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DISTRIBUTION UNIT. Diagnostic - pre-test 3/10 – Explain the concept of Distribution Understand basic distribution concepts and channels Identify multiple types of distribution and the channel members. Distribution. Marketing Co-Op. What is Distribution?. Making the “place” decision

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Presentation Transcript
distribution unit
  • Diagnostic - pre-test
  • 3/10 – Explain the concept of Distribution
    • Understand basic distribution concepts and channels
    • Identify multiple types of distribution and the channel members


Marketing Co-Op

what is distribution
What is Distribution?
  • Making the “place” decision
    • Getting the product into the customers hands

Concepts of Distribution:

  • In order for distribution to occur, marketers must decide on their “channels of distribution” or how they will get the product to the customer
what is channel distribution
What is Channel Distribution?

Channels of distribution:

  • The path a product takes from its producer (manufacturer to the final user (the customer)
  • Move products from the manufacturer to the final user
    • Also known as middlemen
  • Classified based on whether or not they takeownershipof the product
    • Merchant Intermediaries – take ownership
    • Agents – do not take ownership
channel members
Channel Members

Wholesalers – business that buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses

channel members1
Channel Members
  • Rack Jobbers – wholesalers that manage inventory and merchandising for retailers by counting stock, filling it in when needed, and maintaining store displays
      • Ex: potato chips, CDs, greeting cards
channel members2
Channel Members
  • Drop Shippers – own the goods they sell but do not physically handle the actual products
      • EX: coal, lumber, chemicals
channel members3
Channel Members

Retailers – sell goods to the final consumer for personal use

channel members4
Channel Members

Brick-and-Mortar – traditional retailers that sell goods to the customer from their own physical store

channel members5
Channel Members

Non-store Retailing

  • Automatic Retailing (vending machines)
  • Direct Mail
  • Catalog Retailing
  • E-tailing (online retail)
  • TV home shopping
  • Agents – do not own the goods they sell. They bring buyers and sellers together
channel a
Channel A

Manufacturer/Producer Directly to Consumer

Direct distribution – sales of goods or services directly to the customer, with no intermediaries

Ways to sell directly to customers

1. Selling products at the production site

Luck Stone – sell stone directly from quarry

2. Having a sales force call on consumers


3. Using catalogs

Victoria’s Secret

4. Using the internet

channel b

Indirect Distribution- using one or more intermediaries

Channel B

Manufacturer to Retailer to Consumer

Most commonly used channel for merchandise that dates quickly or needs servicing

Ex: clothing, automobiles, produce

channel c
Channel C
  • Manufacturer/Producer to Wholesaler to Retailer to Consumer
    • Most common distribution method for staple goods, which are items that are always carried in stock and whose styles do not change frequently

EX: flowers, non-perishable food items, candy

industrial market
Industrial Market

Industrial Market –buy products to use in their operations; also called the business-to-business market

Industrial users have different needs than retail users

  • Direct distribution (the least common channel in the consumer market) is the most common in the industrial market

Read through Chapter 21.1 in the textbook and complete the following questions

Page 453 – questions 1-3

Page 459 – questions 3, 4, 5

Use each of these words in a sentence that illustrates your understanding of its definition

Channel of Distribution Wholesalers

Rack Jobbers Direct Distribution

Drop Shippers Indirect Distribution

Brick and Mortar retailers Industrial market

e-tailing Intermediaries

distribution review
Distribution Review
  • In your own words what is distribution?
  • What’s the difference between rack jobbers and drop shippers?
  • What are three different channels a product could take to get to the consumer?
  • Explain the difference between merchant intermediaries and agents.
  • Provide an example of a brick and mortar retailer and what makes it a brick and mortar store?
distribution test review
Distribution Test Review
  • Explain the difference between direct and indirect distribution.
  • Provide an example of a product that one would buy in an industrial market vs. a consumer market.
  • Define:
    • FOB Destination
    • FOB Factory Freight Prepaid
    • FOB Shipping Point
    • FOB Destination Charges Reverse23
  • What is the key difference between a rack jobber and drop shipper?