Exclusive, Selective, & Intensive channel distribution.

 Exclusive, Selective, &  Intensive channel distribution.

Two product-based & Two service-based organizations opting for different channel density.

 Distribution Channel is a chain of business or intermediaries through which a good or service passes until it reaches the final buyer or the consumer

 Exclusive Distribution

Exclusive Distribution severely limits the number of intermediaries. It’s appropriate when the producer wants to ensure more knowledgeable and dedicated efforts by the resellers and it often require a closer partnership with them. Exclusive distribution is used for new automobiles, some major appliances and some women apparel brands. Exclusive distribution often includes exclusive dealing arrangements, especially in markets increasingly driven by price. When goods and services are sold through almost all available outlets, it may be said that the producer has adopted a strategy of intensive distribution. In case of all branded convenience items, intensive distribution is a necessity as buyers will not have to spend much effort in buying a particular brand. For eg: Italian designer label Gucci founds its image severely tarnished by overexposure from licensing and discount stores it decided to end contracts with third party suppliers control its distribution and open its own stores to bring back some of the luster

 Selective Distribution

Selective Distribution Relies on only some of the intermediaries willing to carry a particular product. Whether established or new the company does not need to worry about having too many outlets it can gain adequate market coverage with more control and less cost than intensive distribution. When goods and services are sold through almost all available outlets, it may be said that the producer has adopted a strategy of intensive distribution. In case of all branded convenience items, intensive distribution is a necessity as buyers will not have to spend much effort in buying a particular brand. For eg: STIHL is a good example of successful selective distribution as it manufactures handheld equipment all its product are branded under one name and it does not make private labels for other companies.

 Intensive Distribution

Intensive distribution places the good and services in as many outlets as possible. This strategy serves well for snack foods, soft drink, newspaper, candies and gum product consumers buy frequently or in a variety of location. Manufacturers are constantly tempted to move from exclusive or selective distribution to more intensive distribution to increase coverage and sales. This strategy may help in the short term, but if not done properly it can hurt long term performance by encouraging retailers to compete aggressively. Price wars can then erode profitably, dampening retailer interest and harming brand equity. For eg. Convenience stores such as 7-Eleven and Circle K and gas station outlets like ExxonMobil’s on the run to survive by providing simple location and time convenience.

 Difference between Exclusive, Intensive, Selective Distribution

 

Attributes	Extensive Distribution	Selective Distribution	Exclusive Distribution
Objectives	Wide spread market coverage, channel acceptance, high volume sales and high profits.	Moderate market average, solid image, some channel control and loyalty, good sales and profit.	Prestige image, channel control loyalty, price stability and high margins.
Resellers	Many in numbers, all types firms.	Moderate in numbers, well established better firms.	Few in numbers, well established, reputable firms.
Customers	Many in numbers convenience oriented.	Moderate in number, brand conscious, somewhat willing to travel to store.	Fewer in numbers, trends setters, willing to travel to store, brand loyal.
Major Weakness	Limited channel control	May be difficult to crave outside niche	Limited sales potential.
Marketing Emphasis	Mass advertising, nearby location, items in stock	Promotional mix, pleasant shopping condition, good services.	Personal selling, pleasant shopping conditions, good services.

 Two product based organizations which are opting for different channels density

 1.          Titan: 

Titan is the biggest watch company and glassware company in India and in starting they were just in the exclusive distribution system where we knew the most of the Titan watches and Titan glasses were only available in the authorized dealer/stores. But slowly and gradually Titan find it that they have more opportunity when they can explore the different market segments to increase their distribution they opted for selective distribution also where the provided their brands such as Fastrack and tighten glasses in different outlets such as shoppers stop, big bazaar, reliance mart. In which resulted in a profitable increase in the market share and also the sales of the company.

 2. One Plus: 

OnePlus came in India in 2016 but they avoided the selective distribution and made a deal with Amazon for exclusive distribution of their    mobile phones and products. In starting Amazon was the sole distributor of One plus but as the company grow they had to increase their distribution channels and they were successfully able to do that by opening one plus stores and also by selective distribution through different outlets in most parts of India.

 Two Service-based organizations which are opting for different channel density

  Cognizant & TCS:

Creating an effective distribution strategy is a multi-face process. They are basically three distribution strategies to pick from and the best one for the company ‘s growth will depends on various factors such as ideal demographic, item type and current logical  set up. Because there are so many moving parts associated with distribution, both the companies opt to use an indirect distribution strategy or to purchase distribution software to streamline the process. Whatever method The company choose, it’s essential to make sure that the customer need and purchase decision level are accounted for, and these factors will help determining the optimal distribution strategy. And both of these companies are successful in knowing that a single distribution channel (Channel density) it’s not the correct way to take their company in the forward direction.