Distributing through multiple channels in industrial wholesaling: how many and how much?

Abstract

The vast number of channel types and broad range of possible channel configurations makes identifying a product’s most efficient route to end-users challenging for today’s managers. This study analyzes drivers of a firm’s distribution intensity and their respective effects on performance. The simultaneous analysis of the two dimensions of distribution intensity (i.e., the variety of channels and the degree of channel usage) reveals the two decisions to be positively interrelated, reflecting a firm’s intention to achieve market coverage. Moreover, firms align their distribution intensity to their individual context (their business strategy and environmental conditions), leading to efficient intensity levels. Inefficient intensity levels get penalized by market mechanisms. The results reveal that more is not necessarily better: a more offensive-minded intensity of distribution particularly creates a positive performance effect when complex products are being offered and even more so when the customer base contains a large share of demanding key accounts.