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M9 L4 Channels of Distribution

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NCVPS
Small Business

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M9 L4 Channels of Distribution

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

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