While selecting channels of distribution the marketer must decide about the number of customers it wishes to reach and the intensity of distribution, and then has to employ one of the three different distribution strategies:
i. Intensive Distribution:
Products which are of mass use like bread, salt, etc. or relate to impulse purchase such as chocolates or too small and simple, marketers go for intensive distribution. In these cases the customer loyalty is found to be low. Customers can buy any brand if their choice brand is not available. This is the reason that Dabur Hajmola is available at a grocery store, chemist shop, panwala, and bakery shop. Intensive distribution’s aim is to provide maximum coverage of the market by using all available outlets.
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Intensive distribution means mass distribution in all outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, candy, battery cells, bread, biscuits, etc.). In Delhi, bread is available not only with the bakery goods seller, grocer, milk sellers, pan sellers, confectioners et al. Coca Cola is available at all kinds of outlets.
ii. Selective Distribution:
If the number of middlemen are restricted, not completely eliminated, it is known as Exclusive Distribution. It is usually employed in situations where customers are willing to travel to obtain a product and where high levels of customer service have to be guaranteed. The fashion industry which has exclusive brands goes in for this type of strategy. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products.
Selective distribution means carefully chosen distributors e.g. speciality goods such as car garage. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. 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. In case of Raymond’s, there will be only one shop in one colony in Delhi.
iii. Exclusive Distribution:
This strategy lies in between the Intensive and the Exclusive strategies. Customer is loyal to the brand, but even after a search if he fails to find it he may opt for another brand. An example of a product that may be affected by this type of consumer behaviour would be good quality, rather than status symbol, watches. Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area of a city.
Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the ‘product’. Retailers are restricted to keep only one manufacturer’s products, e.g. exclusive outlets of cars, apparels and jewellery, etc. The dealers sell only Maruti cars. Exclusive distribution means distribution restricted to upmarket outlets, as in the case of Rado watch, Mont Blanc pen, Gucci clothes.
Exclusivity is a strategy often used to establish a particular image of a product or brand. Using a limited number of distribution channel partners helps to create an image of exclusivity. It’s also a measure of quality control by using only distributors who specialize within that industry. Distribution channel partnerships require both the manufacturer and the distribution partners to take a larger stake in one another’s survival.