Distribution System
In addition to selling products directly to consumers, players have the option to work with channel
intermediaries. You can review distribution channel options, looking at terms, demographics, and other
factors, and make deals with retailers to develop a profitable channel management strategy tailored to
their product and target market segment.
Distribution Channel Options
Direct Distribution
Companies can sell to consumers directly. There is a pool of consumers in the world available to the
player’s company. Players receive 100% of the proceeds of those sales (no retailer/wholesaler cut). We
have abstracted out shipping, transport, and overhead costs. Direct distribution is one of the sub-hubs
found in the Place hub.
Distribution Channels
Companies can also establish distribution deals with retailers of varying sizes, opening them up to a
greater universe of consumers. There are six distribution channels in the world. The channels include:
n University Store
n Online Discount Retailer
n Supermarket
n Department Store
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n Fashion Boutique
n High End Outdoor
Retailer channels have the following key properties:
n Customer Reach – How many customers served each turn
n Customer Mix – Breakdown of distributor’s customers across target markets
n % MSRP the channel will pay for a pack – affects margin
n Price Discount to Consumers – Amount retailer will discount your MSRP. Each Channel will set
its own price for your pack.
n Sales Dedication – How much effort will the retailer put into pushing the player’s product?
Lower at large chains, higher at specialty goods stores. Players can increase sales dedication
by investing in market development funds (MDF).
n Preferred Price Range – Some channels have price points above or below which they won’t
want to carry a product. A Supermarket won’t carry a very expensive luxury product. A
Luxury store won’t carry a cheap children’s backpack.
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.
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Channel Promotion Discount (Sales Promotion)
Within each Channel, you can also offer a Promotional Discount Program that works like a 5.00 rebate.
This is an optional program to improve buyers’ opinion of the pack’s price in that channel. The cost of
the program will be the revenue that you do not get (5.00 off the price x # sold) because of the
discounted price