Intensive Distribution Meaning
Intensive distribution is the term used in the context of marketing where company after production of goods looks to distribute the products by giving their product to every retail outlet possible whether its small retail shop or supermarket. Manufacturers of product which are used regularly and does not require too much marketing like soft drinks, cigarettes, chips, biscuits and so on using this strategy for grabbing maximum eyeballs from the consumers. In order to understand this concept better one should look at the advantages and disadvantages of intensive distribution –
Advantages of Intensive Distribution
Trust Factor
The first and foremost advantage of intensive distribution is that since the products are on display on almost every shop and shopping mall it leads to more trust in the minds of the customer regarding the authenticity of the products. In simple words suppose you are finding some location and Google map is showing you north direction but if you ask ten people and all ten people say that location is in south direction than chances are you will go to south direction because psychologically when you see same product everywhere then you start to believe that it is the right product which may or may not be the case.
Increases Sales and Profits
Another benefit of this strategy is that since the company has so many distributors and retailers it leads to increased sales because of increased effort from all the distributors and retailers which in turn translates into higher profits for the company. In simple words company in this strategy never finds itself in that situation where the company is losing sales not due to bad product but due to lack of reach to customers.
Substitution Benefit
Companies using this strategy get substitution benefit because suppose you go shopping near you to buy Pepsi but that shopkeeper does not have Pepsi rather he or she keeps coco-cola now majority of customers will buy coca-cola as it is close substitute for Pepsi and hence indirectly coca-cola company will benefit not because of the first choice of the consumer but because of intensive distribution network of the company.
Disadvantages of Intensive Distribution
Expensive
The biggest disadvantage of intensive distribution is that it is expensive because in order to build vast network of distributors and retailers companies need to spend money and effort and if the sales of the company do not rise in proportion to expenses involved for doing intensive distribution than this system will turn out to be loss-making proposition for the company.
Management of Distribution Partners
Another problem with this system is that due to a vast number of retailers and distributors it becomes very difficult for the company to manage the distribution partners besides it involves additional cost and manpower to manage the distribution partners which limits the use of this technique to medium or big companies. In simple words suppose there are 10 students in one class and 100 students in another class than for a teacher it is easy to manage class having 10 students rather than managing class of 100 students same is the case with companies where it is far easier for the company to manage 1 or 2 retailers in every city rather than managing 100 retailers for every city.
Lack of Premium Pricing
In case of this strategy, the company cannot charge premium pricing or differential pricing from its consumers because due to this strategy products are easily available in the market which ensures that company has to charge the competitive price of consumers. Hence, for example, take the case of movie theaters where there are many theaters but few IMAX theaters and that is the reason why ticket price of IMAX theaters are very high as compared to normal theaters.
As one can see from the above that this strategy has advantages as well as disadvantages and that is the reason why not every company can follow this strategy because this strategy is not suitable for all products.