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Channels of Distribution. Chapter 21. Ch 21 Sec. 1 -- Distribution. The concept of a channel of distribution Who channel members are The different non-store retailing methods How channels of distribution differ for consumer and business-to-business products. What you’ll learn.
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Channels of Distribution Chapter 21
Ch 21 Sec. 1 -- Distribution • The concept of a channel of distribution • Who channel members are • The different non-store retailing methods • How channels of distribution differ for consumer and business-to-business products What you’ll learn
Distribution is Part of the Place Decision • Distribution deals with the physical movement, handling, and storage of goods and services. • Place decision deals with where and how goods and services will be distributed to consumers.
Channel of Distribution The path a product takes from producer or manufacturer to the final user.
Channel Members are called intermediaries • Intermediaries provide value to producers because they often have expertise in certain areas in distribution producers do not have. • Intermediaries are experts in displaying, merchandising, and providing convenient shopping locations and hours for customers.
Channel Members are called intermediaries • Wholesalers – buy large quantities of goods from manufacturers, store the goods, then resell them to other businesses • Rack jobbers – manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays. • Drop shippers –own the goods they sell but do not physically handle the actual products.
Retailers – sell goods to the final consumer for personal use • Brick and mortar retailers • Automatic retailing – vending service • Direct mail and catalogs • TV home shopping • E-tailing – online retailing
Agents – do not own the goods they sell. They bring buyers and sellers together
Direct and Indirect Channels • Direct distribution occurs when the goods or services are sold from the producer directly to the customer – no intermediaries are involved. • Example: A farmer sells corn at a street market. • Indirect distribution involves one or more intermediaries.
Deals with how widely a product is distributed. Distribution Intensity
Three Levels of Distribution Intensity • Exclusive Distribution – Involves protected territories for distribution of a product in a given geographic area. (i.e. Rolex) • Selective Distribution – Limited number of outlets in a given geographic area are used to sell product. (i.e. Nike) • Intensive Distribution – Involves the use of all suitable outlets to sell a product. (i.e. Coca Cola)
