There are many variations in respect of the distribution channel structure however,
intermediaries be deemed as appropriate in the business environment, the following channel
structures would be available to you:
1. Passing of goods and services direct from the manufacturer to the consumer
2. Passing of goods and services via a retailer and then on to a consumer
3. Passing of goods and services from the manufacturer via a wholesaler and then directly
on to the consumer
4. Passing of goods and services from manufacturer via a wholesaler, then on the retailer
and consequently on to the consumer
5. Additionally, the manufacturer can distribute the products and services via an agent to a
wholesaler and then follow the route shown in points 3 and 4.Quite often the types of
channels of distribution used by organizations will depend upon
6. the structures of the market, the size of the market, the complexity of the market and the
Selecting the channels of distribution
For manufacturer to select a channel, they must consider the following:
• The product characteristics and how they affect methods of distribution
• Customers and their requirements
• Location of the customers
• How, when and where customers want to buy the products
• The cost of distribution
• The legal and regulatory constraints of the distribution
These are important issues and require significant levels of analysis in order to gain an understanding
of the situation. Clearly some of these issues will form the basis of the marketing audit. Ideally the
marketing mix has a clear focus on achieving customer satisfaction and achieving the profit objectives
of the organization.
Supermarkets have moved away from just supplying food-based products to include fashions, music,
electrical goods, cosmetics, etc. All of this is focused on meeting all of the above distribution factors.
There are two perspectives of intermediary selection, the strategic perspective and the operational
perspective: strategic in relation to looking at the ‘bigger picture’ and ‘operational’ looking at the
ability to implement the strategic marketing plan and distribution strategy.
Channel strategy
There are three types of market coverage:
1. Intensive
2. Selective
3. Exclusive
Intensive distribution means that as may available outlets as possible hold this product, e.g.
chocolate, newspapers, bread, etc. Intensive distribution will mean convenience to the customer and
increase customer satisfaction. The sale of groceries in petrol and service stations is an example of
how intensive distribution has grown (Bowersox eta’l 1986).
Key characteristics include:
• Maximum number of outlets covered to maximize availability
• Target outlets in as many as geographical regions as possible
• Consumer convenience products
• High number of purchasers
• High purchase frequency
• Impulsive purchase
• Low price
Selective distribution is different in that some products are only available from some outlets, e.g.
electrical appliances, certain brands of clothes and fashion products.
Key characteristics include:
• Medium level of customers – but likely to be significant
• Less intensive distribution of outlets
• Retailers may require specialist knowledge
• Shopping based products
• Medium number of shoppers
• Purchase is occasional
• Purchase is more likely to be planned
• Medium price
Exclusive distribution is where possibly only one outlet in a certain geographic area supplies a
product. This method of distribution usually relates to specialty products, e.g. special cars, specialist
clothing, etc. often exclusive distribution is relevant to niche products.
Key characteristics include:
• Relatively few customers
• Limited retail outlets
• Close retailer/customer relationship
• Special products
• Infrequent purchase
• High involvement and planned purchase
• High price
intermediaries be deemed as appropriate in the business environment, the following channel
structures would be available to you:
1. Passing of goods and services direct from the manufacturer to the consumer
2. Passing of goods and services via a retailer and then on to a consumer
3. Passing of goods and services from the manufacturer via a wholesaler and then directly
on to the consumer
4. Passing of goods and services from manufacturer via a wholesaler, then on the retailer
and consequently on to the consumer
5. Additionally, the manufacturer can distribute the products and services via an agent to a
wholesaler and then follow the route shown in points 3 and 4.Quite often the types of
channels of distribution used by organizations will depend upon
6. the structures of the market, the size of the market, the complexity of the market and the
Selecting the channels of distribution
For manufacturer to select a channel, they must consider the following:
• The product characteristics and how they affect methods of distribution
• Customers and their requirements
• Location of the customers
• How, when and where customers want to buy the products
• The cost of distribution
• The legal and regulatory constraints of the distribution
These are important issues and require significant levels of analysis in order to gain an understanding
of the situation. Clearly some of these issues will form the basis of the marketing audit. Ideally the
marketing mix has a clear focus on achieving customer satisfaction and achieving the profit objectives
of the organization.
Supermarkets have moved away from just supplying food-based products to include fashions, music,
electrical goods, cosmetics, etc. All of this is focused on meeting all of the above distribution factors.
There are two perspectives of intermediary selection, the strategic perspective and the operational
perspective: strategic in relation to looking at the ‘bigger picture’ and ‘operational’ looking at the
ability to implement the strategic marketing plan and distribution strategy.
Channel strategy
There are three types of market coverage:
1. Intensive
2. Selective
3. Exclusive
Intensive distribution means that as may available outlets as possible hold this product, e.g.
chocolate, newspapers, bread, etc. Intensive distribution will mean convenience to the customer and
increase customer satisfaction. The sale of groceries in petrol and service stations is an example of
how intensive distribution has grown (Bowersox eta’l 1986).
Key characteristics include:
• Maximum number of outlets covered to maximize availability
• Target outlets in as many as geographical regions as possible
• Consumer convenience products
• High number of purchasers
• High purchase frequency
• Impulsive purchase
• Low price
Selective distribution is different in that some products are only available from some outlets, e.g.
electrical appliances, certain brands of clothes and fashion products.
Key characteristics include:
• Medium level of customers – but likely to be significant
• Less intensive distribution of outlets
• Retailers may require specialist knowledge
• Shopping based products
• Medium number of shoppers
• Purchase is occasional
• Purchase is more likely to be planned
• Medium price
Exclusive distribution is where possibly only one outlet in a certain geographic area supplies a
product. This method of distribution usually relates to specialty products, e.g. special cars, specialist
clothing, etc. often exclusive distribution is relevant to niche products.
Key characteristics include:
• Relatively few customers
• Limited retail outlets
• Close retailer/customer relationship
• Special products
• Infrequent purchase
• High involvement and planned purchase
• High price
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