1. Chain of Productions and Channels of Distribution
We will look at:
Revision of Chain of Production
Samples of Chain of Production
Primary/Secondary/Tertiary Activities
Channels of Distribution and samples
Wholesalers/Retailers

2. Questions to consider
Definition of Chain of Production/ Channels of Distribution
List out sample chains and channels
Differentiate Primary/Secondary/Tertiary Activities
Explain wholesalers/ retailers/ cash and carry

3. Chain of Production and Channels of Distribution
Think about the steps involved in providing consumers with the following:
Baker selling bread.
A kitchen table and chairs.
Cakes.

4. The Chain of Production
The chain of production refers to the various production or processing stages that a good or service goes through before it is sold.
From this we can identify 3 distinct sectors involved in the manufacturing and distribution of products.
The Primary Sector (Raw Materials from land/sea)
The Secondary Sector (Manufacturing/ Construction)
The Tertiary Sector (Services Providers

6. The Primary Sector
Primary producers take materials from the land or sea or use the land or sea to make a product.
The main industries involved in primary production are:
Agriculture
Forestry
Fishing
Mining
Oil Production.

7. Secondary Producers
These manufacture and process the raw materials supplied by the primary producers.
Some examples would be:
The Building Industry
Technological and Pharmaceutical Firms
Food Processing
Clothing

8. Tertiary Producers
They do not make the products. Instead they supply services that businesses need to operate successfully.
Examples include:
Insurance
Banking
Doctors
Solicitors

9. Exercise: List the following into three columns to show which are primary, which are secondary, and which are tertiary
Insurance Companies Agriculture Packaging Firms Furniture Firms Banks Pharmaceutical Firms Mining Solicitors
Bakeries Doctors Forestry Clothing Firms Oil producers Advertising Industries Fishing

10. Primary
Secondary
Tertiary

11. The Channels of Distribution
Channels of distribution are the methods used to transfer finished goods from manufacturers to consumers. Common examples are:
1 Manufacturer
wholesaler
retailer
consumer
2 Manufacturer
retailer
consumer
3 Manufacturer
consumer
R. Delaney

14. Channels of Distribution
Manufacturer
Consumer
Manufacturer
Retailer
Consumer
Manufacturer
Wholesaler
Retailer
Consumer
Producer
Manufacturer
Wholesaler
Retailer
Consumer

15. Wholesaling
A wholesaler is a company or person that buys large quantities of goods from many manufacturers and sells them in smaller quantities to retailers. E.G. A school may need large stocks of paper, which it purchases directly through the wholesaler in order to receive a discount

16. Cash and Carry Wholesalers
Cash and carry wholesalers act as supermarkets to retailers. Consumers are not permitted to shop in them. E.g. Musgraves.
They differ from the traditional wholesaler because:
They do not give credit.
They do not deliver goods.
They operate on a self-service basis.
They provide ample parking space for retailers.
Their prices tend to be lower than traditional wholesalers.
R. Delaney

17. Functions of a retailer
A retailer is somebody (or an outlet) who sells finished goods to consumers. E.g.Tesco, Johnny Ryan’s, Elvery’s.
Functions of a retailer:
Provides a wide range of goods to consumers in one place
Sells goods to consumers in small quantities
Offers advice to consumers on products they may need
Informs manufacturers of changing consumer trends
Creates a demand for goods by advertising
Arranges finance for consumers for expensive goods
May accept “trade-ins” to make it easier for consumers to buy new goods
R. Delaney

18. Wholesaler aids retailer
Role played by wholesaler
Benefit to retailer
Provides a wide range of goods
Retailers need deal with only a
small number of wholesalers
rather than many manufacturers
Sells goods in small quantities
Retailers do not have to store
large quantities of goods
Delivers goods
Reduces retailer’s transport costs and saves retailer’s time
Provides credit facilities
Retailers may be able to sell all
their stock before payment is due
Provides information about new products coming onto the market
Prevents retailers over-stocking
goods that may be going out of
fashion
R. Delaney

19. Wholesaler aids manufacturer
Role played by wholesaler
Benefit to manufacturer
Buys very large quantities
Manufacturers have a small
number of customers, which
reduces their overhead costs
Stores the goods
Manufacturers are saved the
warehousing costs
Promotes the goods to retailers and consumers
Reduces the manufacturer’s advertising costs
Pays promptly for goods
Gives the manufacturer working
capital for current expenditure
Provides the manufacturer with information from retailers regarding consumer trends
Prevents the manufacturers from
making goods that may be going
out of fashion
R. Delaney

20. List a possible channel of distribution for the following
Cereal
A Tailored Suit for a wedding
Tickets to see The Weeknd at the 3Arena
New Audi