What Is Intensive Distribution? A Definitive Guide

By Indeed Editorial Team

Published 11 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

There are several different ways companies might choose to distribute their products depending on their sales and marketing goals. One way includes intensive distribution, a strategy that aims to deliver many products to various locations. Learning about this concept can help you determine if this might be a good choice for the company that employs you. In this article, we discuss what intensive distribution is, explain who benefits from it, list the objectives, give examples of this distribution approach and review the pros and cons.

What is intensive distribution?

Intensive distribution is a strategy that some companies use to sell their products across as many channels as they can. This can involve distributing products to global chains, online and through small businesses to reach as many customers as possible. With this strategy, companies manufacture many products to ensure inventory in many locations.

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Who benefits from intensive distribution?

There are some companies that might benefit from this strategy more than others. Here are examples of companies that may try this:

  • Producers of everyday products: Everyday products are those that people might use frequently for their house or lifestyle, like soap, toilet paper or toothbrushes. Because people need these regardless of location, this kind of distribution can help.

  • Food producers: Similar to everyday products, food manufacturers can also benefit from this delivery method. This approach is suitable for food products sold daily, like milk or eggs, or packaged goods like soft drink or chips.

  • Printing shops: Along with products, companies might also use intensive distribution for services like printing services. With this method, customers can use the service and print from various locations if they need.

Objectives of intensive distribution

There are several primary goals of intensive distribution:

Increasing market share

This distribution model can help a company increase its market share in its industry. This means more customers buy from their company than those that sell other brands. If competitors sell in certain locations, a business that deploys an intensive strategy can take more of the market for their product.

Related: Market Share: Definition, Importance and How to Calculate It

Improving reach

Along with improving their standing in a particular market, companies can also reach new customers by distributing products intensively. Increasing the availability of certain products can increase the number of customers who purchase them if the competition only sells in certain locations. This also promotes brand recognition for increased reach, as people might be more likely to recognise and purchase a product if they see it at several locations.

Increasing revenue

One major objective of this method of distribution is to increase revenue. While selling more products at various locations might not mean new sales depending on target markets, it can often be effective. Sometimes, companies may receive discounts on manufacturing or distribution by producing more products, which can help lower costs to increase profits.

Understanding markets

Wide distribution also helps companies understand markets that they may have not previously explored. For example, companies might be unsure how demographics respond to products in different locations. By distributing to new locations, they can track the sales and see how they might better target specific customers.

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Examples of intensive distribution

Here are some examples of intensive distribution that can help you understand this concept better:

New soft drink company

A new soft drink company hopes to increase its market share and customer reach by adding retailers to its selling portfolio. It currently only sells its soft drink products at local retailers. By targeting global shopping centres, airports and major online retailers, it's able to expand its brand to new markets. After the launch, the company performs an analysis to understand which age groups and other demographics are most likely to purchase the soft drink and create targeted advertisements to better reach people that fit their persona.

Napkin company

An established napkin company sells their products primarily in major retailers across the country. To improve brand recognition, they partner with several local retailers in big cities. With this added convenience, more customers buy their products as they can walk to stores rather than travel to one of the bigger store locations.

Considerations when devising an intensive distribution strategy

When devising a strategy to distribute your products using this method, there are several components to consider:

Collaborations

When creating your strategy, it can be important to consider the collaborations you might need for smooth execution. For example, you might need additional manufacturers to scale production on your products. From there, the manufacturers or you might coordinate with distributors so they can retrieve and deliver the goods to the necessary locations.

You can also think about partners at wholesale stores and retail stores. Wholesalers might already have locations where they plan to deliver your products and the strategic retail locations you partner with can help achieve your goals with these delivery strategies.

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Inventory levels

As this type of distribution requires additional inventory, you might consider how much stock you need to have so you can meet the new demand. This might mean thinking about how much production might need to increase or considering if your existing storage locations can carry the products you plan to sell. When thinking about storage locations, it can help to think about whether your distributors would easily be able to access and deliver your products.

Learn about the complexities

When scaling up your product distribution, understanding the complexity can help you execute your strategy more efficiently. This involves understanding how manufacturers, distributors, wholesalers and retailers operate. You might have unique billing systems, schedules and processes for each of these, so establishing workflows early can help for a smooth launch.

Create strong sales goals

Creating strong sales goals can help you establish realistic expectations for your new distribution strategy. As you're likely to work with many more products, identifying the costs and revenue opportunities can help you forecast sales better. It can also help to establish risk management and mitigation plans if your projections start out slower than you expect.

Consider pricing

As many companies that use this strategy employ it with lower-priced items, it can benefit you to do the same. For example, common items like bread or snacks have lower prices and can therefore have smaller profit margins. Consider the locations where you sell your products and review the competition's pricing to ensure your products are competitive and you can still earn money.

Related: How to Price a Product (Plus Tips and Why It Matters)

Advantages and disadvantages of intensive distribution

Here are some of the advantages and disadvantages of this distribution model:

Advantages

One clear advantage of distributing products this way is that you have the opportunity to sell more products when you distribute to more locations. As more people recognise and appreciate your brand, your sales can continue to increase. This can also benefit manufacturers and distributors, as everyone has an opportunity to make more money.

You can also find that some people may buy your products even if they don't recognise your brand. Especially at retail locations, people need certain products. If they don't see the brand they normally get, you might see increased interaction with these new customers.

Disadvantages

Though it might have many advantages, there are also several disadvantages to consider. For example, the complexity and the costs for distributing products this way can get high. With multiple manufacturers and distributors, you might also have complex payment models and schedules to employ. To combat this, creating a strong plan that can streamline workflows or minimise costs can help ensure this is worth it for your brand.

With a lower price point structure, this strategy also requires that you sell a lot of products to make money. Consider identifying the lowest possible price you might set to ensure you still make money when executing this strategy. Even with lower profit margins, you can still earn more money than you were making before distributing your products broadly.

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