Numeric distribution (ND) is a fundamental concept in the field of marketing. It refers to the presence of a product or reference in various outlets or stores and is typically expressed as a percentage relative to the total number of points of sale within a given market or universe. In essence, it quantifies the extent to which a product is available to consumers.
Tracking the level of numeric distribution is of paramount importance for several reasons. It serves as a crucial metric for evaluating the coverage of each product within a distribution network. This measurement plays a pivotal role in assessing the sales potential of a product and aids in the calculation of sales forecasts.
Numeric distribution assumes particular significance for innovative products, as their success is intricately linked to achieving an adequate level of numeric distribution. Ensuring that these products are readily available to shoppers is vital, as it directly impacts their commercial viability.
Numeric distribution can be categorized into two main types: theoretical and observed.
Theoretical Numeric Distribution: This type corresponds to the level of distribution that is agreed upon with the customer or client. It represents the ideal scenario based on the intended distribution strategy.
Observed Numeric Distribution: In contrast, observed numeric distribution is the actual level of distribution that is encountered during visits by sales representatives or is calculated using sell-out data. It provides a real-world perspective on how the product is distributed.
Comparing numeric distribution with weighted distribution is a valuable exercise. Here's what these comparisons reveal:
When Numeric Distribution < Weighted Distribution: In such cases, the product is present in a limited number of stores, but these specific stores play a more substantial role in driving sales. This suggests a concentrated distribution strategy.
When Numeric Distribution > Weighted Distribution: In this scenario, the product is available in a greater number of stores but may not be present in the most critical outlets for driving sales. This points to a broader, albeit less targeted, distribution approach.
Numeric Distribution Calculation Numeric Distribution (%) = Number of Stores Selling (or Stocking) the Product ÷ Total Number of Stores in the Universe
Practical Usage: Analyzing numeric distribution offers several advantages. It provides insights into gaps in distribution, identifies opportunities for improvement, facilitates competitive performance comparisons, and allows for trend analysis. To effectively analyze trends, adjustments for seasonality should be made, as numeric distribution is subject to significant seasonal fluctuations.
Types of Numeric Distribution and Related Measures:
Numeric Selling Distribution: The percentage of outlets that sold a product during a specified period, relative to the total number of stores in the market (Universe).
Numeric Net Distribution: The percentage of outlets where a product was available at the time of the auditor's visit.
Numeric Purchasing Distribution: The percentage of outlets that purchased the product during the reporting period.
Numeric Handling: The percentage of outlets that either sold the product during the reporting period or had it available at the time of the auditor's visit.
Numeric Out of Stock (OOS) or Lost Handling: The percentage of outlets that sold the product during the reporting period but did not have it available at the time of the auditor's visit. This measure is calculated as the difference between Numeric Handling and Numeric Net Distribution.