This post was most recently updated on May 7th, 2018
Businesses can choose from a number of different types of distribution strategy according to their products and services.
Distribution an important element in the marketing mix. It’s the process of making products and services available for businesses or consumers. Because of this, the distribution should be aligned with a company’s overall goals and strategic vision, especially since you want to reach out to the right people.
Typically, the top management is responsible for selecting the right distribution strategy as this decision is likely to affect overall operations.
How to Select a Distribution Strategy
Before coming up with a distribution system, marketers must determine the most appropriate distribution channel.
Marketers must focus on a number of factors such as:
- Type of product
- Geographic location
- Overall vision and mission of the company
- The target market of the product
Once all these areas have been investigated thoroughly, only then can a company devise an appropriate distribution strategy.
What Is Distribution Channel?
A distribution channel comprises of a list of intermediaries that deliver goods and services to the end consumer. Distribution channels in marketing can be broken down into two main types: direct and indirect.
Direct channels allow consumers to purchase goods from manufactures whereas indirect channels push consumers to purchase goods from retailers or wholesalers.
Typical intermediaries in the world of distribution include:
- Wholesalers – Wholesalers mainly deal with other merchants, businesses, and retailers and sell products for resale purposes.
- Retailers – Retailers directly sell products to people – the public. Retail outlets include independent stores, hypermarts and regular stores.
- Agents – Unlike the others, agents are hired to facilitate exchange. They simply bridge the gap between buyers and sellers and are paid via commission.
- Jobbers – This intermediary acts as a special type of wholesaler but typically operates on a small scale.
Types of Distribution Strategy
Coming back to our main subject, the following is a list of the different types of distribution strategy:
1. Intensive Distribution
Intensive distribution, also known as mass distribution is intended for mass-marketing products. Basically, companies opt for this strategy when they want to ensure widespread availability of products.
This distribution strategy works well for consumer durable and FMCG products. Take your favorite brand of chewing gum for example. The product is probably available everywhere you go from drugstores to gas stations – you name it.
Intensive distribution strategy is typically adopted by companies to make products widely available hence products are stocked in a large number of outlets. It’s also an excellent way to boost product awareness. However, because of its incredibly large reach, intensive distribution strategy might not be the most budget-friendly choice for all companies.
2. Extensive Distribution
Extensive distribution strategy is an excellent choice for companies that are comfortable with using multiple channels to reach out to their customers.
It’s often used by companies that want to target as many consumers as possible to achieve maximum market penetration. The main purpose of an extensive distribution strategy is to make consumers aware of a certain product line or product. This is practically the opposite of selective distribution.
Some big brands such as the Coca-Cola Company and Cadbury.
3. Selective Distribution
Selective distribution strategy is perhaps one of the most popular strategies used by high-end brands. It is typically used by brands that want to open up a handful of outlets in particular geographical location.
While this may seem like it would restrict or hamper sales, it helps companies target best-performing outlets. This, in turn, allows companies to spend more time and effort towards training facilities and improving quality.
In turn, all this helps create a more personalized shopping experience for consumers which directly contributes to better sales.
Most luxury goods manufacturers opt for selective distribution such as Dolce & Gabbana.
4. Exclusive Distribution
Now, this strategy truly is exclusive in essence. Exclusive distribution strategy is used by the most – you guessed it, exclusive and prestigious brands out there. Using this strategy, the company aims to maintain maximum control over retailers.
In exclusive distribution, the seller grants selling rights to a single retailer. The most obvious advantage of exclusive distribution is that when professionals focus all their energies on a concentrated area, they are likely to reap better results.
Top examples include designer clothing brands, automobile companies and luxury watch brands such as Rolex.
5. Inclusive Distribution
Inclusive distribution is a type of distribution strategy that is typically used by low-income FMGC companies to target low-income micro enterprises.
While inclusive distribution has a potential to reap brilliant results, it involves an extensive process. For instance, companies will have to start by conducting thorough market research. After that, they might have to figure out a way to adapt their business model in accordance with area’s social and cultural values.
Types of Distribution Strategy: Conclusion
For maximum success, companies must conduct thorough research to determine what types of distribution strategy would be best for them.
Is there something you’d like to add? Tell us about it in the comments section below.