REVIEW OF DISTRIBUTION
Professor Edward Fox
Cox School of Business
Southern Methodist University
What is a Distribution Channel?
 A set of interdependent organizations
(intermediaries) involved in the process of making a
product or service available for use or consumption
by the consumer or business user
What is a Distribution Channel?
CONSUMER GOODS
Direct Channel
Mfgr
Consumer
Indirect Channels
Mfgr
Mfgr
Wholesaler
Mfgr
Wholesaler
Jobber
Retailer
Consumer
Retailer
Consumer
Retailer
Consumer
Most consumer goods channels include a retailer
Adapted from Prentice Hall
Why Do Manufacturers Distribute
Through Retailers?
 Greater efficiency in making goods available to
target markets
 Enable manufacturers to distribute products more
effectively than they can alone because of retailers’:
 Customer relationships
 Experience and expertise
 Specialization
 Provides consumers with variety
 One-stop-shopping
 Offers a choice
Why Do Retailers Exist?
Make distribution more efficient!
Adapted from Prentice Hall
What Value Do Retailers Add for Consumers?
SERVICE OUTPUTS
Lot Size
Convenience
(Location)
Waiting
Time
Variety
Source: Pete Bucklin
Service Outputs
WHAT DO THEY INVOLVE?
 Inventory management
 Breaking bulk
 Sorting
 Stockpiling
 Variety management
 Geographic distribution
 Transportation
 Convenient, timely access for the end user