Channel of Distribution

A PATH A PRODUCT TAKES FROM PRODUCER OR MANUFACTURER TO FINAL USER

CHANNEL OF DISTRIBUTION

ANSWERS THE “P” = PLACE

DIRECT DISTRIBUTIONPRODUCER TO CONSUMER○NO INTERMEDIARIES

INDIRECT DISTRIBUTIONPRODUCER TO

MANUFACTURER TO RETAILER TO CONSUMER○ INTERMEDIARIES ARE INVOLVED

CHANNEL MEMBERS

INCLUDES PRODUCERS, MANUFACTURERS AND FINAL USERS

ALWAYS BEGINS WITH THE MANUFACTURER OR PRODUCER

CHANNEL ENDS WHEN THE PRODUCT CHANGES FORM

MEMBERS OF CHANNEL

INTERMEDIARIESCHANNEL MEMBERS THAT HELP MOVE

PRODUCTS FROM PRODUCER /MANUFACURER TO FINAL USER

NON CHANNEL MEMBERS

INCLUDE TRANSPORTATION COMPANIES AND INDEPENDENT STORAGE WAREHOUSES

NEVER TAKE OWNERSHIP

PHYSICAL DISTRIBUTION/TRANSPORT COMPANIES

PROCESS OF TRANSPORTING, STORING, HANDLING GOODS TO MAKE THEM AVAILABLE TO CUSTOMER

DISTRIBUTION INTENSITY

INTENSIVE DISTRIBUTIONUse of all suitable outlets○Objective = complete marketing

coverage

Example:Motor Oil

DISTRIBUTION INTENSITY

SELECTIVE DISTRIBUTION

Limited # of outlets in a given geographical area

DISTRIBUTION INTENSITY

EXCLUSIVE DISTRIBUTIONInvolves protected territory for

distribution of a product in a given geographical area

Example:Big Mac= only sold at

McDonald’s

TYPES OF STORAGE

PRIVATE

PUBLIC

DISTRIBUTION

BONDED

PRIVATE OWNED BY A BUSINESS

MEETS SPECIFIC NEEDS OF OWNER

COSTLY TO BUILD & MAINTAIN

TOTAL DISTRIBUTION COSTS STORAGE 51 %48% = TRANSPORTATION

PUBLIC AVAILABLE TO ANY BUSINESS

MUST PAY FOR USE

TYPES COMMODITY – tobacco - agricultural BULK – oil - chemicals COLD – fruits - vegies HOUSEHOLD GOODS - personal GENERAL MERCHANDISE – no

special handling

DISTRIBUTION VARIATION OF PRIVATE/PUBLIC

SPEEDS DELIVERY OF GOODS & MINIMIZES STORAGE COSTS

MAIN FOCUS = MOVE PRODUCTS!!

BONDED STORE PRODUCTS THAT REQUIRE THE

PAYMENT OF FEDERAL TAXIMPORTED GOODS

DO NOT HAVE TO PAY TAX UNTIL GOODS ARE TAKEN FROM WAREHOUSE

CAN BE PUBLIC/PRIVATE