You are here

Intensity at Each Level

13 May, 2016 - 16:19

Once the number of levels has been decided, the channel manager needs to determine the actual number of channel components involved at each level. How many retailers in a particular market should be included in the distribution network? How many wholesalers? Although there are limitless possibilities, the categories shown in Table 10.2 have been used to describe the general alternatives.

Table 10.2 Levels of channel intensity.
  1. Exclusive distribution (such as Ethan Allen and Drexel Heritage Furniture)
  • the use of a single or very few outlets
  • creates high dealer loyalty and considerable sales support
  • provides greater control
  • limits potential sales volume
  • success of the product is dependent upon the ability of a single intermediary
  1. Intensive distribution (such as candy)—the manufacturer attempts to get as many intermediaries of a particular type as possible to carry the product
  • provides for increased sales volume, wider consumer recognition, and considerable impulse purchasing
  • low price, low margin, and small order sizes often result
  • extremely difficult to stimulate and control this large number of intermediaries
  1. Selective distribution (such as Baskin-Robbins)—an intermediary strategy, with the exact number of outlets in any given market dependent upon market potential, density of population, dispersion of sales, and competitors' distribution policies
  • contains some of the strengths and weaknesses of the other two strategies
  • it is difficult to determine the optimal number of intermediaries in each market

The intensity decision is extremely critical, because it is an important part of the firm's overall marketing strategy. Companies such as Coca-Cola and Timex watches have achieved high levels of success through their intensive distribution strategy.