Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

11. Place and Development
    of Channel Systems

Text © The McGraw−Hill

Companies, 2002

320 Chapter 11

we move from intensive to exclusive distribution, we give up exposure in return for

some other advantage—including, but not limited to, lower cost.

In practice, this means that Wrigley’s chewing gum is handled, through inten-

sive distribution, by about a million U.S. outlets. Rolls Royces are handled, through

exclusive distribution, by only a limited number of middlemen across the country.

Intensive distribution is commonly needed for convenience products and busi-

ness supplies—such as laser printer cartridges, ring binders, and copier paper—used

by all offices. Customers want such products nearby.

The seller’s intent is important here. Intensive distribution refers to the desire to

sell through allresponsible and suitable outlets. What this means depends on cus-

tomer habits and preferences. If target customers normally buy a certain product at

a certain type of outlet, ideally, you would specify this type of outlet in your Place

policies. If customers preferred to buy Sharp portable TVs only at electronics stores,

you would try to sell through all electronics stores to achieve intensive distribution.

Today, however, many customers buy small portable TVs at a variety of convenient

outlets—including Eckerd drugstores, a local Kmart, over the phone from the

Sharper Image catalog, or perhaps from a website on the Internet. This means that

an intensive distribution policy requires use of all these outlets, and more than one

channel, to reach one target market.

Rayovac batteries were not selling well against Duracell and Energizer, even

though the performance of the different batteries was very similar. Part of that may

have been due to the heavier advertising for the Duracell and Energizer brands. But

consumers usually don’t go shopping for batteries—83 percent of the time they’re

purchased on impulse. So to get a larger share of the purchases, Rayovac had to be

in more stores. It offered retailers a marketing mix with less advertising and a lower

price. In a period of three years, the brand moved from being available in 36,000

stores to 82,000 stores—and that was enough to give sales a big charge.^20

Selective distribution covers the broad area of market exposure between inten-

sive and exclusive distribution. It may be suitable for all categories of products. Only

the better middlemen are used here. Companies usually use selective distribution to

gain some of the advantages of exclusive distribution—while still achieving fairly

widespread market coverage.

A selective policy might be used to avoid selling to wholesalers or retailers who

(1) place orders that are too small to justify making calls or providing service, (2)

have a reputation for making too many returns or requesting too much service, (3)

have a poor credit rating, or (4) are not in a position to do a satisfactory job.

As the percentage of people and
firms adopting personal
computers has increased,
Microsoft has moved to more
intensive distribution of its
products worldwide.

Intensive distribution_
sell it where they buy it

Selective
distribution_sell it
where it sells best

Reduce costs and get
better partners