Distribution Strategies: Intensive, Exclusive, and Selective

Distribution Strategies

Intensive Distribution

Producers of convenience products and common raw materials typically seek intensive distribution—a strategy in which they stock their products in as many outlets as possible. These goods must be available where and when consumers want them. For example, toothpaste, candy, and other similar items are sold in millions of outlets to provide maximum brand exposure and consumer convenience. Procter & Gamble, Coca-Cola, and other consumer goods companies distribute their products in this way.

Exclusive Distribution

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 new automobiles and prestige women's clothing. For example, Bentley dealers are few and far between—even large cities may have only one or two dealers. By granting exclusive distribution, Bentley gains stronger distributor selling support and more control over dealer prices, promotion, credit, and services. Exclusive distribution also enhances the car's image and allows for higher markups.

Selective Distribution

Between intensive and exclusive distribution lies selective distribution—the use of more than one, but fewer than all, of the intermediaries who are willing to carry a company's products. Most television, furniture, and small-appliance brands are distributed in this manner. For example, Maytag, Whirlpool, and General Electric sell their major appliances through dealer networks and selected large retailers. By using selective distribution, they do not have to spread their efforts over many outlets, including many marginal ones. They can develop good working relationships with selected channel members and expect a better-than-average selling effort. Selective distribution gives producers good market coverage with more control and less cost than does intensive distribution.

Extensive Distribution

The producer uses as many outlets as possible (of any category) to provide maximum brand exposure and consumer convenience.