Distribution refers to the process of getting your product into the hands of your target customer, whether that is an individual consumer or a business user. Entrepreneurs need to identify effective distribution channel(s) to reach their target customer.
If your startup is following Steve Blank’s Customer Development Model, distribution is initially part of thecustomer discovery process. You will later re-examine and verify your assumptions about distribution channel effectiveness in the customer validation process.
Distribution is one of the four main elements of the marketing mix (the other three are product, pricing, and promotion).
Distribution: Identifying channel effectiveness
As part of his Lean LaunchPad course, Blank notes two key considerations for startups when first identifying effective channels for their product. Entrepreneurs must weigh the following: 1
1. How will customers want to buy your product? Considerations for the customer may include
2. How do you want to sell the product? Your preference may be to sell it
Distribution channels: Financial considerations
In evaluating a potential channel for its effectiveness, entrepreneurs need to gauge the following financial considerations:3
- What are the channel costs—how much will your startup spend?
- What will be the indirect expenses, such as presales support or promotions?
- Will your customers need additional components to buy and use your product? If yes, how will they acquire those?
- What is your startup’s net revenue once you factor in the channel expenses?
Do you need help building an effective and diverse distribution channels strategy to reach your market faster?
Check out the Distribution and Channel Development Lunch&Learn at the RIC Centre with Ty Parkes, owner of TT Sales & Marketing.
Click here to learn more about the event and how your startup can strategically position its brand with the right distribution channels strategy.