Page 104 - Marketing the Basics 2nd

96 Marketing: the Basics
of customer service. Firms then decide which markets they wish to serve, and the best available types of marketing channels for reaching those segments. It is not unusual for a manufacturer to employ a vertical market channel in one market and a horizontal in another; this is particularly true in different national markets, where they may not be able to gain access to a market without a local partner.
IDENTIFYING PARTNERS
Once the company has defined the channel goals and selected the channel type, the next step is to identify partners to act as interme- diaries. Choosing a partner depends on the type of distribution strategy the firm wishes to employ. One strategy, called intensive distribution, grants distribution rights to every possible vendor. Manufacturers of consumer goods employ this strategy, as it increases convenience for the consumer. However, because there are literally tens of thousands of partners, the marketing channel is complex and conflicts are abound.
The complete opposite strategy is exclusive distribution. Manufacturers of luxury items often employ this strategy. Exclusive distribution grants a limited number of intermediaries exclusive rights to sell a product-line. Exclusivity increases a brand’s image and desirability, and also allows for more control over pricing, promotion and customer service, since there is only one intermediary selling the product in the market. Whichever intermediary best fits the long-term goals of the manufacturer is the one that should be chosen. If you are lucky or prescient enough to gain the exclusive distribution of a hot new fashion brand in a foreign market, you may be set for life.
Finally, there is selective distribution. If you envision a continuum, this strategy would lie in between intensive and exclu- sive distribution. With a selective distribution strategy, more than one intermediary is granted distribution rights, but not all. Deciding which firms will act as intermediaries will depend on whether the downstream players are willing to cooperate on promotional activi- ties, adapt to meet long-term challenges and which will continue to provide the lowest economic cost. Other factors to consider are profit record, sales growth, reputation, location and size of sales force.