#73- EXPLAIN THE CONCEPT OF DISTRIBUTION
#74- IDENTIFY THE CHANNELS OF DISTRIBUTION

Concept of Distribution
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Movement of products from source of production to final user
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Products move through “channels”
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Includes selection and use of distribution activities: transportation, storage, outlets, and intermediaries

Distribution Activities
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Transportation- method(s) shipping/delivering products to destination SEA, AIR, RAIL, TRUCK,
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Storage – warehouses for storing
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Outlets- where products are sold
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Intermediaries – individual or firm that links producers to other intermediaries or the final consumer

Concept of Distribution
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When final user of product is for a business industrial user.
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When final user of product is used for personal use, it is called a consumer
Industrial User
Consumer

Channel Members
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Called intermediaries – or middlemen
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Reduce the number of contacts required to reach the final user of the product
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Major classifications: wholesaler or retailer

Wholesaler
Person or firm that buys products in large quantities from various suppliers, warehouses them and re-sells to retailers.

Channels and
Channel Members

Wholesaler
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Buys in large quantities from manufacturers
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Stores the goods
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Resells them to other businesses

Retailers
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Purchases from intermediary and re-sells
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Sells goods to final consumer

Direct and Indirect
Channels
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Direct Distribution- occurs when the producer sells goods or services directly to the consumer with no intermediaries
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Indirect Distribution-involves one or more intermediaries


Concept of Distribution
Distribution decisions all made with target market in mind.
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Consider the following:
1) How is each distribution activity important to business?
2)
3)
How does the target market of a product affect its transportation?
How does the target market affect the use of channel intermediaries?

Class Assignment

Work with a partner. Trace the distribution channel of selected product from producer to final consumer.
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Identify how each intermediary (or channel member) marks up the price to make a profit and how that impacts the price to the final consumer.
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Prepare in a PPT slide or presentation.