Question

My newly established FMCG brand launches its brand in a foreign country, if my firm selected intensive distribution what should be its distribution channel (direct involvement or indirect involvement?) What are their advantages and disadvantages? Direct involvement: Company establishes its own sales force or operate its own retail stores but in indirect involvement the company utilizes independent agents, distributors, and/or wholesalers. (international marketing perspective)

Answer 1

Intensive distribution is where a company wants to sell through all the outlets possible at a location. They want their product to be seen in every store to make it possible to persuade customers to buy them. Hence the product is distributed to all channels of retailing in large number for making it easy for customers to reach out and buy them increasing sales and revenues for the business.

For such kind of distribution approach, the indirect distribution channel will be better than direct distribution. In indirect distribution, the manufacturer or parent company relies on other distribution channels to perform all the distribution activities and bring their product to the market for selling. The distribution agents of a place perform all the functions to sell the product in the market while you just pay them for their services from the sales made or as per the agreement made with them.

In intensive distribution, the brand wants to reach every possible distribution channel, retailer and market to sell their product. This vast coverage is not possible through direct distribution as setting up their own distribution channels can be expensive and limited to certain locations and not the whole market. Direct marketing gives the independence of controlling the brand distribution and marketing decisions and activities whereas indirect marketing makes the company depend and rely on the distribution agents totally for selling their products. But indirect marketing is cheaper than direct marketing and as the local distributors are well aware of the market, the risks of failure is less. The decisions and marketing strategies of these distributors will be based on experience they have of the local market.