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Difference between Selective Distribution and Exclusive Distribution
Any foray into uncharted territory, such as entering a new market, may be an exciting time for a business, but it also carries some danger. The success of a product in one market does not guarantee its success in another market. Regardless, establishing a foothold in emerging areas sets a premium on retaining a sales leadership position, which calls for widespread product distribution.
Most companies often fail to properly plan for product distribution, opting for less efficient and cheaper methods. This article will compare and contrast two types of the product distribution− selective distribution and exclusive distribution.
What is Selective Distribution?
This method of product distribution method involves more than one distributor in a particular area. Products like televisions, furniture, and home appliances do very well with this type of distribution. For instance, a maker of television sets may employ a selective distribution strategy by selling their products only via a carefully selected group of retailers and wholesalers. With a strong working relationship in place, the manufacturer can count on the distributor to make remarkable sales efforts on its behalf.
The following are some of the benefits of using chosen distribution −
The tightening of regulations on the market.
An important share of the market in the particular region
Reducing overhead expenses like those for distribution and promotion
Customers are happy because their preferred distributors provide them with top−notch attention.
Improvements in the company's ability to interact with its clients on a two−way basis.
On the other hand, some of the drawbacks are as follows −
Reduced market share that the products now hold
Damages from disagreements with the brand's distributors might be substantial.
What is Exclusive Distribution?
This is a distribution technique in which only one distributor, retailer, or wholesaler is active in a certain geographical region. This is common among businesses and products that aim to appear high−end. Products such as designer clothing, automobiles, and even kitchen equipment all benefit from this method of advertising. Using an exclusive distribution strategy makes it simple for a company to set its regulations for pricing, payment terms, stock availability, promotion, and customer support.
The following are some of the benefits of exclusive distribution −
Profitability improved as a result of more revenue. This is because manufacturers may put all of their marketing efforts into promoting their exclusive distributors.
Due to a finite number of middlemen, attention is increasingly focused on producers. Most exclusive distributors also take part in other forms of advertising, such as branded content and sponsored links.
The following are some of the drawbacks of exclusive distribution −
Distribution for an overall brand may be limited to a single retailer, leading to increased reliance on that retailer.
Losses may be substantial if a dispute arose with the distributor. Disagreements like this might force businesses to lose their whole market.
Differences: Selective Distribution and Exclusive Distribution
Both of these are examples of distribution channels that businesses may use to better disperse their products to end users. The following table highlights how Selective Distribution is different from Exclusive Distribution −
|Characteristics||Selective Distribution||Exclusive Distribution|
|Definition||The phrase "selective distribution" is used to describe a form of product distribution in which more than one distributor takes part in a given market.||If there is just one distributor, retailer, or wholesaler in a given area, then that distribution system is called "exclusive distribution."|
|Products/ Services||Selective distribution tactics are common practice for much popular television, furniture, and appliance brands.||Designer goods, automobiles, and even household appliances seldom have their dedicated channels of distribution.|
The phrase "selective distribution" describes a form of product distribution in which more than one distributor takes part in a given market. Contrarily, an exclusive distribution strategy relies on a single merchant, wholesaler, or distributor to sell a product to consumers in a certain area. The channels of distribution may be retail or wholesale.
There are benefits and drawbacks to using both these approaches to distribution. Maintaining loyal customers is essential to the success of any company, and an effective distribution strategy is a key part of this.
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