Exclusive marketing

Situation in which a product supplier will offer selected vendors exclusive rights to a specific geographic area, industry and/or marketing channel. Resellers like having the exclusive right to a product because it means limited competition, which in turn leads to higher profit margins. They feel limited competition gives them a better opportunity to develop an area and are more likely to allocate resources to marketing the product. For the product manufacturer, granting exclusive marketing rights carries certain hazards. If a reseller is not reaching quota objectives, there’s little remedial action the manufacturer can take as long as the agreement in place. Manufacturers who grant exclusive rights should, in turn, demand quantity commitments or agreements that ca be cancelled if objectives are not reached.