Chapter 9: Channels of Distribution
Distribution Intensity
Distribution intensity refers to the level of market coverage a product has. It determines how widely a product is distributed in the market and how easily customers can find and purchase it. Companies must carefully choose their distribution intensity to match their business goals, target market, and product type. There are three main types of distribution intensity: intensive, selective, and exclusive.
Intensive Distribution
Intensive distribution aims to have a product available in as many outlets as possible. This strategy is used for products that customers buy frequently and with minimal thought, known as convenience goods. The goal is to maximize product availability and ensure that customers can find the product everywhere they go.
Example: Coca-Cola
Coca-Cola uses intensive distribution to make its beverages available in a wide variety of locations. You can find Coca-Cola in supermarkets, convenience stores, vending machines, restaurants, and even gas stations. This widespread availability helps Coca-Cola reach a large number of customers and increase its sales.
Selective Distribution
Selective distribution involves choosing a limited number of outlets in specific locations to sell a product. This strategy is used for shopping goods, which are products that customers spend more time comparing before making a purchase. Companies use selective distribution to control the quality of service and the brand image.
Example: Nike
Nike uses selective distribution for its athletic footwear and apparel. While you can find Nike products in many retail stores, the company is selective about where its products are sold. Nike partners with specific retailers that align with its brand image and can provide a high-quality shopping experience. This strategy helps Nike maintain its reputation for quality and exclusivity.
Exclusive Distribution
Exclusive distribution is the most restrictive form of distribution. It involves granting exclusive rights to a single retailer or a small number of retailers to sell a product in a particular geographic area. This strategy is used for specialty goods, which are high-end products that customers are willing to go out of their way to purchase. Exclusive distribution helps create a sense of luxury and exclusivity.
Example: Rolex
Rolex watches are an example of exclusive distribution. Rolex sells its high-end watches through a limited number of authorized dealers. These dealers are carefully chosen to represent the brand and provide an exceptional customer experience. By limiting the number of outlets, Rolex maintains its image as a luxury brand and ensures that its products are perceived as exclusive and prestigious.
