Week 3 Project

Types of Distribution Strategies and Marketing Channels

When deciding on a distribution strategy, marketing managers must decide whether it should be intensive, selective, or exclusive.

Intensive Distribution Strategy - An intensive distribution strategy is one where a product is made available to any retailer willing to sell it.

This strategy is often used for soft drinks, which are sold in any outlet that will keep them, even in vending machines.

Selective Distribution Strategy - A selective distribution strategy, instead, is more restrictive by requiring that retail outlets be suitable for selling a product—for example, television sets sold through electronic and mass merchandisers.

Exclusive Strategy - The last strategy is an exclusive strategy, in which a product is sold only through a dealer. Automobiles are a classic example of an exclusive strategy—each brand has its own dealer network.

Marketing Channels

There are two basic types of marketing channels, conventional channel systems and vertical marketing systems. Vertical marketing systems are further subdivided into three types: the corporate vertical marketing system, the administered vertical marketing system, and the contractual vertical marketing system.

Conventional channel systems form the traditional model of distribution channels. Each member of a marketing channel acts independently, depending on his or her self-interest, and there is little cooperation between channel members.

Conventional marketing systems work well with intensive and selective distribution strategies.

Vertical marketing systems are governed by cooperative relationships. They, therefore, have an advantage over conventional systems in that the members coordinate their distribution strategy in order to achieve higher results.

Vertical marketing systems are used most often for selective and exclusive distribution strategies:

An organization's strategy is a road map that guides the direction of the organization. In the military, the lack of a strategy leads to a defeat in war; in business, the lack of a strategy leads to corporate defeat. A good corporate strategy is as important to the success of an organization as a good military strategy is to the battle�eld commander. It is an organization's core competency and strategy that will determine how the organization will position itself.

An organization's core competency includes the things that the organization does better than any other organization. Part of the strategy development process is a strengths, weaknesses, opportunities, and threats (SWOT) analysis. A SWOT analysis is a careful study of an organization's strengths and weaknesses (internal assessments) and its opportunities and threats (external assessments).

Additional Materials

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