Understanding Selective Distribution: Concept and Strategy
Selective Distribution plays a major role in one's marketing strategy. This is more so because unless and until your distribution is top-notch, the product won't reach your desired consumers.
But did you know we have various types, even within the broader purview of distribution?
These types are decided based on multiple parameters. You must keep in mind the product being distributed, what is the target consumer-like, and whether it is targeting the masses or has specific needs.
There are three main types of distributions, Exclusive, Intensive, and Selective.
While this blog post is focused on understanding selective distribution in-depth, we will also get a basic understanding of the other two types.
What is Exclusive distribution?
As the name suggests, when it comes to exclusive distribution, the company has only one dealer or retailer in a specific locality to sell its products. This works well for premium brands because it can help them provide more exclusivity.
One of the best examples of exclusive distribution can be a Mercedes Car showroom; you don't have multiple of them in an area because the exclusivity factor is a must for a premium brand like Mercedes.
What is Intensive distribution?
Next, we have Intensive distribution; for this one, the product has to target the masses. Products that work with a mindset of 'more availability will lead to more sales.' Use this distribution strategy.
Intensive distribution is used for products that lack consumer loyalty; if you do not get a brand X product, you are willing to buy a brand Y product.
Now let's get into the blog post's main topic, Selective distribution.
This blog post will cover the following areas under Selective Distribution:
1. What is Selective Distribution?
2. Strategy behind choosing Selective Distribution
3. Advantages and Disadvantages of Selective Distribution
4. Examples of Selective Distribution
5. Creating a selective distribution strategy
1. What is Selective Distribution?
Selective distribution is a type of channel distribution. Here a company or a brand chooses a certain set of outlets through which they can further make their products available to the consumers.
So as per our understanding of exclusive and intensive distribution, selective distribution is a different ball game because it does not have a lot of outlets or just a single outlet.
In selective distribution, some outlets are chosen based on their potential profits, and they are given the right to stock and sell the offerings of the company.
The dealers under selective distribution may not necessarily be obliged to store only one brand of products, but this depends.
Selective distribution may help the company more because selective outlets can help them filter out the outlets based on the profitability parameters.
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2. Strategy behind choosing Selective Distribution
A company usually opts for this type of distribution when they wish to choose outlets based on specific locations.
It can help a manufacturer because they can also add various filters concerning their price point.
For the consumer, it is beneficial because they have access to specific outlets for some products. As against an exclusive distribution, this one provides more visibility to the brand than might be the need of the hour.
And unlike an intensive distribution, this can provide the need for exclusivity in comparison.
3. Advantages and Disadvantages of Selective Distribution
Let’s delve in deeper and understand the advantages and disadvantages of Selective Distribution.
Advantages of Selective Distribution
a. Perfect Market Coverage
You can decide on the outlets that provide maximum coverage and profits in each market. So, it acts as the perfect alternative for companies to even experiment and check what works best for sales and the visibility of the product for sales.
b. Satisfaction for Consumer
Since selective distribution considers a limited number of outlets, there is a high
the possibility that consumers might get good service.
They can experience the best form of customer service because each customer will receive much-needed attention from the retailer.
c. Improved Communication
Manufacturers can help keep track of the outlets since they are limited in numbers, ensuring better and smooth communication for proper functioning.
This also ensures a stronger brand image that acts as a huge add-on in the long run.
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Disadvantages of Selective Distribution
a. Limited Market Penetration
While you may receive the optimum market coverage, it may still be restrictive.
This is because the available outlets are still limited, so there may be certain areas where your distribution is not available, but consumers may be interested in your offering.
4. Examples of Selective Distribution
To understand Selective Distribution in a better manner, let’s use some examples
a. Cars
While exclusive distribution may happen for a very high-end brand range car, selective distribution is more so in the case of premium or mid-range but not luxury cars.
Selective distribution, in this case, maybe brand-specific, like Maruti showrooms that only display brand-specific cars.
Or it can also be for a showroom that considers cars from various brands together.
b. Clothing
If you take the example of clothing, certain brands sell their products only out of specific outlets.
Like in the case of Zara, it will only sell its own offering through the outlets, whereas Raymond may have selective distribution.
They sell their products through specific outlets as well as franchise outlets, which ensures the availability is at its peak.
c. Watches
The best example under the category of watches is that of Titan, now while Titan may have an exclusive outlet, to sell specific offerings.
Their products may be available elsewhere, too, through other shops that sell watches. But the best part about Titan is that they ensure selective distribution among various ranges of products.
The high-end models of the watches may be available only at Titan outlets, whereas other models may have a selective distribution model.
5. Creating a selective distribution strategy
A selective distribution plan is a marketing strategy in which a corporation exclusively distributes its products through a small number of channels or retailers who match certain requirements. This method gives businesses greater control over the quality of their products and their brand's image. Here are some steps to developing a brand's selective distribution strategy:
Define your target audience: Before developing a selective distribution plan, you must first determine your target audience. Age, gender, financial level, and geographic location are all factors. Understanding your target demographic allows you to find the channels and shops that are most likely to contact them effectively.
Identify your distribution criteria: Once you've identified your target audience, you can start thinking about the criteria you'll use to choose your distribution partners. This could include things like sales volume, reputation, customer base, and geographical position. You may ensure that your items are distributed solely through channels and retailers that satisfy your standards by creating specific criteria.
Examine potential partners: Once your criteria have been determined, you may begin to examine potential partners. This may entail conducting research on various merchants, attending trade exhibitions, and networking with industry leaders. When analyzing possible partners, examine their reputation, consumer base, sales volume, and capacity to promote your brand effectively.
Negotiate contracts: Once you've discovered possible partners, you may begin negotiating contracts with them. This may include creating exclusive distribution agreements, pricing agreements, and marketing and promotional programs. By drafting agreements with them, you may ensure that your partners are committed to properly marketing your brand and satisfying your distribution criteria.
Monitor performance: After you've constructed your distribution network, you should keep an eye on its performance on a regular basis. Tracking sales volume, monitoring consumer comments, and analyzing the efficiency of your promotional efforts may all be part of this. Monitoring performance allows you to identify areas where your distribution strategy may be enhanced and take corrective action.
Change your strategy: As market conditions or customer preferences change, you may need to change your distribution plan. This could include broadening your distribution network to reach new customers or focusing on select shops that have shown effective marketing of your brand. By altering your plan, you can ensure that your items reach your target demographic and that your brand is marketed as successfully as possible.
Conclusion
To summarise, knowing selective distribution is critical to every successful marketing strategy. Companies can keep more control over their brand image and product quality by restricting the number of channels or shops through which their items are distributed. This strategy can be especially beneficial for luxury and high-end firms looking to maintain exclusivity while appealing to a specific target demographic.