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Marketing channel intensity takes into account both the variance and number of channels an organization may use to deliver goods and services to consumers.
Differentiate between different distribution intensity strategies, incorporating the modern digital storefronts into this consideration
Organizations must understand the competitive environment of the industry, particularly how to use a variety of marketingchannels to get their products in front of their core targetmarket at the right time and place.
Distribution intensity plays a significant role in marketing channel strategy. Firms can opt for intensive, selective, and exclusive strategies.
Intensive distribution focuses on delivering a firm's goods to as many storefronts as possible and maximizing the amount of sales to pursue scale economies.
Selective distribution focuses on utilizing fewer channels to maintain a higher level of strategic control, but still pursues high volume within those select channels.
Exclusive distribution works off the idea that scarcity can add value. High fashion and other luxury goods focus on being hard to find through limited channels and low volume of production.
Technology has had a significant impact on marketing channel strategy. Influential digital storefronts are key strategic partners in the modern economy.
As organizations develop their marketing channel strategies, an important question arises regarding distribution intensity. There is some freedom in most industries for a firm to determine which channels they will use, and how much volume each channel will receive. Weighing the pros and cons of various channels, both in terms of the number of channels and the volume within each channel, can have a significant strategic impact on a firm's position in a market.
Generally speaking, there are three ways to frame the distribution intensity decision:
This is the highest in both number of channels and volume within each channel. An intensive distribution approach will take advantage of as many sales outlets, distributors, and direct selling opportunities the organization can identify and justify (at a given volume). This is common for goods such as soda, snacks, household items, and other common low cost goods. In short, many channels and high volume.
Selective distribution focuses on narrowing down the number of channels within the distribution strategy, but not the overall volume of goods sold through those channels. This strategy focuses on fewer channels yet retains a desire for higher volumes to capture scale economies in production. Common channels in these circumstances are channels where the firm can maintain strategic control of how the products are sold, at what price, and in which regions.
Finally, some firms opt for a low volume approach with very few channels selected. This is ideal for differentiated organizations with a strong brand and a desire for scarcity. If everyone had the same high fashion item, it would no longer be a high fashion item. If everyone on the road had a beautiful, unique sports car, much of the allure and justification for a high price point would be gone. Exclusive distribution strategies work best for firms that focus on low volume, high margin sales.
Technology and Channels
Technology has disrupted some of the logic behind these channel decisions, as digital storefronts have grown to be highly influential, easily accessible to global markets, and substantially cheaper than retail space. As the rise of digital purchasing continues, and the cost of shipping decreases, globalization will drive organizations more and more towards channel strategies that optimize online exposure.
Considering the vastness of the internet, however, being found by consumers who are not yet aware of your product becomes difficult. This creates an interesting relationship, similar to the retail relationship in traditional channel marketing, whereas certain digital storefronts are highly valuable strategic partners. Amazon, for example, sells a huge number of brands on their website. Being highly rated and promoted on Amazon will greatly increase the efficacy of that particular channel. Understanding how online marketplaces work, and how to build a presence in this new digital age, is a critical skill set for a strategic marketeer looking at channel strategy.