1. Place: Channels of Distribution

2. 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

3. 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

4. Direct
Indirect
Manufacturer
Manufacturer
Wholesaler
Retailer
Consumer
Consumer

5. 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

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

7. 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

8. 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.

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

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

11. With an Intermediary
Store 1 2 3 4 5 6

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

13. Modes of Transportation
Trains
Trucks
Planes
Ships
Pipeline

14. 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

15. 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