M 3.07

Distribution Channels

Distribution Channels

• Intermediary: “middle man”

• # of Channels: the more common the item, the more channels involved

• Distribution intensity: the number of retailers in the channel– Leads to ideal market exposure

Channel w/WholesalerPRODUCER

WHOLESALER

RETAILER

CONSUMER

Channel w/Agent

• Used when producer does not want responsibility for selling activitiesPRODUCER

AGENT

CONSUMER

Adding Value To Product

• Perform channel activities expertly

Technology & Channel Mgt

• Some businesses can distribute most/all of their products via Internet

• Easier to monitor channel members’ activities

• Can decrease the amount of intermediaries necessary

Global Positioning System

• Allows companies to track movements of drivers & vehicles

Impact of Channel Mgt on Customer Service

• Products in stock

• Timeliness

• Communicate effectively

• Limit backorders

Distribution Patterns

• Intensive: use all available outlets to saturate market

• Selective: limited outlets in area

• Exclusive: allows producer to maintain tight control over product