There are three broad approaches to distribution depending on distribution intensity. These options include Intensive Distribution, Selective Distribution and Exclusive Distribution. Firms must decide on the type of distribution that is most suitable.
Let’s give a closer look to those three different approaches to distributing products.
1. Intensive Distribution. Intensive Distribution aims to provide saturation coverage of the market by using all available outlets. For many products such as soft drinks, cigarettes or beer, total sales are directly linked to the number of outlets used. Intensive Distribution is usually required where customers have a range of acceptable brands to choose from. In other words, if one brand is not available, a customer will simply choose another brand. Intensive Distribution is used mainly for mass produced products.
2. Selective Distribution. Selective Distribution involves a producer using a limited number of outlets in a geographical area to sell products. The producer can choose the most appropriate or best-performing outlets and focus effort on them, e.g. employee training, decorating the shop in a particular way. Selective Distribution works best when consumers are prepared to ‘shop around’. In other words, they have a preference for a particular brand or price and will search out the outlets that supply it. Selective Distribution is used mainly when positioning or branding plays a crucial role.
3. Exclusive Distribution. Exclusive Distribution is an extreme form of Selective Distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area. There will be some sort of agreement between a producer and a distributor that the manufacturer will not sell the product to anyone else and will only supply it to the exclusive distributors. The distributor will hold exclusive rights to sell the product within a particular location, e.g. imported medication or luxury wristwatches. Exclusive Distribution is used mainly for for large investment or premium products
Which approach to distribution to choose?
If the aim is to secure a niche market with a high-quality image product (e.g. branded natural cosmetics), then using Selective Distribution to sell through a few carefully selected and exclusive food retailers will be successful, or Exclusive Distribution to make the product available only in one place.
If, however, the marketing aim is to achieve maximum sales and distribution coverage (e.g. chocolate bars and soft drinks) in a mass market, then the business should use Intensive Distribution utilizing all available outlets.
As with all components of 4Ps of Marketing Mix, distribution strategy must be integrated with the marketing objectives of the business and clearly linked with the other components of the Marketing Mix for an effective and convincing overall marketing strategy to be developed.
