The most successful companies have an acute understanding of the power of channels to market, a subject that forms the basis of our Distribution framework. Essentially it’s about understanding the many different routes that your business can take its product or service to potential customers.
On the face of it, knowing how many channels to market your business has should be a relatively simple and consistent fact that anyone on the board can answer. However, our coaches report that this is rarely the case and, fascinatingly, few businesses understand how Distribution unlocks huge growth potential.
Take the example shown in the diagram below.
Kellogg’s are a house of brands that produce breakfast cereals and other related products. The company’s main source of Distribution is the supermarkets. They don’t sell directly to customers. For a high volume/low margin product, they have realised the most efficient way to drive sales is to establish key partnerships with retail distributors.
However this isn’t the only way that Kellogg’s get their products to market. If you stay at any westernised hotel around the world, you’re likely to find small boxes of their cereal available at breakfast. So they also distribute through contracts with hotel providers.
By establishing a number of core distribution relationships, Kellogg’s have been able to simplify their sales processes to drive more revenue. This may seem like an easy analogy; Kellogg’s are a household brand and everything always seems easier for household brands.
So we’ll look at another, smaller example. A kitchen design and installation business had a few retail outlets where customers could come in and buy a bespoke kitchen for their home.
After utilising some of our frameworks they identified that it was the company’s design that set them apart from their competitors. It was a competitive advantage that could be leveraged to open up new distribution channels.
The company now has a contract business, which sells its kitchen designs, in bulk, to property developers & architects.
This contract business now generates more revenue than their original retail business. Opening up new Distribution channels often requires you to think outside the box and find the tools that can enable your company to see the wood from the trees.
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