advantages and disadvantages of intensive distribution
Advantages and Disadvantages of Intensive Distribution
Intensive distribution is a kind of marketing strategy that focuses on maximizing product availability. This Buzzle post highlights the advantages and disadvantages of intensive distribution.
Most Common Example
Companies manufacturing fast-moving consumer goods (FMCGs) use a heavy intensive distribution strategy. The goods include over-the-counter medication, toiletries, chocolates, soft drinks, toys, etc.
When a company/business manufactures a product, it adopts various methods and techniques to make the product easily available to the consumer. One such marketing technique is distribution. Without a well-laid distribution plan, no product or service reaches the desired customer. To make the product available to the target audience, companies use distribution channels. While selecting the right distribution channel, marketers use distribution strategies, which are heavily influenced by the structure of the market and the company's resources.
There are three main types of distribution strategies―intensive, selective, and exclusive strategies. The paragraphs below will explain the characteristics of the intensive distribution strategy along with its pros and cons.
What is Intensive Distribution?
- Intensive distribution strategy concentrates on making the product available everywhere, at any time.
- The company employs as many market outlets as possible to sell its products.
- It uses all the distribution channels available and covers a majority of the market.
- The products sold are generally used on a daily basis, and those which do not require an extensive brand awareness.
- The product is marketed in such a way that consumers are likely to encounter the product at every possible place. They are likely to find the product at the supermarket, gas station, pharmacy, etc.
- The intention is to make the product available in abundance, distribute the product over a vast geographical area in many retail locations, and make sure that consumers are never deprived of the product.
- The image that such products have are 'easily available, not elusive'. To employ an intensive strategy or not largely depends on the type of product, resources, customer demand, use, and marketing funds.
- This strategy has certain pros and cons, depending on which the manufacturer decides if he wants to pursue this strategy or not.
Advantages
Product Awareness
- Since the products are available everywhere (practically), consumers are aware of the same.
- They know the product well enough and trust the company (depending on the marketing tactics and success of the product, of course).
- The main aim of the manufacturer is to improve the recognition of the product in the market.
- The product gains even more popularity through commercials, newspaper ads, and word-of-mouth publicity.
Increased Sales and Earnings
- FMCGs and similar products are frequently used; therefore they are produced in a huge amount.
- The products are distributed via many retail outlets, and since they are regularly used, they are sold rather quickly too. Thus, making sufficient money.
- You may have experienced this yourself―you may have gone to the supermarket to buy something and found that it is out of stock. The same product may be available at another discount store or the gas station. Thus, ultimately, the company benefits through the high availability of goods.
Marketing Efficiency
- Intensive distribution helps increase marketing efficiency.
- As a manufacturer, you are aware of how much and where the product is being used, you know exactly how to change your marketing technique to make a profit.
- You may have seen commercials where a toothpaste brand offers 25% extra at the same price. Or, perhaps a free product is offered on the purchase of another product, etc.
- When you know the demand for your product, you can devise ways to control the marketing campaign.
Impulsive Purchase
- Impulsive purchase may act as a double-edged sword.
- The fact is, since goods that use impulsive strategy are used regularly, the public does not give a lot of thought to what is being purchased and why.
- Most of the shopping is impulsive. If they do not like one brand, they will easily switch to the other.
- With efficient advertising, products may gain the customers' loyalty. More often than not, the same products are used by the customers; in general, the product is so easily available that they may try a new brand for a change, but prefer buying the old one and stick to their preferences.
Huge Customer Recognition
- Frequently-used and readily-available products gain widespread consumer attention.
- After all, this is what the objective of intensive distribution strategy is―to make the product easily available such that the consumer encounters the name wherever he goes.
- Over a period, the product becomes an important part of the consumer's life, and irrespective of whether he uses a brand or not, billboards and print ads help make brand recall of the product.
Disadvantages
Distribution Expenses
- Despite the fact that the huge number of products are likely to result in huge revenue, manufacturers face the problem of varying sales.
- The sale of goods changes as per the retail outlets―some outlets may sell a lot, while some may have a comparatively lesser sale.
- When an outlet has lesser than expected sales, some products may remain unsold; however, the cost of production and distribution will not change.
- Thus, the company will have to put up with the distribution costs to multiple locations despite low sales, resulting in a loss of capital.
Difficulty in Managing Retailers
- The number of retail locations is spread over a large area, and sometimes, it becomes difficult to manage such a huge number of retail outlets.
- There are times when the manufacturer may not even be aware of some retail outlets that may be located in far-off areas, perhaps in the outskirts or suburbs.
Dependence on the Middleman
- Intensive distribution follows all the distribution channels―producer-consumer, producer-wholesaler-consumer, and producer-wholesaler-retailer-consumer.
- This strategy uses so many retailers that the use of an agent/go-between becomes inevitable.
- Distribution to the retailer is handled by the agent, and in such a scenario, the firm has to trust the middleman, which could be a little risky in certain situations.
Low Price Products
- FMCG is the best example of low price and high volume of goods.
- These low price products have a low-margin, and whatever revenue is earned is the money that is left after all the expenses are subtracted.
- These goods require a fast turnover to make profit and benefit the company.
Examples
Given below are a few of examples of products that have been immensely popular due to the successful implementation of intensive distribution.
- Newspapers
- Photo printing shops
- The Coca Cola company
- PepsiCo
- Budweiser
- Marlboro
- Redbox