BUSINESS

Distributing
Products

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What Is the Distribution

Mix?

The combination of
distribution channels
by which a seller gets
its product to end
users

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The Value-Adding Intermediary

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Intermediaries and Distribution

Channels
Intermediaries (once called middlemen)
help to distribute a producers goods
Types of Intermediaries
Agents or Distributors are
responsible for distributing, promoting
and selling the products of company in
a given market
Wholesalers are intermediaries who
sell products to retailers or sometimes
to final consumers
Retailers sell products directly to
consumers
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What Is a Distribution
Channel?

Network of
interdependent
companies through
which a product passes
from producer to end
user

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Channels of Distribution

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Distribution of Consumer
Products
Channel 1: Direct Distribution of Consumer
Products
Direct channel occurs when the product travels from
producer to consumer without intermediaries

Channel 2: Retail Distribution of Consumer

Products
Channel 3: Wholesale Distribution of
Consumer Products
Channel 4: Distribution through Sales
Agents or Brokers
Sales agents (or Brokers) represent producers and
sell to wholesalers, retailers or both
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The Pros and Cons of Using

Intermediaries
Each link in the distribution chain makes a profit by
charging a markup or commission.
The company reduces its cost by using
intermediaries
The more members in the channelthe more
intermediariesthe higher the final price.
Markup levels depend on competitive conditions
and practices in a particular industry.
Ultimately no company selling to a widespread
market can achieve its distribution objectives solely
by itself.
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Distribution Strategies
Intensive distribution is a
strategy by which a product
is distributed through as
many channels as possible
Exclusive distribution is a
strategy by which a
manufacturer grants
exclusive rights to distribute
or sell a product to a limited
number of wholesalers or
retailers
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Distribution Strategies
Selective distribution is a strategy by
which a company uses only wholesalers
and retailers who will give special
attention to specific products

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What Is Physical
Distribution?

Activities needed to
move a product
efficiently from
manufacturer to
consumer

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Warehousing

BUSINESS

Types of Warehouses
Public and Private Warehouses
Private warehouses are owned by and
provide storage for a single company
Public warehouses are independently
owned and operated
Storage Warehouses and Distribution
Centers
Storage warehouses provide storage for
extended periods
Distribution centers provide short-term
storage of products whose demand is both
constant and high
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Warehousing Costs
Inventory control tracks
inventory on hand and ensures
that an adequate supply is in
stock at all times
Materials handling involves the
transportation, arrangement and
orderly retrieval of inventoried
goods
Unitization is a strategy that
calls for standardizing the
weight and form of materials
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Transportation Operations
Major transportation modes:
Trucks
Railroads
Planes
Water carriers
Pipelines

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Transportation Operations
Factors in choosing transportation
methods:
Cost
Nature of the product
Distance
Speed
Customer wants and needs

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THATS ALL!

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