Accounting technicians scheme west africa
C.9.7 Distribution Polices
Download 3.37 Mb. View original pdf
|
| C.9.7 Distribution Polices There are three kinds of distribution policies which an organisation can adopt a) Exclusive distribution b) Intensive distribution c) Selective distribution a) Exclusive Distribution: Some producers enter into special arrangements with specific middlemen whereby the producer will sell only to the middlemen in a given market. This policy is called exclusive distribution. The policy is feasible where the product is very expensive and appeals to an exclusive segment of the market, e.g. jewelry. The organisation finds it difficult getting middlemen to stock its products and the product is very complex and requires specialized after- sales service. From the perspective of the producer exclusive distribution helps the producer to maintain effective control over his distribution outlets, improve service to the consumer and ensure aggressive promotion of the product. However, the policy is a double-edged sword. In the first place, it limits the marketing outlets of the producer, and he might not achieve the market share he desires. Secondly, the location of the exclusive distributor might not be convenient for the customer. From the perspective of the exclusive distributor the policy assures him a ready market in the exclusive area. He is protected from competition. The exclusive distributor also gains from the promotion policies of his principal and often gets preferential treatment from the latter. However, the exclusive distributor might lose heavily if the agreement breaks down and having cut himself off from other suppliers he might find it difficult tore- stock his shop. bi Intensive distribution: This has to do with the situation where the organisation distributes its products through a wide range of distribution outlets. Intensive distribution is prevalent in the consumer market. Convenience goods for instance need maximum exposure in order to attract the consumer. This policy helps the organisation producing consumer products to achieve wider market coverage and satisfy consumer preferences in terms of service and convenience of location of outlets. However, it needs heavy investment in distribution facilities and promotional effort. 256 c) Selective distribution: This refers to a situation where a producer decides not to use all members of the channel available to it and uses only a few outlets in the target market. This policy is desirable where the product is a specialty product and the producer desires to have some organisational control over distribution outlets. This policy helps the producer to avoid the high cost involved in intensive distribution. It also helps the organisation to maintain a close watch over the performance of the distributor. Download 3.37 Mb. Share with your friends:
|