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There are different types of distribution that can be used by supplier to get their products closer to consumers. The chosen level of distribution chosen generally depends on different factors such as the production capacity, the size of the target market, pricing and promotion policies as well as the seasonal requirement of the product by the end user. Here are the general differences between Exclusive, Intensive and Selective distribution. What is Exclusive Distribution?Exclusive Distribution is an agreement between a distributor and a manufacturer, whereby the manufacturer or supplier authorizes only one distributor to carry out distribution of goods and services within a definite region. The distributor thereof becomes the sole authorized seller of the manufacturer’s specific products. Also the agreement may be such that the distributor will exclusively sell the manufacturer’s products and not those of competitors. In this kind of distribution arrangement, the work of the distributor is to engage wholesalers and retailers in order to sell the products to end users. The number of distributors to be engaged in this arrangement depends on the purpose and goals of the manufacturer. Industries or companies that enter into exclusive distribution are High-tech companies, women’s clothing manufacturer, Automakers and major appliances manufacturers. They usually enter into agreement with a handful of distributors in a given region as a way of reaching customers and dealing with their complaints and other queries effectively as they arise. Example of such companies include: Apple, Samsung, Lamborghini, Gucci, Coca Cola, BMW and Mercedes. Advantages of Exclusive Distribution
Disadvantages of Exclusive Distribution
What is Intensive Distribution?Intensive distribution is whereby the manufacturers make use of more than one channel to distribute their products and reach the target audience or customers. This policy is used when the manufacturers make a decision to distribute their products through as many mats as possible. The intension of this method is usually to make the manufacturer’s product brand available in abundance and distributed over a large geographical area and that end-users (customers) are not faced with any kind of shortage. The products distributed through intensive distribution method are those that are generally used on a daily basis and those which do not require extensive brand awareness. The product brand is usually marketed in such way that consumers are likely to encounter the brand at every possible place of their shopping. Examples of products that have been a successfully sold through intensive distribution include:
Advantages of Intensive Distribution
Disadvantages of Intensive Distribution
What is Selective Distribution?Selective Distribution is a distribution approach where selective and few outlets are chosen through which the product is made available to the customers on the basis of a company specific set of rules. In many cases, furniture, television and home appliances are distributed through this method. Selective distribution can to some extend limit the competition in a market especially where there is an agreement between the producer and retailer. The agreement usually places restrictions on the distributors to sell only to other approved distributors or directly to the ultimate consumer, influencing the prevalence of a product on the market. On the part of the supplier, he or she might insist on certain criteria to be met before one is appointed as a distributor. The criteria may include: service provision requirements, distributor sales personnel training or specific presentation of products, among many others. Advantages of Selective Distribution
Disadvantages of Selective Distribution
Having the right distribution strategies in place can give you a great advantage over your competitors. You could have the best products in the world, but if you cannot get them to your customers in a timely and cost-effective manner, you’re wasting money on marketing and you’re losing opportunities for growth. When determining what distribution strategies best fit your company’s goals, you need to ask three key questions:
Indirect vs Direct DistributionOverall, there are two types of distribution: indirect and direct. With indirect distribution, your product will go through numerous channels before reaching your end customer. The product may leave the manufacturer, then go to a distributor, who sends it to a retailer, where the customer buys it. With direct distribution, you would send your product directly to your customer or otherwise reduce the number of channels it’s sent through. You might sell your product directly through an e-commerce portal, or directly distribute your product to retailers. Intensive, Selective, and Exclusive DistributionAs with most strategic concerns, the devil is in the details. Indirect and direct distribution strategies are further impacted by the level of penetration, as determined by your marketing mix:
Your distribution strategies and needs can change over time, especially if you are growing a small business. With our world class supply chain management distribution services, American Western Distribution is ready to work with you to determine the logistics of your company’s individualized distribution strategy. |