When a distribution channel is decided upon it usually has management involved due to its overall effect on operations. This type of channel is best summarized by these 3 points:
- To get end product from manufacturer to customer
- Ways of cost control and saving time as the channel is executed
- Maintain competitive distribution channels
A more detailed approach to these distribution types can be summarized under these 5 innovative
forms of distribution .
1) Indirect distribution
With indirect distribution the product is received by the customer via many different channels. A good example of this is when a product starts at manufacturing then goes to C&F, distributor, retailer, and then the customer receives it. The downside to this is that the distribution chain is too long.
2) Direct distribution
The direct distribution channels is normally the shortest due to less length. This allows the customer to receive their product in a shorter amount of time. So if you have ever bought a product online or in a traditional outlet then you have experienced direct distribution. Also, distribution channels can be decided upon by the penetration level that the company plans to meet.
3) Intensive distribution
An intensive distribution is used if a company plans to mass market their products. Under intensive distribution it tries to make the product seen on as much of the market as possible. An example of this includes products that are durable and FMCG.
4) Selective distribution
Companies like Zara or Armani are labeled as selective distribution levels because of their selective distribution. These types of channels also have a limited amount of outlets. An example of this is when there might be only 2-3 Armani outlets and 4-5 Zara outlets.
5) Exclusive distribution
When it comes to exclusive channels you are likely to find only one company type within a region for example, Lamborghini. If a big region is given to a distributor then it is referred to as an exclusive distribution strategy. Sometimes a distributor may also be designated an entire country to represent in. This also means that they would be the only distributor in that particular country.
All-in-all, these channels all have one thing in common and that is the variety of products available. As with all single companies they may have many product lines and having their own individual distribution strategy.
With some premium products, they might require selective channels, but the others may be considered as mass products and would require the intensive distribution . While both strategies will be different, the overall distribution is considered dynamic as it contributes to the overall company advantage.
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