping with the needs of the target customers
Aligning and influencing the channel system
Mapping the industry channels
Researching & understanding the roles of all the external forces at play, including what competitors are doing
Building and updating the channel value chain
Defining how a firm carves out a channel strategy (linked to its customers needs & requirements)
PORTER's 5 forces: definition and goal
The goal of the PORTER analysis is to determine whether your industry is likely to be profitable or not.
The micro-environment of your company is composed from 5 forces:
- Competition
- Substitution
- New entrants
- Suppliers
- Consumers
The more powerful these 5 forces are, the less profitable your industry is supposed to be. If these 5 forces have little power, your industry should generate more profit.Read more: https://yourfreetemplates.com/wp-content/uploads/2019/03/Porter%e2%80%99s-five-forces-e1552181129804.png https://www.comindwork.com/images/weekly/five-forces-analysis-porter.png
INFO
Read more: https://vimeo.com/461727823
Source: https://uhurunetwork.com/buyers-journey-stages/
Where is your target?
Offline
Online
Catchment area: geographical space surrounding a point of sale, in which potential customers live, work or pass.We distinguish :
- a primary zone, where potential customers take less than three minutes on foot or by car to reach the store;
- and a secondary zone where this journey time remains less than ten minutes.
The ideal location is the one with the lowest installation costs while satisfying the greatest number of project constraints and making the best use of environmental resources.Web to store
Store to web
Cross channel
Source: https://business-builder.cci.fr/guide-creation/les-strategies-operationnelles/la-strategie-de-distribution-lemplacement
Customers' desired service level
Service backup
Spatial convenience
Lot size
Waiting time
Product variety
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
Source: https://courses.lumenlearning.com/wmopen-introbusiness/chapter/marketing-mix-introduction/
https://www.youtube.com/watch?v=uZEa9RXRAzI
The 4P's must be:
Source: https://www.youtube.com/watch?v=Mco8vBAwOmA
To Go further:
Section
Distribution network impact
INTERNAL IMPACTS
SUPPLY CHAIN
HUMAN RESOURCES
Logistics Transportation facilities Inventory Paletization data sheet
Salespeople After-sales department Training department
MARKETING
REAL ESTATE
Advertising Assortment Service
Warehouse
CASH & STOCKS FLOWS
Same flows as in the wholesale channel as the agent is only an intermediary business (10% fees on transactions)
Source: https://s3-us-west-2.amazonaws.com/courses-images-archive-read-only/wp-content/uploads/sites/903/2016/02/23230705/Marketing-channel-graphic.png
FINANCIAL IMPACT (price waterfall)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer (direct sales) --> what final price?
30% of margin for producer, retailer and distributor --> what final price?
30 % of margin for retailer, final price $10 --> what margin for the producer?
Exercice Financial impact
30 % of margin for distributor and retailer, final price $10 --> what margin for the producer?
$10 final price --> what margin for the producer?
30% of margin for producer and retailer --> what final price?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer, retailer and distributor --> what final price?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
Exercice Financial impact
30 % of margin for distributor and retailer, final price $10 --> what margin for the producer?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30 % of margin for retailer, final price $10 --> what margin for the producer?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer and retailer --> what final price?
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
30% of margin for producer (direct sales) --> what final price?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
For all the simulations: $4 costs of unit
$10 final price --> what margin for the producer?
Exercice Financial impact
Source : https://s3.amazonaws.com/he-assets-prod/interactives/062_channel_margins/Launch.html
FINANCIAL IMPACT (P&L)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/066_channel_profiles/Launch.html
FINANCIAL IMPACT (P&L)
Source : https://s3.amazonaws.com/he-assets-prod/interactives/066_channel_profiles/Launch.html
Section
Growth strategy and impact on distribution network
4 classic Growth strategies
Growing your MS by developing new customer segments, expanding your user base, or expanding your current users' usage of your product.
Market penetration strategy
Product development strategy
Growing your MS by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market.
Growing your market share (MS) by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
Growing your MS by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
Diversification strategy
Market development strategy
Source: https://www.appcues.com/blog/growth-strategies
Growth strategies - impact on distribution
Growing your MS by developing new customer segments, expanding your user base, or expanding your current users' usage of your product.
Market penetration strategy
Product development strategy
Growing your MS by entering entirely new markets. Rather than expanding within your existing market, you’re launching into the unknown with new products or services in a new market.
Diversification strategy
Growing your market share (MS) by developing new products to serve that market. These new products should either solve a new problem or add to the existing problem your product solves.
Growing your MS by bundling products, lowering prices, and advertising — basically everything you can do through marketing after your product is created. This strategy is often confused with market development strategy, but the approaches are distinct in emphasizing either sales or marketing.
Market development strategy
Internationalisation
vertical integration
Source: https://www.appcues.com/blog/growth-strategies
Vertical integration
Backward integration: gaining control of the supply-side of a company. Forward integration: moving through the production cycle and giving a company more control over its distribution
+ Info
Read more: https://www.researchgate.net/profile/Subasgar_Kumareswaran/publication/335079623/figure/fig2/AS:790017676935169@1565366300332/Micro-and-macro-environmental-forces-Blythe-2005.ppm
To anticipate changes, use the PESTEL model
Image source: https://blog.threeandahalfroses.com/wp-content/uploads/2020/04/diagram-pestel.png
Factors that may influence your distribution strategy:
Image source: https://blog.threeandahalfroses.com/wp-content/uploads/2020/04/diagram-pestel.png
Tesla distribution strategy:
DELL distribution strategy (1985):
In a nutshell....
Section
Cosmetics
Methodology: cakes factory
2:40
Recommended methodology - Analysis
Competitors
Product
CONSUMERS
Organisation
PESTEL
PORTER
Macro-environment factors
Micro-environment factors
Internal
External
Recommended methodology - Strategy
Pros & cons of each option
Which Mode?
Direct or Indirect?
Distribution impact
Growth strategy
Cosmetics industry - one of the most challenging for logistics
HUGE complexity in STORAGE conditions
EXpiration date
many options
240 colors
0% margin: direct ditribution (website, social selling, door-to-door sales, concept stores, ephemeral shops, own shops) 35%: mass market (supermarkets, discounters, e-commerce plateforms) 40%: pharmacies beauty institutes, professional wholesalers, 50%: specialized distribution networks (Sephora)
HUGE complexity in portfolios
Section
E-commerce
E-commerce turnover increase
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce and Brick & mortar can be complementaries
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
US Comparison between brick & mortar and e-commerce
E-commerce evolution according to product category / France
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce evolution according to product category / US
TOP 20 e-commerce websites
Source: https://fr.fashionnetwork.com/news/L-e-commerce-gagne-encore-du-terrain-en-france-avec-15-1-en-2021,1374877.html
E-commerce platformes still an attractive business
Source: https://www.eu-startups.com/2022/01/ankorstore-secures-e250-million-with-a-e1-75-billion-valuation-to-become-frances-latest-unicorn/
Digital Native Vertical Brands
Source: https://www.digitalnativegroup.com/articles/panorama-2022-des-dnvb-francaises
Some aspects you need to pay attention when going on e-commerce
Display products
Showrooming
Easy (& free) return
Visualization tools
Consumer reviews
THANKYOU!
Building and challenging a channel value chain
Source: Developing and Managing Channels of Distribution, by V. Kasturi Rangan (Harvard Ressource)
French speaking useful videos
French speaking useful websites