Why do companies use intensive distribution?
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Definition: Intensive distribution is a marketing strategy that involves placing the product in every available distribution channel. Under this approach, companies direct their sales efforts to position the product into as many places as possible. This marketing approach applies mostly to mass-produced goods that have
no specific market segment, since they are bought by almost everyone. By employing this method, companies take advantage of being constantly present in customer’s everyday life since products will probably be available at retail shops, supermarkets, wholesalers, small shops, kiosks, restaurants and many other establishments. In order to engage in this strategy companies have to produce a large quantity of goods to be able to place them effectively to cover its target geographical area,
which is normally the most important segmentation that takes place under this technique. On the other hand, these companies will have to deal with many different customers with different business realities and dynamics. This is very challenging to the manufacturer but since intensive distribution is a procedure that is normally employed by big firms and large brands, customers are the ones that desire to commercialize the product, therefore the manufacturer can demand certain conditions to be
met in order to do business. Energize Drinks Co. is a company that produces energetic beverages for common athletes and people demanding considerable hydration into their diet or every day journey. The company commercializes a widely known brand called “Powerfill”. This brand is constituted by many different drinks offered to customers in different flavors and presentations. Since its beginnings, the company decided to pursue an intensive
distribution strategy. They gathered enough funds to mass-produce the drinks and started by filling an entire town with the drinks. Each drug store, supermarket and food establishment offered Powerfill to their customers. This proved to be an effective strategy to position the brand positively and it created more opportunities for the company to expand to other geographical area.
Disclaimer: We sometimes use affiliate links in our content, meaning, at no additional cost to you, we will earn a commission if you click through and make a purchase. For more information, visit our Disclaimer Page. In today’s competitive landscape, the inability to gain a firm foothold in the market is one of the biggest challenges companies face. As a result, intensive distribution can be a valuable tool for businesses to take their business to new heights. This article will explore what intensive distribution is and why it’s essential for your company. We’ll also cover some of the most common strategies companies are trying to get ahead through intensive distribution and an example of how these strategies have been implemented successfully in real life! Intensive distribution definitionIntensive distribution is a strategy that manufacturing businesses use to improve their supply chain and inventory management. It involves shipping products to many retail locations in a brief period. This allows retailers to keep a smaller inventory on hand while still meeting the demands of their customers. Excessive supply creates brand awareness and helps promote the product, resulting in increased market share. It has proven to be an effective strategy for achieving a boost in annual revenues, and sales vary significantly from one year to the next. ImportanceNowadays, retail landscapes are changing at an unprecedented rate. In addition, the way consumers buy has changed dramatically. These changes have created a need for a flexible, responsive supply chain that can react quickly to market demands. Companies that don’t have this adjustable supply chain will find themselves stuck with excess inventory, costing them a lot of money. Intensive distribution is the answer to this problem. ImplementationThere are many different ways that this marketing strategy can grow your business. One way is through market segmentation. By focusing on your target market, you can create a supply chain tailored specifically for those markets. This will help you react quickly to changes in demand and keep your inventory costs low. Intensive distribution can also be used to improve customer service. By bringing the products closer to the customers, you can reduce delivery times and provide a better customer experience. In 2009, Hasbro decided to use intensive distribution to improve sales of their board game, Monopoly. The company wanted to increase sales by 20%. The toy manufacturer shipped the product to an additional 14% more stores in different locations throughout North America to achieve this goal. They also increased marketing spending for television, print, and other digital media campaigns. In 2010, Hasbro’s revenue from Monopoly went up by 27%. This was due to the increased distribution and marketing efforts. As a result, the toy company increased sales without increasing production or inventory. Application of this marketing strategyPopular products that use the intensive distribution strategy are soft drinks, smartphones, cars, and clothing. All of these products are available in various retail outlets, making it easy for consumers to purchase. However, the success of their distribution strategies cannot be determined by a retail location alone. The strategy behind each product placed in all the possible outlets also impacts its sales and overall revenue. Here are some examples: Apple’s iPhone is available in all sorts of locations, such as significant cellphone carriers, big box stores, and even some convenience stores. This variety of distribution options means that there’s an iPhone for everyone, no matter where they are or what they’re looking for. Another great example is Nike. You can find their sneakers in sporting goods stores, department stores, and online. Not only does this allow consumers to find the sneakers they want, but it also gives Nike exposure in a variety of locations that wouldn’t necessarily be considered solely athletic wear. The hybrid car Ford is another successful product with an intensive distribution strategy. The vehicles are available at several different dealerships across the country and at some larger retail stores, such as Walmart and Target. This mix allows people interested in hybrid cars to find them easily, no matter where they live or shop. Coca-Cola provides an excellent example for intensive distribution in the beverage category. It is available practically everywhere you turn, from convenience stores to gas stations to major grocery chains and even in a drug store. This ubiquity helps ensure that everyone who wants a Coke can get one without too much trouble.  BenefitsMinimize inventory and operating costsOne of the advantages of intensive distribution is that it helps to minimize inventory and operating costs. By having a smaller inventory, businesses can save on storing and maintaining products. Additionally, companies can reduce time and money spent on transportation by streamlining the supply chain. Maximize customer satisfactionIntensive distribution can help companies maximize customer satisfaction by ensuring a quick and responsive supply chain. This can help to keep customers happy by ensuring that they get the products they want when they want them. In addition, it can also help to improve the company’s bottom line by reducing inventory costs. Eliminate out-of-stocks and lost salesThe intensive distribution also helps eliminate out-of-stocks, lost sales, and customer dissatisfaction. In addition, it allows for the quick and easy replenishment of products so that customers can always find what they are looking for. This, in turn, results in increased customer loyalty and better long-term profitability. This strategy might help increase marketing efforts, leading to improved inventory turnover rates and reducing the inventory needed to support a business. In addition, by consolidating shipments and making better use of transportation and storage resources, companies can save money while still providing their customers with the products they want. Intensive distribution is an integral part of any successful business. By understanding its advantages and implementing a strategy that works for your company, you can improve your bottom line and create a more efficient supply chain. DrawbacksOperate on thin marginsThis marketing strategy forces companies to operate on thin margins. This can be tough, especially if demand drops or costs go up. Small businesses would struggle to maintain profitability in this type of situation. Therefore, only big companies with a solid financial position could use this strategy. Requires strong channels of distributionOne of the disadvantages of implementing an intensive distribution strategy increases manufacturers’ costs. Manufacturers need to pay more for their products to place their desired quantity on retailers to implement this strategy. Additionally, the products need to be stored in a warehouse and shipped to the retailers. This can be costly for the manufacturer, so it’s essential to have a strong distribution channel. Final ThoughtsEffective & efficient distribution has never been more critical. As the retail landscape changes and customers have more choices than ever before, it is vital to distribute your product on time across different channels. It would help if you had an intensive distribution strategy for online and offline sales models to do so successfully. Hopefully, this guide helped you understand the importance of intensive distribution, why it matters and provide some insight into implementing an effective strategy for your business. Related: Selective Distribution What companies use intensive distribution?Intensive Distribution Examples. Pepsi cans.. Newspapers.. Toothpaste.. Herhsey chocolate bars.. Soaps.. Doritos.. Marlboro cigarettes.. Budweiser.. What is one of the advantages of using the intensive distribution strategy?The advantage of applying an intensive distribution strategy is in generating revenue, product awareness and pushing for impulse buying. As more products are sold, more money is earned. As more locations carry the products, the more opportunities there are for manufacturers to make profit.
What are the pros and cons of intensive distribution?Manufacturers use an intensive distribution strategy with products that need to be quickly replenished. The advantages of this strategy include money, product awareness, and impulse buying. The disadvantages include sales vary, low prices/low margins, and lack of retailer control.
What type of products would use an intensive distribution system?Intensive distribution strategy is adopted when companies place their products in many retail outlets in many locations. The distribution method is applicable for daily products such as newspapers, soaps, cigarettes, and soft drinks. These mass-produced commodities do not have a specific target market.
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