Distribution Channels

Answer 1

Multichannel distribution system
A distribution system in which a single
firm sets up two or more marketing
channels to reach one or more
customer segments

Question 2

Intensive, Exclusive, & Selective distribution

Answer 2

_Intensive distribution
Stocking the product in as many
outlets as possible.
{Producers of convenience products and common raw materials typically seek intensive distribution}

_Exclusive distribution
Giving a limited number of dealers
the exclusive right to distribute the
company’s products in their territories.
{By contrast, some producers purposely limit the number of intermediaries handling their products. The extreme form of this practice is exclusive distribution,
in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories. Exclusive distribution is often found in
the distribution of luxury brands.}

_Selective distribution
The use of more than one but fewer
than all of the intermediaries that
are willing to carry the company’s
products.
{the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products. Most consumer electronics, furniture, and home appliance brands are distributed in this manner.}

Question 3

Distribution Strategy

Answer 3

Distribution strategy is an essential part of a company’s overall marketing plan that determines how a product or service will be made available to customers. The goal is to ensure that the right products are in the right place at the right time to meet customer demand. Distribution can be achieved through various channels, including direct sales, wholesalers, retailers, and e-commerce platforms.

One approach to distribution is to use a distribution strategy that involves choosing the most appropriate channels to reach the target customers. There are three main types of distribution strategies: intensive distribution, exclusive distribution, and selective distribution.

Intensive distribution involves stocking the product in as many outlets as possible. This strategy is often used by producers of convenience products and common raw materials. The goal is to ensure that the product is widely available and easily accessible to customers. Intensive distribution provides several advantages, such as greater product visibility, increased sales opportunities, and higher market share. However, it can also result in lower profit margins due to increased competition and reduced control over the product’s presentation and positioning in the market.

Exclusive distribution, on the other hand, involves giving a limited number of dealers the exclusive right to distribute the company’s products in their territories. This strategy is often used by producers of luxury brands who want to maintain tight control over the distribution process and ensure that their products are associated with a high level of exclusivity and quality. Exclusive distribution provides several advantages, such as increased brand recognition, higher profit margins, and greater control over the product’s presentation and positioning in the market. However, it can also limit the product’s availability and reduce sales opportunities, especially in areas where exclusive dealers are not present.

Selective distribution is a compromise between intensive and exclusive distribution that involves using more than one but fewer than all of the intermediaries willing to carry the company’s products. This strategy is often used by companies that want to balance the benefits of wider product availability with greater control over the distribution process. Selective distribution provides several advantages, such as increased product availability, greater control over the distribution process, and the ability to maintain a high level of product quality and exclusivity. However, it can also limit the product’s availability in some areas and reduce sales opportunities compared to intensive distribution.