M9 L4 Channels of Distribution
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M9 L4 Channels of Distribution

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M9 L4 Channels of Distribution M9 L4 Channels of Distribution Presentation Transcript

  • Channels of Distribution From the Manufacturer to the Customer
  • Channels of Distribution The path a product takes from producer or manufacturer to the final user.
  • Channel of Distribution
    • How will you get your products to sell?
    • How will you get the products to the customer’s hands?
    • Channels of Distribution are the routes products or services take from the time they are produced to the time they are consumed.
  • Channel Members are called intermediaries
    • Intermediaries provide value to producers because they often have expertise in certain areas that producers do not have.
    • Intermediaries are experts in displaying, merchandising, and providing convenient shopping locations and hours for customers.
  • Channel Members are called intermediaries
    • Wholesalers – buy large quantities of goods from manufacturers, store the goods, then resell them to other businesses
      • Rack jobbers – manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays.
      • Drop shippers –own the goods they sell but do not physically handle the actual products.
  • Retailers – sell goods to the final consumer for personal use
      • Brick and mortar retailers
      • Automatic retailing – vending service
      • Direct mail and catalogs
      • TV home shopping
      • E-tailing – online retailing
  • Agents – do not own the goods they sell. They bring buyers and sellers together
  • Direct and Indirect Channels
    • Direct distribution occurs when the goods or services are sold from the producer directly to the customer – no intermediaries are involved.
      • Example:
      • A farmer sells corn at a street market.
      • Services businesses are additional examples of direct channel
      • * If you take your financial plans to an accounting firm and they audit your books for you. No one else is involved.
  • Direct and Indirect Channels
    • Indirect distribution occurs when the goods or services are sold from the producer through an intermediary to the customer
      • These can include:
      • * Wholesalers – in turn sell to retailers
      • * Retailers – sell to customers
      • * Agents – arrange for sales
  • Channel of Distribution
    • Every time you can remove a person from the distribution chain, you may be able to reduce cost.
    • Before opening your business, you must determine where you will get your product and how you will get it to the customer.
  • Channels in the consumer markets
  • Channels in industrial markets