Channels of Distribution

Chapter 21.1
Making the “place” decision or getting the
product into the customers hands
In order for distribution to occur, marketers must
decide on their “channels of distribution” or
how they will get the product to the customer
 The
path a product takes from its
producer (manufacturer) to the final
user (the customer)
Move products from the
manufacturer to the final user
Also known as middlemen
Classified based on
whether or not they take
ownership of the product
– take ownership
– do not take ownership
–buy large quantities of goods from
manufacturers, store the goods, and then resell them to other
– wholesalers that manage inventory and
merchandising for retailers by counting stock, filling it in when needed,
and maintaining store displays
Ex: potato chips, CDs, greeting cards
– own the goods they sell but do not physically
handle the actual products
EX: coal, lumber, chemicals
– sell goods to the final consumer
for personal use
– traditional retailers
that sell goods to the customer from their own physical
Automatic Retailing (vending machines)
Independent Sales
Catalog Retailing
E-tailing (online retail)
TV home shopping
- do not own the goods
they sell. They bring buyers and
sellers together
They are usually paid commission
a fee or percentage of the sale
paid for services rendered
sales of goods or services
directly to the customer, with no intermediaries
1. Selling products at the production site
Luck Stone – sell stone directly from quarry
2. Having a sales force call consumers
3. Using catalogs
Victoria’s Secret
4. Using the Internet
Most commonly used channel for merchandise
that dates quickly or needs servicing
clothing, automobiles, produce
Most common distribution method for staple goods,
which are items that are always carried in stock
and whose styles do not change frequently
flowers, non-perishable food items, candy
–buy products to use in
their operations; also called the business-tobusiness market
 Direct
distribution (the least common
channel in the consumer market) is the
most common in the industrial market
Skim through Chapter 21.1 in the textbook and
complete the following questions
Page 453 – questions 1-3
Page 459 – questions 3, 4, 5
Use each of these words in a sentence that
illustrates your understanding of its definition
Channel of Distribution
Rack Jobbers
Drop Shippers
Brick and Mortar retailers
Direct Distribution
Indirect Distribution
Industrial market