Channels of DistributionDistribution and Planning

The 4th P of the Marketing Mix - Place

Vocabulary to KnowChannel Of Distribution

Intermediaries

Wholesalers

Rack Jobbers

Drop Shippers

Retailers

Brick & Mortar Retailers

E-tailing

Agents

Direct Distribution

Indirect Distribution

DistributionThe path a product takes from producer or manufacturer to the final user.

Channel Members.Intermediaries (Middle Men)Any business involved in moving the products from the manufacturer to the final user .

Are valuable because they often have expertise in areas that producers do not have. These areas include:

•Displaying•Merchandising•Creating Locations

Classified by whether or not they take ownership of the goods and services.

Merchant Intermediaries (Merchants)Take ownership of products and services

Ex. Retail Store

Agent Intermediaries (Agents)Do not take ownership of the product or services

Ex. Real Estate Agent

Merchant IntermediariesWholesaler

Buy large quantities of goods from manufacturers, store the goods, and then resell them to other businesses.

Rack Jobbers Manage Inventory and Merchandising

Drop ShippersOwned but never physically handle the products.

RetailerSell goods to the final consumer for personal use.

Brick and Mortar Sell goods to the customer from their own physical stores.

Non Physical RetailersAutomatic retailing, Direct Mail and Catalog retailing, TV home shopping, and online retailing (e-tailing).

AgentsPrimary function is to bring the sellers and the buyers together.

They are not connected with the buyer or seller.

Examples of AgentsTravel Agents, Brokers, Real Estate Agents, Independent Manufacturer’s Representatives.

Agent Intermediaries

Channels of Distribution are classified into 2 categories

Direct and Indirect Channels

Direct distribution Occurs when the goods or services are sold from the producer directly to the customer; no intermediaries are involved.

Indirect distribution Involves one or more intermediaries.

A B

C D

E

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