09 December 2019

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Which 'Business Model' You Should Opt For?

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Small Enterprise India Business Desk 

In the business parlance, the definition for Business Model is: The manner in which goods move from the manufacturer to the sales outlets where the products are available for the consumers. Though the definition seems simple, this is infact complex since this process involves distributors, wholesaler, brokers etc.

 Today, conventional distribution models play vital role for any business. The conventional distribution model has three levels:

 

 

  1. The producer
  2. The wholesaler
  3. The retailer


The pitfall, the conventional model has is: All those who are involved in the conventinal distribution web always try to safeguard their business interests, resulting in conflicting interests, which will have a negative impact.  For example, a producer sometimes feels that he/she can negotiate directly with the retailers, without involving the whole sale distributors, for want of saving some costs.
 
Obviously the wholesaler will feel 'negleted'in this move,and this will prompt the wholesaler to  drop the producer's entire range of products.


An alternative to these hussels is Direct distribution.  You can sell and deliver your product with the help of your own salespeople and warehouses. This will help you save significant costs as you don't have to provide a profit for the intermediaries such as wholesalers and retailers. A retailer will aslo benefit from this as he/she can buy the products at competitive prices directly from the manufacturer.


However, ther are various factors which influence your choice of selecting a proper business model. They are:

  • The nature of your product
  • The targetted customer segment
  • The size of the product

If your product belongs to the category of perishables, you need to take extreme care in refrigerating, storaging as well as transporting. This will make your selection of a suitable istribution model a herculian task.

Size is another issue. Suppose your products are of great size, be it huge storage containers, Automobiles, or any other gigantic equipments for that matter, they all need to have huge space for displaying it to customers. You cannt afford to have enormous space at a busiest, the most happening centre of the town as this will devour huge amount of money fot availing 'space'.This will force you to loacte your business centre to a flung away place from town where the charges for space would be affordable.  

Another pain area in selecting a distribution method is the buying behaviour of the consumers. Consumers of electronic gadjets, mechanical equipments, electric goods always prefer live demonstration of the product. so if yours is one of those products, your distribution plan will have to include some way  of conducting these demonstrations.

One of the best ways to have demos infront of live audience is to have  multilevel network marketing plans. Suppose your product is often bought on impulse, it is always better that you display the product in the high traffic area of your business centre in such a way that they will receive the immediate atttention of the consumers.

The proximity of your business centre is also a key factor.  If you sell a one of-a-kind product which is on high demand, and short in supply, it is adviseble that you restrict the distribution to your immediate locality. Customers will be ready to come to your business centre to buy that particular thing which is on top of their buying list.

So in conclusion, think well before you wish to employ new business plans and strategies to leverage your business.

 

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