BUILD A NEW DISTRIBUTION CHANNEL

Sometimes distribution channels are so tied up by existing companies it is difficult (even impossible) to get a product to market. Even when retailers can be identified, often part of the chain is contracted to some major supplier who blocks the distribution at the wholesale stage.

For small companies in particular, finding a route to market can present a major challenge: often the big boys are not interested unless there is a fairly substantial financial commitment in terms of renting shelf space or supplying large amounts of product on extended credit.


When Red Bull was first launched in Britain, it was an attempt to create the energy drinks market from scratch. The company was founded in Austria in 1984, but only started selling the drink When Red Bull was first launched in Britain, it was an attempt to create the energy drinks market from scratch. The company was founded in Austria in 1984, but only started selling the drink in 1987.

Breaking into the British market proved difficult. The company wanted to target a young audience, partly because they would have the longest usage life and partly because young people often participate in sports or need to stay up late, either to party or to study. Red Bull therefore began by recruiting students to act as
part-time salespeople, visiting nightclubs and sports centers to promote the drink. Since the nightclub owners were seeking to attract a young audience, the student salespeople represented a powerful influence.

Eventually Red Bull established its own warehousing and distribution, but again ran these using students as part-time workers. Apart from keeping costs down, this ensured that the entire workforce matched the brand values, and (perhaps even more importantly) were able to act as influences, telling their friends
about the product.

Today, Red Bull has reached the point where it sells 3 billion cans of the drink a year. 


Practice
•Decide where you really want to sell your product, and focus on just those outlets.
•Decide who would be your best advocates for the product in those outlets.
•Follow up with a continued commitment to the distribution chain, even when other channels open up.