DISTRIBUTION STRATEGIES: TYPES AND EXAMPLES - DUDAS - 2025

The distribution strategies are implemented by a company plans to make sure to place a product or service available to the maximum of potential customers through the supply chain, with minimal cost or optimal.

A good distribution strategy can maximize revenue and profit, but a bad one can lead not only to losses, but also helps competitors to take advantage of that opportunity created in the market.

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A company can decide whether it wants to offer the product through its own channels, or partner with other organizations to use the distribution channels of these companies to do the same.

Some companies may use their exclusive stores to sell their products or may use available retail chains. Likewise, it can be a combination of both strategies.

A single company can have multiple product lines, each with its own distribution strategy.

Importance

Due to rising costs, companies try to expand into various markets in order to have higher sales and profitability. To be able to go far, you need correct distribution strategies. You cannot market a product and then not deliver it to the end customer.

This would be a huge waste of money, since your marketing money would be wasted, as well as the loss of opportunities being enormous. Not to mention the loss of the brand when the customer wants to buy the product, but can't find it.

Therefore, it is very important for a company to have adequate distribution strategies. This is also why the point of sale, which consists primarily of distribution, is one of the top 4 Ps of the marketing mix.

Types of distribution strategies

Before designing a distribution strategy, the company has to determine in general what the corresponding distribution channel should achieve. This strategy can be summed up with these three main points.

- How to take the product from the point of manufacture to the end customer.

- How to control costs and save time, while executing the distribution strategy.

- How to build a competitive advantage through distribution.

Furthermore, distribution strategies are also decided based on the level of penetration that the company wants to achieve.

Some products that are “Premium” may need selective distribution, while others that are mass products may need intensive distribution.

The strategies for both types will be different. Therefore, the distribution of a company is dynamic in nature and contributes greatly to the competitive advantage of the company.

If a manufacturer decides to adopt an exclusive or selective distribution strategy, it must select reputable distributors, experienced in distributing similar products and known to the target audience.

Intensive distribution

It is also known as mass distribution. It is a distribution strategy for low-cost mass consumer products, where the product is made available to the customer in all possible ways. The goal is to penetrate as much of the market as possible.

Different distribution channels are used for the customer to find the product in every possible location to buy, such as general stores, health stores, discount stores, shopping centers, etc.

Sometimes a mass consumer product has differentiation problems and it becomes difficult to retain the customer for said product.

Here you will not have the problem of brand retention, since the customer does not have to be aware of that product. Product availability will satisfy the customer's need.

Selective distribution

It is a type of distribution strategy that lies and operates between intensive and exclusive distribution.

It involves using more than one distributor, but less than all the intermediaries and distributors that carry a company's consumer products, based on a specific set of company rules.

A small number of outlets are selected in specific locations to distribute the product. Doing this allows manufacturers to choose a price that addresses a specific consumer market.

Therefore, it provides a more personalized shopping experience, limiting the number of locations in a particular area.

Most brands of furniture, televisions and appliances are distributed in this way, where consumers are willing to compare prices and manufacturers want a large geographical distribution. The advantages of a selective distribution are:

- Good market coverage.

- Greater control.

- Reduced costs compared to intensive distribution.

Exclusive distribution

It has points of sale limited to a single outlet. This may mean high-priced, special-collection, exclusive luxury brands, available only at private locations or stores.

This strategy helps to maintain the image of a brand and the exclusivity of the product.

An exclusive distribution strategy is one in which a company grants exclusive rights to its products or services to a distributor or retailer only in a local area. The most common characteristics are:

- Unique brand.

- Exclusive territory rights.

Therefore, a single distributor only has the right to market that product in its specific territory. The justification for granting exclusive rights to the distributor is:

- Encourage a better promotion of the product.

- Provide better customer service.

In some cases, a distributor may be designated for an entire country. There would be no one other than that distributor to operate that company.

Indirect distribution

Indirect distribution is when the product reaches the end customer through numerous intermediate channels.

For example, the product goes from the manufacturer to the port, then to a distributor, then to retailers, and finally to the customer. Therefore, the distribution chain is very long.

Direct distribution

Direct distribution is when the company sends the product directly to the end customer or when the length of the distribution channel is considerably shorter.

A business that sells on an e-commerce portal or that sells through modern retail is a form of direct distribution.

Push vs. pull

Another key decision at the strategic level is whether to use a push or pull strategy.

In a push strategy, the seller uses advertising and incentives intensively for distributors, with the expectation that they will stock the product or brand, and that consumers will buy it when they see it in stores.

On the other hand, in a pull strategy, the seller promotes the product directly to consumers, hoping that they will pressure retailers to stock the product or brand, asking for it through the distribution channel.

The choice of a push or pull strategy has important implications for advertising and promotion.

In a push strategy, the promotional mix would consist of industrial advertising and sales calls. Approved advertising media would typically be magazines, exhibitions, and trade shows.

A pull strategy would make more extensive use of consumer advertising and promotions, taking into account mass media such as newspapers, magazines, television and radio.

Examples

Direct distribution

It involves the distribution of the product directly from the manufacturer to the consumer. For example, Dell Computers supplies its computers directly to its target customers.

The advantage of direct distribution is that it gives the manufacturer full control over their product

Intensive distribution

Intensive distribution is important for high demand and everyday products such as soft drinks, bath soaps, toothbrushes, matchboxes, snacks such as chocolates and chips, etc. Here customers do not identify with the different brands and attributes.

For example, snacks and beverages are sold through a wide variety of outlets, including supermarkets, convenience stores, vending machines, coffee shops, and others.

Soap is a good example of intensive distribution. Even though there are different brands of soap and customers will recognize them, there is a good chance that if the usual brand is not available and they need a soap, they will choose another one that is available on the store shelf.

Many times, a marketing campaign for a brand can generate customer interest, but if that brand is not available where the customer is, a competing brand can take advantage of satisfying the customer's interest.

Selective distribution

The best examples would be Whirlpool and General Electric, which sell their major appliances through large networks of selected distributors and retailers.

They develop a good working relationship with these selected distribution channel partners. They expect a better than average sales effort.

For example, Dr. Scholl's orthopedic shoes only sell their product through pharmacies, because this type of establishment supports the desired therapeutic positioning of the product.

Some of the well-known skincare and cosmetic brands such as Estee Lauder and Clinique insist that sales staff be trained to use their range of products.

A company like Armani, Zara or any other brand company will have a selective distribution. These companies are likely to have only limited outlets.

For example, in an urban city Armani could have 2 to 3 stores at most, while Zara could have only 4-5.

Exclusive distribution

Some examples of companies that enact exclusive distribution would be high-end designers like Chanel or even an automotive company like Ferrari.

If Zara has 4-5 outlets in a city, how many outlets would a company like Lamborghini have? Probably a single point of sale in a region spanning 5 to 7 cities.

When a company wants to give a large region to a single distributor, then it is known as an exclusive distribution strategy.

References

1. Hitesh Bhasin (2018). What are the various distribution strategies for a company? Taken from: marketing91.com.
2. Mba Skool (2019). Distribution Strategy. Taken from: mbaskool.com.
3. Melissa Sonntag (2019). Product Distribution Strategy: The Ultimate Guide. Taken from: repsly.com.
4. Wikipedia, the free encyclopedia (2019). Distribution (marketing). Taken from: en.wikipedia.org.
5. Advergize (2018). Detailed Guide: Types of Distribution Strategy. Taken from: advergize.com.
6. Smriti Chand (2019). Types of Distribution: Intensive, Selective and Exclusive Distribution. Your Article Library. Taken from: yourarticlelibrary.com.