Definition: Exclusive distribution is a situation where a company decides to make its products available to customers through a very limited number of retailers or distributors. The term refers to a kind of agreement between a producer a few intermediaries with the purpose of providing the products to consumers in a specific geographical area.
What Does Exclusive Distribution Mean?
The word “exclusive” implies that the distribution is carefully defined and implemented by the producer through only one channel. Under this type of arrangement, the distributor chosen by the producer is the only one that owns the rights to sell the product. This term differs from other possible types of distribution that place the products in numerous different retailers and channels.
Some companies have reasons to choose exclusive distribution as the strategy to sell their goods. It might want to show a prestigious image to consumers. Or maybe the producer wants to control better what kind of services and environments are associated to its products.
This is often the case with high-end products that require certain image of luxury within the establishments that sell the product.
Example
Mendell is a brand of high-end tables that have marble pieces. Prices are high because materials and production processes are very expensive. The firm wanted to sell its products through a wide variety of furniture retailers at the beginning. However, consumers seemed to find Mendell too expensive when comparing this brand with competitor items shown at those stores. Sale volumes were lower than expected and therefore the Marketing Manager decided to change the distribution strategy.
He though that exclusive distribution was adequate. He chose a chain of stores that sold high-quality carpets and curtains as Mendell’s exclusive channel. That retailer accepted to include Mendell tables as part of its prestigious offer and Mendell required the addition of certain services for customers. After some meetings and bargaining procedures were made, the exclusivity agreement was signed. The exclusive distribution allowed Mendel to improve brand image and expand sales value significantly.
