Distribution Channels: Introduction

Understanding the distribution channels and target audience of AdvaCare Pharma (herewithin referred to as “AdvaCare”) distributors is the most basic and vital aspect for the operations and growth of the company. Every department in the company must have a thorough understanding of the supply chain, specifically in the context of distribution channels - from when our products arrive in the destination country to the point of sale, and ending with the end consumer/patient. Throughout this part of the supply chain, our understanding of the distribution channels and target audience dictates how each involved department fulfills their role effectively in the company.

Department Roles

HOW ARE DISTRIBUTION CHANNELS RELATED TO EACH DEPARTMENT?
Marketing Dept.	To conduct effective marketing campaigns, provide the most relative and effective promotional materials, do meaningful marketing research and conduct any other marketing activities, the Marketing Dept. must understand the nuances of how our products are sold through each distribution channel, what our distributors want to achieve, and the differences of the supply chain in each country.
AM Dept.	Account Managers in the Sales Dept. must understand through which channel each product is being sold and why, which dictates price dynamics to decide our margin and how to further develop the distributor to grow every product in the market and expand the range of products for distribution. The Account Manager is responsible to know every detail about their distributors, provide relevant distributor information to the Marketing Dept. and ensure that the distributor receives the most optimal marketing support and overall service possible.
BD Dept.	Business Development Specialists in the BD Dept., responsible for converting new prospects into distributors and efficiently completing the product registration process, must have a good understanding of how a prospective distributor works in their country to determine if such a distributor is likely to convert, which requires understanding distribution channels and the target audience. BD Dept. must also work closely with the Marketing Dept. to guide on needs for improved conversions and provide feedback on conversion metrics so that campaigns and marketing goals can be adjusted accordingly.
Purchasing Dept.	An understanding of product positioning in the market and through which channels our products are sold can help guide the Sales Dept. to provide products that better meet the needs of distributors. Generally, the flexibility of manufacturing is limited and instructions will come from the Sales Dept. to define the specifications of every product, but a strong understanding of our distribution channels and target audience helps facilitate less mistakes and increased efficiency.

Understanding our Target Audience

For every distribution channel of each product range, it is important to understand the dynamic of:

B2B: Primary Target Audience

The purchasers, sellers and on-the-ground marketers of our products, also known as our “Distributors”, are our most important target audience. Our Marketing Dept. targets and identifies this demographic, creating lead generation strategies to maintain an online presence, conduct campaigns and increase brand awareness - all with the purpose of new customer acquisition. Then it is the job of our BD Dept. to convert these leads into distributors. After conversion, it is the job of AM Dept. to support and grow the distributor.

B2B: Secondary Target Audience

Simply put, the secondary target audience is the customer of our customer. We do not market directly to this demographic or try to obtain them as our direct customer, but we do need to convince them that we are credible and our products are of high quality. We achieve this through online presence, brand awareness and supporting our distributors with effective marketing materials.

The secondary target audience is the part of the supply chain that dictates the business success or failure of our primary target audience - our distributors. As reorders from our distributors, who rely on reorders from their customers, are a core component of our business model and what makes our business scalable, it is imperative that we enable our distributors to convince their customers why AdvaCare is a trusted brand and our products should be purchased over other brands.

B2C

Although our business model is B2B, there is a B2C element to our marketing because our products are consumed by someone at the end of the supply chain, an end user who is a patient, consumer or farmer. These end users must be convinced of and have good results from our products to either purchase again or provide positive feedback to doctors/veterinarians that eventually result in the reorders of our products.

We do need to maintain a consumer-facing image, mainly for credibility purposes. To achieve this, we have an online presence and create promotional materials that sometimes are B2B targeted, appealing to consumers. For example, a website for our AdvaMate pet supplement brand and AdvaLife nutraceuticals brand, that consumers can go to see more about the brand. We also make some promotional materials targeting consumers, such as flyers, shelf wobblers, standing posters, window and wall signage, ads on delivery vans and online B2C campaigns.

Understanding Supply Chains

Understanding the position of every stakeholder in the supply chain is necessary to understanding our business model:

API Manufacturer > Finished Manufacturer > AdvaCare > Distributor/Importer > [Sub-Distributor] > Hospital/Clinic/Pharmacy/Retail > End Consumer (patient/consumer/farmer)

Although AdvaCare is not technically the manufacturer, we are often perceived as the manufacturer by stakeholders that are further down the supply chain than our position. We market ourselves to also be manufacturers via JVs with our main manufacturing partners. AdvaCare is more involved in the manufacturing process than other CMOs because we decide every specification of our products to differentiate our products and make our brands more recognizable, prepare and compile the highly technical documentation needed for registration which most of our manufacturers cannot do without our expertise, and often do our own formulations for our veterinary and supplement products.

The complexity and number of stages of supply chains for every country is different. Generally, lower income countries will have more simplified supply chains with less stages while higher income countries will have more complicated supply chains with more stages.

Purpose of Promotional Materials

It is important to understand the difference between how we market to our distributors (primary target audience) vs. how we provide marketing support to our distributors for them to reach their customers (secondary target audience). Promotional materials only apply to the marketing materials we provide to our distributors for them to use for their customers, who we consider to be our secondary target audience.

The purpose of providing our distributors with promotional material is:

Our promotional materials are designed to communicate information, convey key messages, and promote offerings to a target audience with the goal of influencing their behavior, such as making a purchase. Our promotional materials serve as a tool to attract, engage and persuade potential customers.