Gathering the World: Sales Channels. Human Resources. Financial Operations

Author: Gao Jincheng
Publisher:
Publish Date: 2005-11-01
Features: According to the number of intermediaries at each level of the sales channel, the distribution channel network can be divided into wide distribution channel networks and narrow distribution channel networks.
(1) Wide Distribution Channel Network. The enterprise uses a relatively large number of similar intermediaries, and the product has a broad distribution in the market. General daily consumer goods (such as towels, toothbrushes, soaps, etc.) are usually distributed by multiple wholesalers, who then sell them to more retailers, allowing for extensive consumer contact and large-scale product sales.
(2) Narrow Distribution Channel Network. The enterprise uses fewer similar intermediaries, and the distribution channel is relatively narrow. It is generally suitable for highly specialized products or luxury durable consumer goods, usually handled by one intermediary or a few distributors. This type of channel network makes it easier for the production enterprise to control distribution, but the market distribution coverage is somewhat limited to a certain extent. Of course, the width structure of the channel is influenced by factors such as the nature of the product, market characteristics, customer distribution, and the enterprise's distribution strategy. The width structure of the channel is divided into the following three types:
Intensive Distribution Channel, also known as extensive or universal distribution channel, refers to a type of channel where the manufacturer selects as many intermediaries as possible at the same channel level to distribute its products. This channel allows the product to form a pervasive presence in the target market, achieving full brand visibility, making the product widely known and readily available, and extensively capturing the target market. Intensive distribution channels are commonly found in the consumer goods sector, such as toothpaste, toothbrushes, and beverages. The advantages of this sales channel are: high market coverage and convenient customer purchases. The disadvantages are: intense market competition and price competition, leading to market chaos. Enterprises adopting intensive distribution channels must fully anticipate that each intermediary may simultaneously distribute multiple brands from different manufacturers, requiring the enterprise to provide certain financial support to them. This results in increased channel costs. At the same time, due to the large number of intermediaries, the enterprise cannot control channel behavior, adding difficulty to channel management.
Selective Distribution Channel, refers to a type of channel where a small number of intermediaries are selected at a certain channel level for product distribution. The manufacturer selects some wholesale and retail enterprises with good conditions from among many willing partners as its intermediaries. This allows for the centralized use of enterprise resources, relatively lower costs, and better control of channel behavior. The selectivity of the selective distribution channel depends on the enterprise's strategic objectives, product characteristics, and customer distribution. Generally speaking, in the consumer market, the distribution channel for special products is narrow, for convenience products it is medium, and for convenience goods it is wide: the distribution channel for new products is relatively narrow, while for mature products it is relatively wide. In the IT industry chain, many products adopt selective distribution channels.
Exclusive Distribution Channel, refers to a type of channel where only one intermediary is selected at a certain channel level for distribution.