Retail Distribution Strategies

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  • 0:06 Product Distriution Defined
  • 1:02 Intensive Distribution
  • 1:56 Selective Distribution
  • 2:37 Exclusive Distribution
  • 3:32 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Retailers, such as department stores, discount stores and boutiques, sell most consumer products. In this lesson, you'll learn about different retail distribution strategies that manufacturers employ to get their products in front of consumers.

Product Distribution Defined

Lucy is a vice president of a small kitchen appliance company that produces products that include coffeemakers, toasters, microwaves and blenders. Part of her job is to create a strategy for the distribution of her company's products.

Lucy is working with different distribution channels and intermediaries. A distribution channel is the path Lucy's products take as they move from her company to the consumer. Sometimes the distribution channel is direct, such as when a consumer purchases a product directly from Lucy's company. And sometimes intermediaries are used, such as when Lucy's company distributes its products to wholesalers who turn around and sell the products to retailers who then sell to consumers. Today, Lucy is working on retail distribution strategies. Let's take a look at her options.

Intensive Distribution

Lucy could employ an intensive distribution strategy. An intensive distribution strategy is undertaken when a manufacturer distributes its products to any and all retailers that want an opportunity to sell them. Lucy probably will utilize a wholesaler in this approach. Rather than directly shipping to each retailer, she'll sell to one or more wholesalers, who in turn, will sell to retailers.

This is a shotgun approach. You hope to make sales by having your product appear on as many retail shelves as possible, regardless of the type, quality or reputation of the retailer. If Lucy uses this approach, her company's products can end up on the shelves of discount chain stores and high-end gourmet cooking stores.

Selective Distribution

Some of the appliances produced by Lucy's company are designed for high-end consumers with an interest in gourmet cooking. These folks can be snobbish on occasion and may not purchase a product that can be found at a mere discount store. Therefore, Lucy may decide to use a selective distribution strategy.

In this strategy, the products are distributed to a select group of retailers. For example, the company's high-end blender may only be distributed to specialty gourmet cooking stores where the sales staff are more likely to be educated and knowledgeable about the products.

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