Distribution is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries. There are four types of Distribution Arrangement:
Intensive Distribution Arrangement is places of products in to different locations for distribution. Its purpose is to put many products in to many locations that a customer will come across the product what will make that a customer will remember and buy the product. For example, toothpaste is made in a factory, but common brands of toothpaste can be found at the grocery store, the drug store, the convenience store, or a retail store. A customer seldom has to go out of his or her way to find her favorite brand of toothpaste because of the intensive distribution that has been undertaken. Benefit to producers is that the company that produces the product benefits greatly from intensive distribution. Their product with their brand name is seen everywhere and is available everywhere. It can easily If a customer knows that no matter where they go they will be able to find what they want and become the recipient of product loyalty. With such intensive distribution, customers are seldom forced to go without the product.
Benefit to retailers is that the more brands they carry of any given item, the more they are seen as having a great selection. Customers want to be able to find the brand or style of a product that they prefer, and they want to know they could have chosen many other ones.
An intensive distribution strategy allows customers to both have choices and find what they want without going out of their way. It makes sure the product in question is everywhere a customer might be, so that customers can find what they want when they want it. Intensive distribution can make any product a household name and benefits everyone involved.
Selective Distribution Arrangement is a retail strategy that involves making a product or group of products available only in certain markets. There are several reasons for employing this approach, including the potential for limiting competition and minimizing distribution costs so that net profits are higher.
The process of selective distribution focuses on identifying specific markets where a company’s products are highly likely to be favored by consumers in the area, while avoiding distribution to areas where there is less of a chance of gaining a significant market share.
One approach to selective distribution that some businesses take is to contract with a limited number of retailers who will sell the products in their stores. For example, a company making a specific brand of cologne may choose to only allow their product to be sold at a couple of high-end department stores, and withhold distribution to supermarkets, drugstores, and discount retailers.
Benefit to Customer is that they are focusing on customers who are more likely to shop at one or more of the high-end stores, such as teenagers or a woman which have enough time for shopping. For them then the product begins to be seen as somewhat prestigious, and will command a higher price per unit.
Benefit to Retailer is that the retailers benefit from being able to offer a product that is not widely available in the area, while the manufacturer stands to increase sales by having little to no competition from similar products within that area.
Benefit to Producer is that the producer may wish his products to be sold only from trading premises at which certain technical equipment or facilities are available, or where the surroundings have the atmosphere that he thinks best for selling his product, without involving the manufacturer in vertical integration.
Selective distribution is necessary because retailer requirements must reach 'quality standards' and these restrictions exclude supermarkets as distributors. The requirements mean that for high-tech goods, consumers get the benefit of trained and knowledgeable staff and a good selection of products. In a selective distribution network, both distributors and the retailers in the product supply chain are assessed by the manufacturer or by supplier for their suitability to sell the product concerned before they are included in the distribution system.
The effect is that it is difficult for retailers outside the network to acquire stock of the relevant goods, so the limited number of approved shops are the only ones selling the products.
Exclusive Distribution sell high end and luxury products. The structure of an exclusive distribution agreement favors both the manufacturer and the distributor or retailer. From the point of view of people moving the product to consumers, having an exclusive contract means that consumers must come to them if they want the product. For example, if a cell phone provider has an exclusive deal with a manufacturer of cell phones, people who want to use cell phones made by that manufacturer must go through that cell phone provider.
Exclusive distribution allows companies to tightly control brand image, which can be especially important for luxury products. If something can be bought at any store, it is viewed as mundane, whereas if it can only be bought at certain stores, this adds a scarcity component which can make it more appealing.
Exclusive distribution is mentioned in product advertising. For example when an ad says something like “only available at the following stores” it may indicate that the manufacturer has an exclusive agreement, and the product cannot be obtained elsewhere.
Benefit to Supplier is that a supplier has made a deal with one or two retailers in a particular area to sell the supplier's product exclusively. This provides an advantage to the supplier because it permits the supplier to dicate some of the retail strategies. exclusive distribution provides the product with a prestige image because it can not be found everywhere. This can be considered a disadvantage if the supliers product is not positioned to be pristine.
Benefit to Customers there is not, because it sells only high price product for rich people not for ordinary people. But rich people may have a feeling that they are better than others. Luxury brands products such as Gucci or Armani that are really very expensive.
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