Page 448 - Marketing Management

DESIGNING AND MANAGING INTEGRATED MARKETING CHANNELS | CHAPTER 15 425

resellers, and it often includes exclusive dealing arrangements. By granting exclusive distribution,
the producer hopes to obtain more dedicated and knowledgeable selling. It requires a closer
partnership between seller and reseller and is used in the distribution of new automobiles, some
major appliances, and some women’s apparel brands.
Exclusive deals are becoming a mainstay for specialists looking for an edge in markets STIHL’s selective distribution
increasingly driven by price. 26 When the legendary Italian designer label Gucci found its image strategy includes 8,000 independ-
severely tarnished by overexposure from licensing and discount stores, it decided to end contracts ent dealers but does not include
with third-party suppliers, control its distribution, and open its own stores to bring back some of other, broader forms of
the luster. 27 distribution.
Selective distribution relies on only some of
the intermediaries willing to carry a particular
product. Whether established or new, the com-
pany does not need to worry about having too
many outlets; it can gain adequate market cover-
age with more control and less cost than intensive
distribution. STIHL is a good example of selective
distribution.

STIHL STIHL manufactures hand-
held outdoor power equipment. All its
products are branded under one name and
it does not make private labels for other
companies. Best known for chain saws, it
has expanded into string trimmers, blowers, hedge
trimmers, and cut-off machines. It sells exclusively to
six independent U.S. distributors and six STIHL-owned
marketing and distribution centers, which sell to a na-
tionwide network of more than 8,000 servicing retail
dealers. The company is also a worldwide exporter of
U.S. manufactured STIHL products to 80 countries.
STIHL is one of the few outdoor-power-equipment
companies that do not sell through mass merchants,
catalogs, or the Internet. 28
Intensive distribution places the goods or ser-
vices in as many outlets as possible. This strategy
serves well for snack foods, soft drinks, newspapers,
candies, and gum—products consumers buy fre-
quently or in a variety of locations. Convenience
stores such as 7-Eleven, Circle K, and gas-station-
linked stores such as ExxonMobil’s On the Run
have survived by selling items that provide just
that—location and time convenience.
Manufacturers are constantly tempted to move
from exclusive or selective distribution to more in-
tensive distribution to increase coverage and sales.
This strategy may help in the short term, but if not
done properly, it can hurt long-term performance
by encouraging retailers to compete aggressively.
Price wars can then erode profitability, dampening
retailer interest and harming brand equity. Some
firms do not want to be sold everywhere. After
Sears acquired discount chain Kmart, Nike pulled
all its products from Sears to make sure Kmart
could not carry the brand. 29