Explain the concept of a channel of
Identify channel members.
Distinguish between direct and indirect
Explain distribution channels for consumer
products and services.
Describe distribution intensities.
The process of deciding how to get goods in
One of the 4 P’s of marketing-place.
Channels of Distribution- the path a
product takes from its producer or
manufacturer to the final user.
Industrial user-final user when a product
purchased for business use
Consumer-final user when a product
purchased for personal use
Direct and Indirect Channels
When the producer sells goods or services
directly to the customer, with no intermediaries.
Involving one or more intermediaries.
Intermediaries- (middlemen); businesses
involved in sales transactions that move
products from the manufacturer to the
Reduces number of contacts required to reach
the final user
Classified by whether they take ownership of
goods and services
With no intermediaries 25 transactions needed.
MFG MFG MFG MFG MFG
Consumer Consumer Consumer Consumer Consumer
Businesses that buy large quantities of goods
from manufacturers, store the goods, and then
resell them to other businesses.
Take title to goods they buy for resale.
Rack jobbers-wholesalers who manage inventory
and merchandising for retailers by counting stock,
filling it in when needed and maintaining store
Drop shippers-own the goods they sell but do not
physically handle the actual products.
Sell goods to final consumer for personal use.
Brick-and-mortar retailers-sell goods to the
customer from their own physical stores.
Buy products from manufacturers or wholesalers.
Takes title for goods.
E-tailing-online retailing; selling products over the
Intermediaries that bring buyers and sellers together.
Independent Manufacturer’s Representative
Work with several related, but noncompeting
manufacturer’s in a specific industry.
Paid commission on what they sell.
Negotiate a sell, paid a commission, and look for new
Manufacturer Directly to Consumer
Selling products at the production site
Having a sales force call on consumers
Using catalogs or ads to generate sales
Using the internet to make online sales
Manufacturer to Retailer to Consumer
Used for merchandise that dates quickly or needs
Manufacturer to Wholesaler to Retailer to Consumer
Most commonly used for staple goods, which are
items that are always carried in stock and whose
styles do not change frequently
Manufacturer to Agents to Wholesaler to Retailer to
For manufacturers who wish to concentrate on
production and leave sales and distribution to others
Manufacturer to Agents to Retailer to
Used by manufacturers who do not want to
handle their own sales.
Protected territories for distribution of a product in a given
Characteristics: prestige, image, channel control, and high
A limited number of outlets in a given geographic area are
used to sell the product
Select channel members that maintain the image of the
product and are good credit risks, aggressive marketers,
and good inventory planners.
The use of all suitable outlets to sell a product
Objective/Goal: complete market coverage and to
sell to as many customers as possible
Channels of distribution