How Distribution Channels Affect Game Play
Distribution channel management adds a new layer of complexity to decision-making in the game. You
must carefully evaluate each retailer, looking for the optimal places to sell your products.
Types of questions you might ask:
Where does my primary target buyer typically shop? Where will my pack attract customers at the price
point I have set? What channels will broaden my pack’s appeal to secondary market segments, thus
expanding my product’s market reach? Where are my key competitors’ products sold?
You also have the option of making concessions to get into specific retail stores. For example, a big box
retailer might not carry your pack above a certain price. So you must weigh the cost (in lost margin) of
lowering your price to get into that store vs. the benefits of continuing to charge a premium price for
your pack, and perhaps limiting its distribution to higher-end stores.
Sales calculations run for each distribution channel. As the player, how you do depends on a number of
factors, including how well your pack meets the needs of consumers, how consumers feel about your
pack’s price, what other competitors are selling in that retail outlet, and overall product awareness.
(See Buy Calculation.)
Market Development Funds (MDF)
Each channel partner responds positively to market development funds. An investment in MDF
increases the sales force dedication in that channel. The partner will push your product harder, thus
improving sales. But by how much exactly? You sacrifice some margin to boost sales, so it’s important to
keep a close eye on whether the sales increase warrants this ongoing investment.