- Seller's unit costs for stocking are high;
- Customers are willing to travel to location.
- There are fewer locations where the customer can buy the product. They are not everywhere. Approach taken when the cost to stock product is very high.
For example for home computers, you might sell through a retail outlet. The inventory cost is very high for that retailer so you don’t want to license several retail outlets in a small market to sell your product. Their inventory cost is so high.Creating all kinds of competition for them will then weaken their position. - Another consideration is whether customers are willing to travel to a location to purchase the product. For high ticket items like cars, furniture or computers, the customer may be willing to travel to a number of outlets.
- For items like toothpaste, it had better be everywhere (intensive distribution).Because customers are not willing to travel all around to buy toothpaste, it needs to be available in every outlet.
Exclusive Distribution.
- Takes place when suppliers enter into agreements with one or a few retailers that designate the latter as the only companies in specified geographic areas to carry certain brands and/or product lines.
- Strategy taken for branding purposes.
- Retailers involved in a more exclusive distribution arrangement are likely to be more “loyal”—i.e., they will tend to recommend the product to the customer.
- Sell large quantities;Carry larger inventories and selections;Provide more services
