106 CHAPTER 16: Distribution Strategies
A. Channel-Structure Strategy (TM 16-1)
1. Direct Distribution
2. Indirect Distribution
B. Distribution-Scope Strategy (TM 16-2 and TM 16-3)
1. Exclusive Distribution
2. Intensive Distribution
3. Selective Distribution
C. Multiple-Channel Strategy (TM 16-4)
1. Complementary Channels
2. Competitive Channels
D. Channel-Modification Strategy (TM 16-5)
E. Channel-Control Strategy (TM 16-6)
F. Channel-Conflict Strategy (TM 16-7)
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Typical Channel Structures
CHAPTER 16: Distribution Strategies 108
Gary L. Frazier, “Designing Channels of Distribution,” The Channel for
Communication (Seattle, Wash.: Center for Retail and Distribution Management, University of
Washington, 1987), pp. 3–7.
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For an efficient channel network, the manufacturer
should clearly define the target customers it
intends to reach. The strategic alternatives here
are exclusive distribution, selective distribution, and
The multiple-channel strategy refers to a situation in which two or more different channels are
employed for distribution of goods and services.
The market must be segmented so that each
segment is provided the services it needs
and pays for them, but is not charged for
services it does not need.
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Reasons for a shift in existing channels include:
• Changes in consumer markets and buying
• Development of new needs in relation to service,
parts, or technical help.
• Changes in competitors’ perspectives.
• Changes in relative importance of outlet types.
• Changes in manufacturer’s financial strength.
• Changes in the sales volume level of existing
• Changes in product (addition of new products),
price (substantial reduction in price to gain
dominant position), or promotion (greater
emphasis on advertising) strategies.
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Vertical marketing systems may be defined as
professionally managed and centrally programmed
networks that are pre-engineered to achieve
opera-ting economies and maximum market
impact. Stated alternatively, vertical marketing
systems are rationalized and capital-intensive
networks designed to achieve technological,
managerial, and promo-tional economies through
the integration, coordina-tion, and synchronization
of marketing flows from points of production to
points of ultimate use.
They can be classified as:
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Channel conflict may be defined as a situation in
which one channel member perceives another
channel member(s) to be engaged in behavior that
is preventing or impeding it from achieving its
goals. Disagreement between channel members
may arise from incompatible desires and needs.