Place Channels of Distribution Channel of Distribution Refers
Place: Channels of Distribution
Channel of Distribution Refers to the path goods and services take from the producer to the consumer n Producer n – Extracts raw material from the ground or grows it. n Manufacturer – Uses raw materials or processed goods to make a product. n Intermediary – Links between the producer and the consumer, i. e. wholesaler, retailer
Distribution Intensity Intense # of Distributors Many Rare Selective Fewer Exclusive Several visits Willing Customer Expectation: to Travel Quick & easy Service Minimal Some High Medium Low Competition
Direct Manufacturer Indirect Manufacturer Wholesaler Retailer Consumer
Direct Distribution Direct link between the producer and the consumer n Ex: Dentist, Farmers Market, many restaurants n Good technique when sales representatives are involved n Producer Consumer
Indirect Distribution Manufacturer n Intermediaries take possession of the goods, add a markup, and then resell them to consumers. Wholesaler Retailer Consumer
Importers May have exclusive rights to sell a product or line of products in another country n Must consider tariffs and transportation costs n May sell through intermediaries n
Wholesalers Buy products in bulk from domestic or foreign sources, resell them to retail stores or other businesses. n Provide service to retailers, such as warehousing, financing, buying, transporting, etc. n
Retailers n Final link in the indirect chain. Sells goods and services to the customer n Ex: Chapters, Superstore
Without an Intermediary 1 2 3 4 5 6 7 8 9 Producer Customers
With an Intermediary 1 4 Store 2 3 5 6
Specialty Channels Any indirect channel of distribution that does not involve a retail store. n Ex: Vending machines, Internet, catalogues, TV n
Modes of Transportation Trains Trucks Planes Pipeline Ships
Activity 1 Complete the table below on the one provided on your handout Item: Channel of Distribution Fresh Cut Flowers A pair of Jeans A Playstation 4
Activity 2 n Take a product from last week’s pricing tasks and give two detailed explanations of the distribution route it may take from the manufacturer to the consumer
- Slides: 15