Question

My newly established FMCG brand launches its brand in a foreign country, if my firm selected intensive distribution what should be its distribution channel (direct involvement or indirect involvement?) What are their advantages and disadvantages? (international marketing perspective)

Answer 1

Solution:

Intensive distribution is a strategy where a firm tries to sells the products of the brands from as many outlets as possible. This strategy is used by firms that are looking out for increasing the presence of the product. Since this is an FMCG brand it will obviously want its product to have maximum impressions from consumers and hence the choice of intensive distribution strategy.

Our firm has introduced a new brand in a foreign country. We can assume that there is no existing supply chain of the company in a foreign country. Hence, to utilize the intensive distribution strategy we must use existing chain of retailers by involving our product with maximum retailers, distributors as possible to increase the presence of our product. Direct investment into creating the retail outlets that will increase the presence of the product is a time-consuming strategy and a capital intensive strategy. As a foreign brand, we must utilize existing supply chain networks to supply our products while we develop capabilities to introduce our own distribution network. Hence, the use of direct involvement in the existing supply channel is a desirable strategy for accomplishing the intensive distribution of the products of the new brand.

The advantage of using the existing supply chain network is that we are minimizing the risks associated with the supply chain and product market as well. If we invest in specialized distribution outlets and the product fails then we have a huge capital cost that we incur. Also, the spread of products with our own distribution strategy will become time-consuming, instead, we can start with using existing supply chain networks and then simultaneously build our capabilities to develop our own distribution network. The disadvantages of this strategy is the lack of control over the supply chain and end elements of the supply chain networks such as retailers and distributors. This is a big drawback of this strategy.