What are the modalities of a distribution contract?
Modalities of a distribution contract
The main modalities of a distribution contract are:
- Intensive distribution: This modality implies that the products are distributed through as many points of sale as possible in a given market. The goal is to maximize the availability and accessibility of products to reach the largest number of consumers possible.
An example of heavy distribution might be a well-known soft drink brand. These soft drinks are available at a wide variety of outlets, such as supermarkets, convenience stores, restaurants, kiosks, and vending machines. The strategy here is to make sure that products are available in as many places as possible so that consumers can easily find them no matter where they are..
- Selective distribution: In this modality, a limited number of distributors who meet certain criteria established by the provider are carefully selected. The objective is to maintain control over the distribution and to ensure that the chosen distributors are capable of adequately representing the products or services.
Imagine a high-end beauty product brand. These products are selectively distributed through certain high-end stores, luxury boutiques, and beauty salons that meet certain quality and prestige criteria. The idea is to keep tighter control over where products are sold to maintain an image of exclusivity and quality.
- Exclusive distribution: This modality implies that a single distributor or a select group of distributors have exclusive rights to market and sell the products or services of the supplier in a certain geographic area or market. The goal is to establish a close and trusting relationship with the dealer, and limit competition within that area.
An example of exclusive distribution might be a line of luxury watches. These watches are only sold through a specific store in a certain location. So a watch brand might have a single boutique in a major city where its products are exclusively sold. This strategy focuses on exclusivity and creating a unique shopping experience for customers.