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Exclusive distribution involves an agreement between a supplier and a distributor or a distributor’s network. The distributor is authorized to be the only holder and seller of the supplier’s goods and/ or services within a specified geographical location.
An example of an exclusive distributorship agreement was between Apple and AT&T. Apple approached the network provider with the exclusive distributor offer in order to distribute the first iPhone. The reason behind Apple’s plans was that they needed a strong distributor with the ability to support the iPhone with data and voice access.
An exclusive distributor deal between Marc Jacobs and FJ Benjamin is another exclusive distributorship agreement that sought to offer exclusive rights to FJ Benjamin to carry Marc Jacobs in Singapore, Malaysia, and Indonesia. FJ Benjamin was upbeat about the deal because it presented exclusive rights with a high-end fashion label and it also offered them an opportunity to replace Raoul, their folding homegrown fashion brand.
Exclusive distribution is offering a product for sale only in one outlet or the outlets of a single company. For example, in 2007 Kodak announced that their new line of EasyShare printers would be available only in Best Buy stores for the first three months following the product launch.
The retail strategy is often used by manufacturers of high-priced, upscale merchandise like cars or jewelry. Manufacturers grant certain retail outlets exclusive territorial rights to sell the product. Retailers benefit from lack of competition and manufacturers benefit from greater sales committments from the retailer.
Exclusive distribution refers to a system of distribution in which a distribution channel partner, particularly a retail outlet, handles products of only one company among all the competitors in that product category. Whether or not a manufacturer uses exclusive retail outlets depends is to a large extent on the company policy and strategy.
Two factors have substantial influence on on a company's policy in this respect. First, the products that are exclusive or costly, requiring more personal selling effort during the actual sales process, tend to be more suitable for exclusive distribution. Secondly, the sales turnover of the for each retail outlet mus be substantial to justify the higher cost of exclusive distribution.
Perhaps the exclusive dealership is most commonly used for automobiles. Another, class of product where exclusive distribution is used is premium sport shoes and accessories. For example, both Nike and Adidas use exclusive retail outlets extensively.
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