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.