Exclusive Distribution Example
Give two example of exclusive distribution being in the market along with the reason.
Exclusive distribution occurs when the distributor of a product signs an agreement with a manufacturer to be the only company to sell that product in a given area. When this occurs, the distributor will not sell any products that would compete with those of the manufacturer. These agreements may be very lengthy and complex.
An example of an exclusive distribution agreement was one made by Sagent Technology, Inc. of Palo Alto, California, and Sagent U.K. Ltd. in England. In this situation, Sagent Technology would provide computer software, and Sagent U.K. Ltd. would agree to distribute this software to members of the European Union. The company in England would be the only company to sell this computer software and wouldn’t sell any other competing software.
Another example of an exclusive distribution agreement was one between Laser Shot, Inc. in Texas and Lamperd Less Lethal, Inc. in Canada. In this case, Laser Shot Inc. developed firearms simulators, and Lamperd Less Lethal would be the only company to sell these items in Canada. Lamperd Less Lethal wouldn’t sell any items that would compete with this product.
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 is seen as an agreement between a supplier and a retailer granting the retailer exclusive rights within a specific geogrphical location to carry the supplier's products.
One of the strategic examples is the supplier that often limits the number of products it supplies the retailer. The reason behind this is that a business might want to implement this strategy if it is a small business. Many small businesses have limited resources and may not be able to produce a large amount of products.
Also, exclusive distribution is a way for a supplier to brand its products as inclusive. The reason for this is exclusivity. Limiting the amount of products allows the distributions to offer things like limited editions. That is, SUPPER MASTER CD ELECTONICS as the supplier may supply the retailer the products: electronics and electronic appliances under exclusive rights within the specific goegraphical areas. The same is applicable to other products like automobiles, lavish furniture and brands of clothing.
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Adelakunj Adeola A.
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.