channels of distribution3
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Channels of Distribution
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Channels of Distribution
Path a product takes from its producer or manufacturer to the final user. Personal useconsumer Businessindustrial user
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Channel Members
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Channels Members
Intermediaries Help move products from the manufacturer to the
final user Agent Intermediaries Merchant Intermediaries
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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
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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
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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
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Distribution Channels:
Consumer products/services
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Distribution Channels:
Industrial products/services
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Resources
http://ww2.nscc.edu/gerth_d/MKT2220000/Lecture_Notes/unit13_files/image002.jpg
Marketing Essentials, 2009