April 18, 2024

Business Bib

Business & Finance Blog

A Quick Look at The Exclusive Distribution Model

2 min read

In terms of the relationship between manufacturers and retail consumers, there are three basic strategies. These are:

  • Intensive Distribution model
  • Selective Distribution model
  • Exclusive Distribution model

Let’s examine the ins and outs of the “exclusive” distribution model like of Fueltransport.com.

Exclusive Distribution: A DEFINITION

To understand the exclusive distribution model, you need to have a basic grasp of the first two models.  Essentially, the intensive distribution model is the broadest, most widespread model. Manufacturers who make single-use, regularly-purchased items—like snack foods, for example—want to have their products available for sale in as many outlets as possible, so they use this model.  Secondly, the selective distribution model is, as its name suggests, more selective. This model applies the same strategy to consumer products that are popular but not purchased often: things like furniture and appliances.

The Exclusive Distribution model, then, results in a manufacturing choosing to allow for only very specific outlets to carry their brand. Typically, this also results in fewer distribution intermediaries between the manufacturer and the consumer.

Exclusive Distribution: A DESCRIPTION

One excellent example of exclusive distribution is when you buy designer clothing, which are generally only available at certain high-end department stores or in a boutique shop that only carries that specific designer.  Another example of exclusive distribution is when you buy a car directly from a manufacturer dealership; similar to buying a cell phone directly from Sprint or Verizon.

Exclusive Distribution: The ADVANTAGES

Here are some advantages to exclusive distribution:

  • Simple Focus: this contract means the brand knows the retailer will not carry any (or many) competing brands, so they will focus more attention into developing the brand
  • Control: This lack of competition means the original manufacturer also has more control over how the product is advertised, presented, and sold
  • Availability: With no competition, exclusive distributors are able to store large amounts of limited products, which means better matching of retailers, wholesalers, and customers throughout the distribution channel
  • Market Penetration: with specialized focus, it is much easier to penetrate a market since they do not have to expend the money and labor on maintaining the distribution channel

Exclusive Distribution: The DISADVANTAGES

Here are some of the disadvantages to exclusive distribution:

  • Awareness: New brands have trouble penetrating a competitive market if they are only available from exclusive sellers
  • Risk: Exclusivity carries greater risk because if your relationship falters or one of your partner fails, it puts you at a higher risk than if you were to have your product carried in multiple outlets