The Trio of Distribution: Intensive, Selective and Exclusive Distribution
For taking your products to the end-users i.e consumers, you certainly need a distribution channel. Choosing a distributor is a proven way that helps in the growth of your business and vital to attain targets. While selecting distributors, observe the prospective distributor: if he has the characteristics to become a capable distributor, if he would be able to help you in accomplishing your business expansion goal.
We present the three types of distribution business models to be adopted by companies. The differences are based upon the size of the market the distributor targets and breadth of services offering. Some partnerships are new while others have evolved for many years. Some distributors handle many categories and channels where others focus against a specific market segment. Let’s take a sneak peek of them:
Intensive Distribution:
This is a marketing strategy under which a company sells through the widest possible channels and cover as many outlets as possible so that the customers come across the product virtually wherever they go- drug stores, gas stations, supermarkets, and the like.
Mostly common for: This strategy is common for snacks, soft drinks and juices, foods, basic supplies, magazines.
Profit Margin: Intensive distributors work with many manufacturers and generally sell high volumes of goods at lesser prices and earn lower margins.
Pros:
- Increased sales
- Wider customer recognition
- Impulse buying
Cons:
- Characteristically low price
- Low-margin products that require a fast turnover
- Difficult to control large number of retailer
Selective Distribution:
This strategy is usually observed for more specialized products which are carried through specialist distributors covering a specific geographic location. The firm chooses some outlets for distributing its products. This option helps focus the selling of manufacturers on selected outlets rather than dispersing it over numerous marginal ones.
It Covers:
Product distribution here basically considers high-end items such as prestige or designer goods e.g. Puma, Fila, Nike, Adidas.
Pros:
- Save expenses
- Improve marketing efficiency
- Control the marketing
Cons:
- Difficult to attain a variety of business objectives in relaxed conditions of the marketing environment
- Lack of adaptability to goods that are not selective
- A certain risk as firm has to provide more services to selected middlemen
Exclusive Distribution:
Exclusive distribution is an intense form of selective distribution in which only one distributor is appointed in each territory. Taking exclusive distributorship opportunity is not tough but need few steps to follow. This type of distributor is used where channel control is important to maintain brand image, brand integrity, and often higher pricing points.
When the manufacturing firm distributes its products through just one or two major outlets in the market that are exclusively dealing in it, it is said that the firm is using an exclusive distribution strategy.
Apple had an exclusive distribution deal with AT&T to provide the iPhone to consumers.
It caters to:
Exclusive distributors usually cover designer ware, major domestic appliances, and the most luxurious items & brands like Gucci, Prada.
Pros:
- More control over the market
- More aggressive middleman
- High brand loyalty
Cons:
- Difficult to maintain a high level of brand image
- Betting on one dealer in each market
- Only suitable for high priced & low volume products
Turning as a distributor requires evaluation of business opportunities, complete research and proper product knowledge. So which type of distributor you want to be?
About the Author: GD Author
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