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Objectives » e
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• Define distribution.
• Explain the concept of a channel of
distribution.
• Identify channel members.
• Distinguish between direct and indirect
channels.
• Explain distribution channels for
consumer products and services.
• Describe distribution intensities.
customer s hands.
product takes from its producer or
manufacturer to the final user.
Industrial user-final user when a product
purchased for business use

purchased for personal use

 directly to the customer, with no
intermediaries.

• Indirect distribution:
Involving one or more intermediaries.
• Intermediaries- (middlemen);
businesses involved
in sales transactions that
move product s from
the manufacturer to the
final user.
Reduces number of contacts required to
reach the final user
Classified by whether they take ownership of
goods and services
• Wholesalers
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 ¡obbers-wholesalers who manage inventory
and merchandising for retailers by counting stock,
filling it in when needed and maintaining store
displays.
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 goodsto
the customer from their own physical stores.
Buy products from manufacturers or
wholesalers.
Non-store retailers
Takes title for goods.

Internet
• Agents
Intermediaries that bring buyers and sellers
together.

Independent Manufacturer's Representative

Work with several related, but noncompeting
manufacturets in a specific industry
Paid commission on what they sell.

Brokers
Negotiate a sell, paid a commission, and look for new
customers
• Manufacturer Directlyto Consumer
Selling products at the production
site Having a sales force call on
consumers
Using catalogs or ads to
generate sales
Using telemarketing
Using the internet to make online
sales

• Manufacturer to Retailer to Consumer

Used for merchandisethat dates quickly or needs
Channels •
• 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

Consumer
For manufacturers who wish to concentrate

on
production and leave sales and distribution
to others
Used by manufacturers who do not want to
handle their own sales.
• Exclusive Distribution:
Protected territories for distribution of a product in a
given geographic area
Characteristics: prestige, image, channel control, and
high profit margins

• Selective Distribution:
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

sell to as many customers as possible