Channels of DistributionMrs. WilsonLarry A. Ryle High School

Q.O.D. 3/17/14 Think about the pair of jeans your are

wearing right now or have. Start with the purchase of your jeans

and working backwards, list the steps of how the jeans got to your hands.

Might look something like this

C.O.D. How do products get from the

manufacturer to the retailer? The Consumer?

Manufacturer- business that makes or produces the goods for sale.

Goods move through channels of distribution.

C.O.D. What does distribute mean?

To hand out, to move out Channel of Distribution- the path a

product takes from where it is made to the final consumer.

C.O.D.

Direct Channel- the path leads directly from the manufacturer to the final consumer. Example: Farmer sells his crops @ a

farmer’s market.

C.O.D. Indirect Channel- path follows more than one

step. Item moves from manufacturer to the

wholesaler, then to the retailer, then to the consumer. Example:

1. A flower grower produces 500 dozen tulip bulbs. 2. Wholesaler purchases 250 dozen3. Local florist doesn’t need that many!4. Wholesaler allows local florist to buy 20 dozen. 5. You, the customer purchase a single dozen of the

tulips.

C.O.D. What does this do when items travel

through all these channels? It makes things more expensive! That’s why buying direct is often (not

always) the cheaper way to go.

c.o.d. Wholesaler- buys large quantities of

merchandise and then resells it in smaller quantities to retailers, who in turn sell It to the customer.

Producer Channel- manufacturer also owns its retail stores so the good goes from man. To retail store to consumer. Example: Sam’s Club, some Wal-Mart

products.

Q.O.D.3/19/14 Explain the difference between a direct

channel and an indirect channel. Give an example of each.

Multiple ChannelsLevi’s Jeans

Costco

Macy’s

JC Penney

One Channel Cherokee

Target

C.O.D. Benefits of Retailing

According to the U.S. Dept. of Labor, Bureau of Labor Statistics, the retail industry is the 2nd largest industry nationally. Includes # of stores and the # of

employees.

Q.O.D.3/20/14 What are the 4 main channels of

distribution ?

What is a middleman? Also called intermediary

Members of a channel who assist the producer in getting goods to final user.

Wholesaler Businesses that buy goods from producers & sell

them to retailers. Retailers

Brick & mortar- physical building of a store. Agents

Assist in sale/promotion of goods but DO NOT buy them

Consumer Issues What if a store doesn’t have a brick & mortar

location? E-tailing Catalog Sales E-Bay Infomercials Home Shopping Network Door to Door Flea Markets… Legal issues

How often is a real human used in E-tailing? Returns/ Issues

Group Activity1. Count off by 1, 2 & 3’s

• 1’s represent wholesalers• 2’s represent manufacturers• 3’s represent retailers

2. Develop a list of conflicts from your point of view that might arise between your group and the other two groups.

• Example: Retailers might say that wholesalers are too slow to deliver products

Channels of Distribution Interview with NIKE

“Through what channels does Nike currently sell its shoes?”

“Primarily through a combination of retail accounts, NIKE-owned retail stores, independent distributors and licensees, in the United States and over 160 countries worldwide. The biggest retail account is FootLocker, Inc., which accounts for 10% of Nike’s sales worldwide. Nike also has its own Internet store, www.niketown.com. “

Multi

And Now… What are the pros/cons of each type of

shopping? Internet Flea Markets Infomercials Brick & Mortar Catalogs

Write the answers in your notebook. You can work with a partner if you wish.

Internet Pros

Quicker No speaking/dealing with people Use of credit card Easy. No effort

Cons Spam I.D. theft Charge more/ shipping/handling Must have computer/ internet Not speaking with people

Flea Markets Pros

Negotiate prices Dealing with normal people Cheaper Variety

Cons Knock offs Products don’t last as long Legal issues Communication issues

Infomercials Pros

Credit card Shopping from home Waste time in store Quicker

Cons Expensive Fake promises I.D. theft

Brick and Mortar Pros

Easy Products like to touch Customer service Socialization

Cons Expensive Travel Busy/lines People can be rude Stores can be dirty i.e bed bugs

Q.O.D.2/29/12 Explain what a middle man is. Give an

example.