Distribution Where do products come from?

Channels of Distribution The path from manufacturer to the final user Business – industrial user Person - consumer

Channel Members Manufacturers – make the product Intermediaries – move / resell the product  Wholesalers  Retailers  Agents Consumers – use the product

Wholesalers Buy large quantities of goods Resell the goods to another business Rack jobbers – manage rack and product inside the store Drop shippers – buy product from manufacturer, sell to retailer, and ship directly from one to the other (often raw materials)

Retailers Sell goods to consumers Brick and mortar – physical building you shop at Vending service – machine holds inventory Catalog or online – stores inventory available from convenience of home

Agents Do not own products Make money by connecting manufacturers, wholesalers, or retailers to one another Very common in the food industry

MANUFACTURERS AGENTS WHOLESALE RETAILERS CONSUMERS

Manufacturer to Consumer Factory outlet or farmer’s market Home sales call, door-to-door sales Catalogs from manufacturers Telemarketing Online sales (manufacturer’s site)

MANUFACTURERS AGENTS WHOLESALE RETAILERS CONSUMERS

Manufacturer to Retailer to Consumer Commonly used for merchandise that dates quickly or needs servicing Fashion apparel and automobiles Large chain stores also use this method

MANUFACTURERS AGENTS WHOLESALE RETAILERS CONSUMERS

Manufacturer to Wholesaler to Retailer to Consumer Items that are always carried in stock Items include, supermarket items, flowers, candy, and stationary supplies

MANUFACTURERS AGENTS WHOLESALE RETAILERS CONSUMERS

Manufacturer to Agents to Wholesaler to Retailer to Consumer Manufacturers who don’t want to bother with the selling process Because of so many intermediaries, prices are higher

MANUFACTURERS AGENTS WHOLESALE RETAILERS CONSUMERS

Manufacturer to Agents to Retailers to Consumers Again, manufacturers focused on production and not sales Examples include expensive cookware, meat, cosmetics, and many supermarket items

Distribution Planning Control of product, sales terms, price Cost of storing, shipping, selling Market considerations – foreign markets, e-marketplace, etc.