Strategic channel choices - Marketing Management

An important consideration when formulating channel policy is the degree of market exposure sought by the company. Choices available include:

  • Intensive distribution where products are placed in as many outlets as possible. This is most common when customers purchase goods frequently, e.g. household goods such as detergents or toothpaste. Wide exposure gives customers many opportunities to buy and the image of the outlet is not important. The aim is to achieve maximum coverage.
  • Selective distribution where products are placed in a more limited number of outlets in defined geographic areas. Instead of widespread exposure, selective distribution seeks to show products in the most promising or profitable outlets, e.g. high-end ‘designer’ clothes.
  • Exclusive distribution where products are placed in one outlet in a specific area. This brings about a stronger partnership between seller and re-seller and results in strong bonds of loyalty. Part of the agreement usually requires the dealer not to carry competing lines, and the result is a more aggressive selling effort by the distributor of the company’s products, e.g. an exclusive franchise to sell a vehicle brand in a specific geographical area, in return for which the franchisee agrees to supply an appropriate after sales service back-up.

We can see that there are several key decisions to make when determining the company’s distribution system. Its importance is underlined by the fact that the choice of distribution channel has an effect on all elements of the marketing mix and these are long term.

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