Exclusive Distribution

Exclusive distribution is one of three levels of distribution intensity that companies may choose from as they develop their marketing channels. Intensive and selective distribution are the other two levels of intensity. Manufacturers must decide the extent to which the consumer has access to their products. In other words, each manufacturer must determine the extent of market coverage it considers adequate. This coverage decision is affected by a number of factors, including how much control over the channel's members the manufacturer wants, the type of product being distributed, and the target markets (consumer segments) being pursued.

For example, a product such as milk is purchased frequently by consumers, in part because it is perishable. Dairy producers thus want to have their markets thoroughly covered, so these products are available in grocery stores, convenience stores, and many other retail outlets. This is intensive distribution. Other products are bought less frequently, involve more risks (financial, psychological, social, and physical), and require that consumers spend more time in the decision-making process.

Exclusive distribution is used for products that are very expensive, have a high degree of brand loyalty, and are important enough for consumers to spend extensive time searching for them. There's also more risk involved in these purchases. There is financial risk, because consumers are paying a high price for the product and want assurances that the quality and value they receive from the product are worth the cost. Psychological and social risks may be involved, because consumers may worry about what their friends and family members may say or think about their purchases. In the case of health care products, there is a strong chance for physical risk to be involved as well. Consumers dealing with cancer or heart disease are [Page 197]concerned about the quality of treatment received for the amount of money being spent; that is, “Will the treatment cure the disease and prolong my life in a meaningful way?”

A medical equipment manufacturer that allows only one hospital in a broad geographic region to bring in its specialized piece of equipment to treat a special disease, while excluding other hospitals in the region from offering the treatment with the specialized equipment, is practicing exclusive distribution. Consumers must be willing to fly or drive hours to the one hospital's location for their specialized health care treatment needs.