Overview
This lecture covers the factors influencing a firm's marketing channel decisions and explains the different distribution strategies—intensive, selective, and exclusive—and when each is most appropriate.
Factors Affecting Channel Decisions
- Channel choice can determine a product’s success or failure.
- Customer preferences and how they want to buy products should guide channel selection.
- Differentiation between consumer and business customer needs is crucial.
- Perishable or high-value products require shorter or more direct channels.
- The firm’s capabilities vs. those of potential channel partners influence channel structure.
- The economic and technological environment impacts channel decisions.
- Competitors’ channels may influence, but do not dictate, a firm’s choices.
Types of Distribution Strategies
- Intensive distribution: Product is sold in as many outlets as possible; used for convenience goods like soft drinks.
- Selective distribution: Product is sold at selected outlets; allows targeting different market segments, e.g., electronics at specialty stores vs. mass merchants.
- Exclusive distribution: Product is sold through one or few outlets; builds image, controls price, and can protect brand value.
Distribution Strategy Suitability
- Intensive distribution suits convenience and frequently purchased products.
- Selective distribution fits products needing some comparison shopping, often with higher price or specialty features.
- Exclusive distribution is best for high-value, luxury, or image-driven products.
Key Terms & Definitions
- Marketing Channel — A path through which products flow from producer to consumer.
- Intensive Distribution — Selling a product in as many locations as possible.
- Selective Distribution — Selling a product through a limited number of outlets.
- Exclusive Distribution — Restricting product sales to one or a few outlets.
- Gray Market — Unauthorized selling of a producer’s products.
Action Items / Next Steps
- Review channel selection factors and distribution strategies.
- Prepare answers to: Why are channel decisions critical? What factors affect channel selection? Which products use exclusive strategies?
- Read assigned textbook chapter 8.4 for further examples.