Describes the different distribution channels, what the choice of channel depends on, how distribution channels are changing to reflect social change, and how markets are changing from products to services
Theme 1 Topic 17
Distribution
Place – the way in which a product or service is distributed from the producer to the consumer. It can be direct
or indirect.
Intermediaries
Wholesalers
Buy the products in bulk from the manufacturer and sell them on to retailers, who sells them directly
on to the consumer
Store large quantities of stock, which can be a saving in storage costs for both the retailer and the
producer
Now, many large supermarkets buy directly from the manufacturer
Retailers – the final stage in the process of distribution e.g. straight to the consumer. Most goods are sold
through retailers
The Main Roles of Retailers Include:
Convenience – place which is easily accessible to the customers
Advice – knowledge to help customers reach an informed decision
Financial assistance – many retailers are able to offer credit terms e.g. buying furniture
After sales support – guarantees or after sales service e.g. for personal computers
Distribution Channels
Distribution – how to get the product to the right place for customers to make their purchase. Involves
physical or online distribution
Distribution Channels – the route taken by a product from the producer to the customer
There are 5 main channels of distribution:
Traditional physical channels
Direct to retailer
Be your own retailer
Direct online
Online retail
Types of Distribution Channel
Direct – where the provider of the product Indirect – where the provider of the product sells to the
sells directly to the customer without a customer through an intermediary possibly supplied by a
wholesaler or agent ‘middle-man’ e.g. an agent or wholesaler. Products pass
through a supply chain.
Two Stage Three Stage
Direct marketing, no intermediary Manufacturer/producer to retailer, then consumer
levels E.g. electrical goods and cars
Manufacturer/producer to
consumer Four Stage
E.g. Jet2 selling a holiday directly to Manufacturer/producer to wholesaler to retailer,
a customer then consumer
E.g. groceries and confectionary
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