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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 DistributionThe 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.
• Agents: Businesses or individuals that assist in the sale and/or promotion of goods and services but do not buy them from the producer.
Types of Intermediaries-Agents
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.
Channels in the consumer markets
Channels in industrial markets