1. Channel of Distribution
Alright kids! I got the orange juice! Let’s go home!
Channel of Distribution
Attention Employees! Juice has arrived…lets carton!
A PATH A PRODUCT TAKES FROM PRODUCER OR MANUFACTURER TO FINAL USER
Let’s plant some seeds
Ok Acme Employees….Cartoned Orange Juice is being deliviered!
Ok Gang! Lets change these oranges to juice!

2. CHANNEL OF DISTRIBUTION
ANSWERS THE “P” = PLACE

3. INDIRECT DISTRIBUTION
PRODUCER TO CONSUMER
NO INTERMEDIARIES
INDIRECT DISTRIBUTION
PRODUCER TO MANUFACTURER TO RETAILER TO CONSUMER
INTERMEDIARIES ARE INVOLVED

4. CHANNEL MEMBERS INCLUDES PRODUCERS, MANUFACTURERS AND FINAL USERS
ALWAYS BEGINS WITH THE MANUFACTURER OR PRODUCER
CHANNEL ENDS WHEN THE PRODUCT CHANGES FORM

5. INDUSTRIAL USER CONSUMER USER WHEN PURCHASED FOR BUSINESS PURPOSES
WHEN PURCHASED FOR CONSUMER PURPOSES

6. MEMBERS OF CHANNEL INTERMEDIARIES
CHANNEL MEMBERS THAT HELP MOVE PRODUCTS FROM PRODUCER /MANUFACURER TO FINAL USER

7. 2 MAJOR MERCHANT INTERMEDIARIES
WHOLESALER
BUYS LARGE QUANTITIES, STORES THEM AND RESELLS THEM TO OTHER BUSINESSES
RETAILER
TRADITIONAL RETAILERS SELL GOODS TO THE ULTIMATE CONSUMER THROUGH THEIR OWN STORES
CAN BE WHOLESALER TOO

8. AGENT INTERMEDIARY
PART OF THE CHANNEL OF DISTRIBUTION BECAUSE THEY NEGOTIATE THE TITLE OF GOODS
WORK ON COMMISSION

9. 2 MAJOR TYPES OF AGENTS INDEPENDENT MANUFACTURER AGENT BROKERS
REPRESENT SEVERAL RELATED (BUT NOT COMPETITIVE) MANUFACTURERS IN A SPECIFIC INDUSTRY
BROKERS
AGENT FOR DIFFERENT MANUFACTURERS
MORE INVOLVED

10. NON CHANNEL MEMBERS
INCLUDE TRANSPORTATION COMPANIES AND INDEPENDENT STORAGE WAREHOUSES
NEVER TAKE OWNERSHIP

11. PHYSICAL DISTRIBUTION/TRANSPORT COMPANIES
PROCESS OF TRANSPORTING, STORING, HANDLING GOODS TO MAKE THEM AVAILABLE TO CUSTOMER

12. DISTRIBUTION INTENSITY
INTENSIVE DISTRIBUTION
Use of all suitable outlets
Objective = complete marketing coverage
Example:
Motor Oil

13. DISTRIBUTION INTENSITY
SELECTIVE DISTRIBUTION
Limited # of outlets in a given geographical area

14. DISTRIBUTION INTENSITY
EXCLUSIVE DISTRIBUTION
Involves protected territory for distribution of a product in a given geographical area
Example:
Big Mac= only sold at McDonald’s

15. TYPES OF STORAGE
PRIVATE
PUBLIC
DISTRIBUTION
BONDED

16. PRIVATE OWNED BY A BUSINESS COSTLY TO BUILD & MAINTAIN
MEETS SPECIFIC NEEDS OF OWNER
COSTLY TO BUILD & MAINTAIN
TOTAL DISTRIBUTION COSTS
STORAGE 51 %
48% = TRANSPORTATION

17. PUBLIC TYPES COMMODITY – tobacco - agricultural BULK – oil - chemicals
AVAILABLE TO ANY BUSINESS
MUST PAY FOR USE
TYPES
COMMODITY – tobacco - agricultural
BULK – oil - chemicals
COLD – fruits - vegies
HOUSEHOLD GOODS - personal
GENERAL MERCHANDISE – no special handling

18. DISTRIBUTION VARIATION OF PRIVATE/PUBLIC
SPEEDS DELIVERY OF GOODS & MINIMIZES STORAGE COSTS
MAIN FOCUS = MOVE PRODUCTS!!

19. BONDED STORE PRODUCTS THAT REQUIRE THE PAYMENT OF FEDERAL TAX
IMPORTED GOODS
DO NOT HAVE TO PAY TAX UNTIL GOODS ARE TAKEN FROM WAREHOUSE
CAN BE PUBLIC/PRIVATE