Channels of Distribution

Channels of Distribution

Path a product takes from its producer or manufacturer to the final user. Personal useconsumer Businessindustrial user

Channel Members

Channels Members

Intermediaries Help move products from the manufacturer to the

final user Agent Intermediaries Merchant Intermediaries

Agent Intermediaries (Agents)

CommissionBring buyers and sellers togetherDo not own the goods2 types:

Independent Manufacturers Representative Work with many related, non-competing manufacturers

in an industry Brokers

Bring buyers and sellers together Do not have a continued relationship with either party

Merchant Intermediaries

Take title of the products2 types:

Wholesalers Buy large quantitiesresell to businesses Specialized wholesalers

Rack jobbers- Manage inventory/merchandising for retailers

Drop shipper- Own the goods they sell, but do not handle the products (bulk items)

Retailers Sell goods to the final user for personal use

Direct vs. Indirect Channels

Direct distribution Producer sells goods

directly to the customer

Advantages: Don’t share profit

margins Control over the sales

process

Indirect distribution 1 or more

intermediaries Advantages:

Efficient distribution logistics

Overall costs may be lower

Consumers may expect choice at point of sale

Producers may not have sufficient resources / expertise to sell direct

Distribution Channels:

Consumer products/services

Distribution Channels:

Industrial products/services

Resources

http://ww2.nscc.edu/gerth_d/MKT2220000/Lecture_Notes/unit13_files/image002.jpg

Marketing Essentials, 2009