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Channels of Distribution. 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. Channel of Distribution.
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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
Channel of Distribution The path or routes, that goods and services take from the producer to the ultimate consumer or industrial user.
Producer (Manufacturer) • Makes or provides goods and services.
Ultimate Consumer • Is anyone who personally uses a good or service to satisfy her/his own wants or needs.
Industrial User • Is a business that buys materials, services, or goods that will be used to make other goods or used in the operation of the company.
Channel Members are called intermediaries • Operate between producer and consumer or user to help in the movement of goods and services.
Types of Intermediaries-Retailers • Retailers: Businesses that buy consumer goods and sell them to the ultimate consumers.
Types of Intermediaries-Wholesalers • Wholesalers: Businesses that buy goods from producers or agents and sell them to retailers. • Wholesalers buy a variety of goods from many producers and sell groups of related products to retailers.
Types of Intermediaries-Agents • Agents: Businesses or individuals that assist in the sale and/or promotion of goods and services but do not buy them from the producer.
Importance of intermediaries • Through the use of intermediaries, producers are able to match their production to the wants and needs of consumers or industrial users. • Intermediaries will have products and services at the right place, at the right times and at the least costs.
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.
