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Distribution

Distribution. #73- Explain the concept of distribution #74- Identify the channels of distribution. Concept of Distribution. Movement of products from source of production to final user Products move through “channels”

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Distribution

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  1. Distribution #73- Explain the concept of distribution #74- Identify the channels of distribution

  2. Concept of Distribution • Movement of products from source of production to final user • Products move through “channels” • Includes selection and use of distribution activities: transportation, storage, outlets, and intermediaries

  3. Distribution Activities • Transportation- method(s) shipping/delivering products to destination SEA, AIR, RAIL, TRUCK, • Storage – warehouses for storing • Outlets- where products are sold • Intermediaries – individual or firm that links producers to other intermediaries or the final consumer

  4. Concept of Distribution • When final user of product is for a business industrial user. • When final user of product is used for personal use, it is called a consumer Industrial User Consumer

  5. Channel Members • Called intermediaries – or middlemen • Reduce the number of contacts required to reach the final user of the product • Major classifications: wholesaler or retailer

  6. Wholesaler Person or firm that buys products in large quantities from various suppliers, warehouses them and re-sells to retailers.

  7. Channels and Channel Members

  8. Wholesaler • Buys in large quantities from manufacturers • Stores the goods • Resells them to other businesses

  9. Retailers • Purchases from intermediary and re-sells • Sells goods to final consumer

  10. Direct and Indirect Channels • Direct Distribution- occurs when the producer sells goods or services directly to the consumer with no intermediaries • Indirect Distribution-involves one or more intermediaries

  11. Concept of Distribution • Distribution decisions all made with target market in mind. • Consider the following: • How is each distribution activity important to business? • How does the target market of a product affect its transportation? • How does the target market affect the use of channel intermediaries?

  12. Class Assignment • Work with a partner. Trace the distribution channel of selected product from producer to final consumer. • Identify how each intermediary (or channel member) marks up the price to make a profit and how that impacts the price to the final consumer. • Prepare in a PPT slide or presentation.

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