7.01 Summarize the channels of distribution

What is distribution?

The moving of or transferring the ownership of goods and services from the producer to the consumer

What is a channel of distribution?

The path (channel) a product travels from the producer (manufacturer) to the ultimate consumer. This is the “place” element in the marketing mix.

Who is an intermediary (middleman)?

Channel members who assist the producer in getting the goods and services to the final user. There are three types.

The three types of intermediaries: Wholesalers: Companies that purchase large

quantities from manufacturers, store products in warehouses, and sell them to other businesses

Ex: Ingles’ buys soft drinks from Pepsi and Coca Cola manufacturers. Bi Lo buys their canned vegetables from Del Monte or Green Giant manufacturers

Retailers: businesses that sell products to the final user (consumer)

Brick-and-mortar retail: A physical store that sells their products directly to customers.

Ex: Dillard’s, Lowe’s, Ingles. Non-store retail: Way to reach customers through vending

machines, direct mail, catalog retailing, TV home shopping, and e-tailing.

Lance snack machines, Land’s End Catalogs and QVC. Agents: An individual or business that connects the

buyers and sellers. These do not own the products they sell.

Ex: Real estate agent links home buyers to the home seller.

What is a direct channel?Distribution that occurs directly from

the producer to the consumer For example: A consumer buys

apples from an apple farmer at his produce stand.

What is an indirect channel?Distribution that occurs through one or

more intermediaries before reaching the final user For example: The apple farmer sells his

apples to Harris Teeter and Harris Teeter sells them to the consumer.

Or the farmer sells them to Seneca who makes apple juice or applesauce out of them and then sells those to the grocery store who them sells them to the consumer.