-the path through which goods & services travel from the vendor to
the consumer or payments for those products travel from the
consumer to the vendor.
- A distribution channel may include several
interconnected intermediaries along the way such as wholesalers,
distributers, agents and retailers.
Channel of distribution
1. Middleman – independent link between producers and consumers
2. Merchant middleman – actually buys goods and takes title/ownership
3. Agent – business unit that negotiates purchases & sales but does not take ownership
4. Wholesaler – a merchant who primarily stores and handles goods in large quantities
5. Retailer – merchant middleman who sells to final consumers
6. Broker – middleman who serves as a go-between for the buyer and seller
7. Manufacturer’s agent – an agent who operates by contract serving a geographic territory
8. Distributor – wholesale middleman in lines with selective or exclusive distribution
9. Jobber – a middleman who buys from manufacturers and sells to retailers
10. Facilitating agent – a firm that performs distribution tasks other than buying, selling and
Major types of Marketing Intermediaries
Major functions Performed
in Channel Distribution
Conventional Channel of Distribution
of Consumer goods
Conventional Channel of Distribution of
in Channel Planning
- Customer characteristics
- Product characteristics
- Intermediary characteristics
- Competitor characteristics
- Company characteristics
- Environmental characteristics
Distribution Coverage required
Channel selection may depend upon the nature of market coverage desired
Intensive distribution – Using as many wholesalers and retailers as possible
Selective distribution – Using only the best available per geographic area
Exclusive distribution – Selected intermediaries are given exclusive rights within a
Degree of control desired
- Achieved by the seller is proportionate to the directness of channel
Total distribution cost
- Channel should be viewed as a total system composed of interdependent subsystems
Objective should be to optimize total system performance
Generally assumed that the total system should be designed to minimize costs,
other things being equal
Channel flexibility – Ability of the manufacturer to adapt to changing conditions
Relationship Marketing in Channels
Types of Vertical Marketing Systems (VMS)
single ownership of each stage in the
a dominant channel member produces
channel coordination through the
exercise of power
similar to conventional channels
formal agreements between channel
involve independent production and
WHOLESALING- Wholesaling is the process of selling goods and services to a
client who will in turn resell those products to other consumers. Wholesalers
can include retailers, organizations who market services to members, and
companies that sell the purchased products under their own brand.
Generally, wholesaling involves providing the customer with a discounted rate
per item in exchange for buying the item in large amounts.
Specialty stores sell just one category of merchandise, although that category
may be further divided into particular departments
Department stores- They are organized by divisions that include several
clothing categories, cosmetics and accessories, jewelry, household goods,
furniture, kitchenware. Each department has a manager, and there are store
designers and decorators, plant maintenance and cleaning divisions, store
security and more.
Warehouse Store-. Products include clothing, automotive parts, sports
equipment, nursery plants, toys, bedding, electronics--and even groceries. Some
stores require annual memberships that offer discounts. Others are just huge
discount operations. Warehouse stores may train employees for multiple
departments and shift you from one area to another as needed.
Grocery Stores- Mom 'n' pop groceries, national chains, organic specialists,
corner delis--grocery stores come in all flavors. Departments may include a
bakery, deli, produce, meat and floral. Resale Stores
Resale or second-hand stores might be considered charity shops, antique stores
or consignment. Items found in these stores vary from donated clothing to
valuable antiques. Resale store employees accept and sort donations, stock racks
and shelves, assist customers and answer questions about the items on display.
Online Stores- They sometimes have real stores as well as virtual ones. But, even
if they exist only online, the stores need a fulfillment division to take orders, find
and pack purchased items from the warehouse, manage billing and shipping and
deal with customer service questions and complaints.
Non store retailing
1. Catalogs and direct mail
- consumers can be targeted effectively and reached home & work.
2. Vending Machines
- sales are beverages/food. Its available 24 hours & placed in variety of places.
3. Television Home shopping
- includes cable channels.
4. Direct sales
- from salesperson to consumers to their homes and offices.
5. Electronic exchange or Internet marketing
- involves collecting information, shopping, and purchasing from internet.