- Canberra College Online

• Place or distribution is one of the
elements of the marketing mix.
• Channel of distribution is the route
taken to get the product from the
factory/business to the customer.
• This process usually involves a
number of intermediaries such as
the wholesaler, agents or retailers.
• A manufacturer is a business that
transforms raw materials into a finished
• A wholesaler is a business that purchases
a product from a manufacturer and sells
the product to a retailer.
• A retailer is a business that sells a product
to the public.
• Agent will represent the manufacturer of
the product and will arrange for the
product to be sold to retailers.
Traditional Distribution Channels
• The four most commonly used channels of
distribution are:
• 1. Producer to customer: is the simplest channel
and involves no intermediaries. Virtually all
services use this method.
• 2. Producer to retailer to customer: retailers buy
from producers and resells to customers. This
channel is often used for bulky or perishable
products such as furniture or fruit.
Traditional Distribution Channels
3. Producer to wholesaler to retailer to customer:
is the most common method used for
distribution of consumer goods.
4. Producer to agent to wholesaler to retailer to
customer: An agent distributes products to
wholesalers but never owns the product.
Agents are paid commission by the producer. A
business that does not have sales
representatives will often use an agent.
Innovative distribution methods — nonstore retailing
• Telemarketing. The logical extension of
telemarketing is the area of interactive
technology, which will allow customers to
purchase via their television or personal
Innovative distribution methods — nonstore retailing
• Internet marketing. There is a current rush
by businesses to use the internet as a
promotional tool. US research suggests that
businesses are moving away from the
telephone and onto the internet for product
communication. It is now relatively easy for
any business to obtain a domain name and a
website and begin marketing its products
via the internet
Main Distribution Issues
• The three main issues that
a marketer will consider
when choosing a
distribution channel are the:
(1) cost – how much money
will it cost to transport the
product to the customers
using this particular
distribution channel.
Main Distribution Issues
(2) efficiency – how quickly can the
product be transported to the places
where customers can purchase the
(3) reach – is the product on sale at a
large number of retail outlets that are
located close to where most customers
live or work.
Channel Choice
• How a business chooses the channel of distribution
best suited to its product depends largely on the
location of the business’s market or market
• Market coverage refers to the number of outlets a
firm chooses for its product.
• A business can decide to cover the market in one of
the three ways as follows:
Channel Choice
1. Intensive distribution.
This occurs when the business wishes to
saturate the market with its product.
Customers can shop at local outlets
and be able to purchase the product.
Many convenience goods, such as
milk and bread are distributed this way.
Channel Choice
Selective distribution:
This involves using only a moderate proportion
of all possible outlets. Clothing, furniture and
electrical appliances are often distributed using
this method.
Channel Choice
• Exclusive
This is the use of only one
retail outlet for a product in
a large geographic area.
This method of distribution
is commonly used for
exclusive, expensive