Channels of Distribution
The channels of distribution of a product or service are often referred to as the "place decision" in regards to the four P's of the marketing mix. The four P's stand for Product, Price, Place, and Promotion. The "place" refers to the location from which the product or service is being distributed. The method of distribution depends on the product or service that is being provided to the end user. There are multiple methods of distribution and choosing the right method is vital for the success of the organization. Indirect and direct are two methods of distribution that are commonly used by today's suppliers. Indirect distribution occurs when the end user does not have direct contact or communication with the supplier. Direct distribution occurs when the supplier and the end user work directly together to complete a transaction. Other methods of distribution include, intensive, selective, and exclusive distribution methods.
Intensive distribution occurs when "all available outlets are chosen for maximum exposure (within reason) of a product that would be purchased by a consumer. For example Timex sells through 45,000 drug stores and thousands of other stores"(looksmart.com). When using the intensive distribution method the availability of the product is more important than the nature of the outlet.
Selective distribution happens when only a few outlets are chosen to distribute a product usually for geographic reasons. This method is typically used in places where the buyer prefers to spend time shopping, and customer service is important. Producers tend to have more control and have retailer promotional support when this method is in use.
Exclusive distribution occurs when there is only one outlet in a large market area. Products are purchased infrequently and last a long time. Exclusive distribution is used as an incentive to the sellers since there is...