distribution

The form of distribution determines whether a supplier wants to sell its products exclusively, intensively or selectively via external partners.

In the case of exclusive distribution, the supplier grants an exclusive distribution right to selected sales partners (usually for a specific region). In return, the sales partners commit to not distribute competing products. The advantages of this form of distribution are obvious: exclusive marketing efforts, high motivation and qualification of the sales partners and high control of the supplier over the market development (e.g. pricing, sales promotion, service). However, market coverage and the scope of action of the supplier (e.g. when setting up new distribution channels such as direct sales via e-commerce) are more limited in exclusive distribution compared to alternative forms.

The counterpart to exclusive distribution is intensive distribution. In this case, there are usually very low minimum requirements for the sales partners. The supplier wants to ensure full presence of its products on the market (“ubiquity”) and provide customers with the greatest possible “convenience” in procurement. However, the advantage of ubiquity is offset by the disadvantage of having little control over the marketing of the own products. Additionally, the fit of strategy and image between supplier and sales partner is only guaranteed to a limited extent. Furthermore, this form of distribution bears high potential for conflict, as the various sales partners may be direct competitors. In many cases, this comes with a correspondingly high coordination effort for the supplier.

Selective distribution is placed in between the two alternatives mentioned above. Sales partners must meet a clearly defined profile of requirements and close business relationships are established with selected partners. This leads to relatively high marketing control and ensures adequate market coverage.

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