Good Essay About Exclusive Distribution

Exclusive distribution is known to be a rather extreme form of selective distribution in which only a singular wholesaler, distributor or retailer is authorized to sell in a specified geographical area. When a company decides to distribute its brand name via just one or two major retailers in the market, who deal exclusively in it and don’t deal in all competing brands, it is then known that the organization is utilizing an exclusive distribution strategy. This form of distribution is rather common in labels and products that seek a high prestigious image. Most common examples are of designer products, large domestic appliances and even cars. By giving exclusive rights to distribution, the manufacturer begins to hope to be able to partly control the intermediaries’ price, credit inventory, promotion and service policies. The company also hopes of gaining the advantage of aggressive selling through such outlets. (Trivedi, 1998)
According to Nevin (2005) one main reason for a company to want to use this strategy would be if it were a small business. Several small businesses have quite limited resources and are not able to manufacture large amount of products. This can be an advantageous strategy for a small business with a product that cannot be produced in mass production. Another reason could be that a business might want to use this strategy to gain exclusivity. By limiting the number of products, the distributor can then sell it as a limited edition which can be another way for the supplier to gain a brand image of exclusivity. Businesses that usually carry high end products use this technique to enhance their brand image.
Bitner and Booms (1982) said that retailers and other intermediaries would probably opt for exclusive deals in order to control the competition in the market. Especially for retailers, if they are the only ones selling a certain product in vicinity it would give them more control of the price and selling strategies and increase sales. In some instances intermediaries might not be as attracted to exclusivity where they won’t be able to sell the competing product as well, this will give their competitors an edge by sealing a deal with their manufactures competitor and having their own exclusive product.
With reference to products such as candy bars, batteries, and steak knives, exclusivity may not be suitable for the producers because they wouldn’t want to limit sales of a such a mass produced product to just one or two territories, rather they would prefer to sell them through all channels because there is no exclusivity in these products or need to enhance brand image as these are not high end brands who would benefit from being exclusively sold. Due to the large competition in the market, if their product is not available in one store, consumers will simply chose another brand of batteries, chocolate or steak knives instead of looking for a particular one. (Weitz and Dap, 2006)
For products such as television sets, gold balls, golf clubs and industrial woodworking machinery, exclusivity for producers is probably more important because these products are not mass produced, target a niche market and therefore would make better sales if sold through few retailers. Also since these products are either exclusive due to a brand image or just target a small market, exclusivity is important for them to avoid wastage of inventory.(Hennart, 2006)

References

Trivedi, M. (1998). Distribution Channels: An Extension of Exclusive Retailership. Management Science, 44(7), 896-909. Retrieved April 20, 2015, from http://pubsonline.informs.org/doi/abs/10.1287/mnsc.44.7.896
Bitner, M., & Booms, B. (1982). Trends in Travel and Tourism Marketing : The Changing Structure of Distribution Channels. Journal of Travel Research, 20(4), 39-44. Retrieved April 20, 2015, from http://jtr.sagepub.com/content/20/4/39.short
Nevin, J. (1995). Relationship marketing and distribution channels: Exploring fundamental issues. Journal of the Academy of Marketing Science, 23(4), 327-334. Retrieved April 20, 2015, from http://link.springer.com/article/10.1177/009207039502300413?LI=true
Hennart, J. (2006). A transaction costs theory of equity joint ventures. Strategic Management Journal, 9(4), 361-374. Retrieved April 20, 2015, from http://onlinelibrary.wiley.com/doi/10.1002/smj.4250090406/abstract
Weitz, B., & Dap, S. (2006). Relationship Marketing and Distribution Channels. Journal of the Academy of Marketing Science, 23(4), 305-320.