Companies have to decide on the number of intermediaries to use in their channel. The various strategies that are available are as follows:
- Exclusive distribution
- Selective distribution
- Intensive distribution
Exclusive distribution: It involves severely limiting the number of intermediaries handling the company goods or services. It is used when the producer wants to maintain a great deal of control over the source level and service output offered by the reseller. Often it involves exhaustive dealer agreement in which dealer agrees not to carry competitive brand. By generating exclusive distribution, the product hopes to obtain more aggressive and knowledge selling. Exclusive distribution tends to enhance the product image and attain larger markups. It requires greater partnership between the seller and the reseller and it is found in major industrial products, automobiles sector etc.
Selective distribution: It involves more than a few and less than all of the intermediaries who are willing to carry a particular product. It is use both by established companies and by new companies seeking to obtain distributors. In this distribution the company does not have to dissipate its effort over many outlet, rather it can develop a good working relation with its selected intermediaries and expect a better than average selling effort with more control and less cost than intensive distribution.
Intensive distribution: This involves placing the goods or services in as many outlets as possible. When the consumers require a great deal of location convenience. This strategy is generally used for consumer items like tobacco products, soap, snacks and cosmetics.