Major Channel Alternatives

• Channel alternatives differ in three ways:

• the types of intermediaries,
• the number needed
• the terms and responsibilities of each.
TYPES OF INTERMEDIARIES
• Wholesalers
• Export and Import Agents
• Retailers
• Industrial Distributors
• Distributors • Value-Added Resellers (VARs)
• Direct Sales Representatives
• Agents and Brokers • Cooperatives
• Franchisees
NUMBER OF INTERMEDIARIES
• Three strategies based on the number of intermediaries are
• EXCLUSIVE DISTRIBUTION
• SELECTIVE DISTRIBUTION
• INTENSIVE DISTRIBUTION.
EXCLUSIVE DISTRIBUTION
• Exclusive distribution is a distribution strategy in marketing where a company limits the
distribution of its products to a single retailer or a small number of carefully chosen
retailers in a specific geographic area.
• This approach is often employed to create a sense of exclusivity, maintain strict brand
control, and provide a high level of customer service and expertise.
• Exclusive distribution is commonly used for premium and luxury products, as well as
specialized items that require specific knowledge or support.
SELECTIVE DISTRIBUTION
• Selective distribution is a distribution strategy in marketing where a company chooses to
distribute its products through a limited number of carefully chosen retail outlets or
channels.
• This approach strikes a balance between the wide reach of intensive distribution and the
brand control of exclusive distribution.
• The goal of selective distribution is to maintain a certain level of brand image and
accessibility while still reaching a significant portion of the target market.
INTENSIVE DISTRIBUTION.
• Intensive distribution is a distribution strategy in marketing where a company aims to
make its products available to the widest possible audience by distributing them through
as many retail outlets or channels as possible.
• The goal of intensive distribution is to maximize the availability and accessibility of the
product to consumers in order to capture a significant share of the market.
TERMS AND RESPONSIBILITIES OF CHANNEL
MEMBERS
• Price policy
• Conditions of sale
• Distributors’ territorial rights
• Mutual services and responsibilities
Evaluating Major Channel Alternatives
• Each channel alternative needs to be evaluated against
• ECONOMIC CRITERIA
• CONTROL, AND ADAPTIVE CRITERIA.
ECONOMIC CRITERIA
• The first step is to estimate how many sales each alternative will likely generate
• The next step is to estimate the costs of selling different volumes through each
channel.
• The final step is comparing sales and costs
CONTROL AND ADAPTIVE CRITERIA
• Using a sales agency can pose a control problem. Agents may concentrate on the
customers who buy the most, not necessarily those who buy the manufacturer’s
goods. They might not master the technical details of the company’s product or
handle its promotion materials effectively.
• To develop a channel, members must commit to each other for a specified period
of time. Yet these commitments invariably reduce the producer’s ability to
respond to change and uncertainty. The producer needs channel structures and
policies that provide high adaptability