Place: Channels of Distribution

Channel of Distribution Refers to the path goods and services take from the producer to the consumer Producer Extracts raw material from the ground or grows it. Manufacturer Uses raw materials or processed goods to make a product. Intermediary Links between the producer and the consumer, i.e. wholesaler, retailer

Distribution Intensity Intense Selective Exclusive # of Distributors Many Fewer Rare Customer Expectation: Quick & easy Several visits Willing to Travel Service Minimal Some High Competition High Medium Low

Direct Indirect Manufacturer Manufacturer Wholesaler Retailer Consumer Consumer

Direct Distribution Direct link between the producer and the consumer Ex: Dentist, Farmers Market, many restaurants Good technique when sales representatives are involved Producer Consumer

Indirect Distribution Manufacturer Intermediaries take possession of the goods, add a mark-up, and then resell them to consumers. Wholesaler Retailer Consumer

Importers May have exclusive rights to sell a product or line of products in another country Must consider tariffs and transportation costs May sell through intermediaries

Wholesalers Buy products in bulk from domestic or foreign sources, resell them to retail stores or other businesses. Provide service to retailers, such as warehousing, financing, buying, transporting, etc.

Retailers Final link in the indirect chain. Sells goods and services to the customer Ex: Chapters, Superstore

Without an Intermediary Producer 1 3 2 4 5 6 7 8 9 Customers

With an Intermediary Store 1 2 3 4 5 6

Specialty Channels Any indirect channel of distribution that does not involve a retail store. Ex: Vending machines, Internet, catalogues, TV

Modes of Transportation Trains Trucks Planes Ships Pipeline

Activity 1 Complete the table below on the one provided on your handout Item: Fresh Cut Flowers A pair of Jeans A Playstation 4 Channel of Distribution  

Activity 2 Take a product from last week’s pricing tasks and give two detailed explanations of the distribution route it may take from the manufacturer to the consumer