Channels of Distribution Mrs. Wilson Larry A. Ryle High School

Q.O.D. 3/17/14  Think about the pair of jeans your are wearing right now or have.  Start with the purchase of your jeans and working backwards, list the steps of how the jeans got to your hands.

Might look something like this

C.O.D.  How do products get from the manufacturer to the retailer? The Consumer?  Manufacturer - business that makes or produces the goods for sale.  Goods move through channels of distribution.

C.O.D.  What does distribute mean?  To hand out, to move out  Channel of Distribution - the path a product takes from where it is made to the final consumer.

C.O.D.  Direct Channel - the path leads directly from the manufacturer to the final consumer.  Example: Farmer sells his a farmer’s market.

C.O.D.  Indirect Channel- path follows more than one step.  Item moves from manufacturer to the wholesaler, then to the retailer, then to the consumer.  Example: 1. A flower grower produces 500 dozen tulip bulbs. 2. Wholesaler purchases 250 dozen 3. Local florist doesn’t need that many! 4. Wholesaler allows local florist to buy 20 dozen. 5. You, the customer purchase a single dozen of the tulips.

C.O.D.  What does this do when items travel through all these channels?  It makes things more expensive!  That’s why buying direct is often (not always) the cheaper way to go.

c.o.d.  Wholesaler - buys large quantities of merchandise and then resells it in smaller quantities to retailers, who in turn sell It to the customer.  Producer Channel- manufacturer also owns its retail stores so the good goes from man. To retail store to consumer.  Example: Sam’s Club, some Wal-Mart products.

Q.O.D. 3/19/14  Explain the difference between a direct channel and an indirect channel.  Give an example of each.

Multiple Channels Levi ’ s Jeans Costco Macy ’ s JC Penney One Channel Cherokee Target

C.O.D.  Benefits of Retailing  According to the U.S. Dept. of Labor, Bureau of Labor Statistics, the retail industry is the 2 nd largest industry nationally.  Includes # of stores and the # of employees.

Q.O.D. 3/20/14  What are the 4 main channels of distribution ?

What is a middleman?  Also called intermediary  Members of a channel who assist the producer in getting goods to final user.  Wholesaler  Businesses that buy goods from producers & sell them to retailers.  Retailers  Brick & mortar- physical building of a store.  Agents  Assist in sale/promotion of goods but DO NOT buy them

Consumer Issues  What if a store doesn’t have a brick & mortar location?  E-tailing  Catalog Sales  E-Bay  Infomercials  Home Shopping Network  Door to Door  Flea Markets… Legal issues  How often is a real human used in E-tailing?  Returns/ Issues

Group Activity 1. Count off by 1, 2 & 3 ’ s 1 ’ s represent wholesalers 2 ’ s represent manufacturers 3 ’ s represent retailers 2. Develop a list of conflicts from your point of view that might arise between your group and the other two groups. Example: Retailers might say that wholesalers are too slow to deliver products

Channels of Distribution  Interview with NIKE  “ Through what channels does Nike currently sell its shoes? ”  “ Primarily through a combination of retail accounts, NIKE-owned retail stores, independent distributors and licensees, in the United States and over 160 countries worldwide. The biggest retail account is FootLocker, Inc., which accounts for 10% of Nike ’ s sales worldwide. Nike also has its own Internet store, “

Multi

And Now…  What are the pros/cons of each type of shopping?  Internet  Flea Markets  Infomercials  Brick & Mortar  Catalogs  Write the answers in your notebook. You can work with a partner if you wish.

 Internet  Pros  Quicker  No speaking/dealing with people  Use of credit card  Easy. No effort  Cons  Spam  I.D. theft  Charge more/ shipping/handling  Must have computer/ internet  Not speaking with people

 Flea Markets  Pros  Negotiate prices  Dealing with normal people  Cheaper  Variety  Cons  Knock offs  Products don’t last as long  Legal issues  Communication issues

 Infomercials  Pros  Credit card  Shopping from home  Waste time in store  Quicker  Cons  Expensive  Fake promises  I.D. theft

Brick and Mortar  Pros  Easy  Products like to touch  Customer service  Socialization  Cons  Expensive  Travel  Busy/lines  People can be rude  Stores can be dirty i.e bed bugs

Q.O.D. 2/29/12  Explain what a middle man is. Give an example.