Channels of distribution
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Channels of Distribution. Distribution. The concept of a channel of distribution Who channel members are The different non-store retailing methods How channels of distribution differ for consumer and business-to-business products. What you’ll learn. Channel of Distribution.

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Channels of Distribution

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Channels of Distribution


Distribution

  • The concept of a channel of distribution

  • Who channel members are

  • The different non-store retailing methods

  • How channels of distribution differ for consumer and business-to-business products

What you’ll learn


Channel of Distribution

The path or routes, that goods and services take from the producer to the ultimate consumer or industrial user.


Producer (Manufacturer)

  • Makes or provides goods and services.


Ultimate Consumer

  • Is anyone who personally uses a good or service to satisfy her/his own wants or needs.


Industrial User

  • Is a business that buys materials, services, or goods that will be used to make other goods or used in the operation of the company.


Channel Members are called intermediaries

  • Operate between producer and consumer or user to help in the movement of goods and services.


Types of Intermediaries-Retailers

  • Retailers: Businesses that buy consumer goods and sell them to the ultimate consumers.


Types of Intermediaries-Wholesalers

  • Wholesalers: Businesses that buy goods from producers or agents and sell them to retailers.

    • Wholesalers buy a variety of goods from many producers and sell groups of related products to retailers.


Types of Intermediaries-Agents

  • Agents: Businesses or individuals that assist in the sale and/or promotion of goods and services but do not buy them from the producer.


Importance of intermediaries

  • Through the use of intermediaries, producers are able to match their production to the wants and needs of consumers or industrial users.

  • Intermediaries will have products and services at the right place, at the right times and at the least costs.


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.

  • Indirect distribution involves one or more intermediaries.


Channels in the consumer markets


Channels in industrial markets


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