B: Channels of Distribution

What is the concept of distribution?

• Changes in factors affecting demand, such as consumer preferences, income, or the number of consumers, can shift the entire demand curve. An increase in demand generally leads to a higher equilibrium price and a higher equilibrium quantity.

• the process of delivering products or services from producers to consumers. It encompasses all activities involved in getting products into the hands of customers, including storage, transportation, inventory management, and sales

• The shipping process involves preparing, packaging, and dispatching products for delivery to customers, retailers, or distribution centers. It includes several key steps:

What are examples of direct distribution?

• department stores, specialty stores, supermarkets

• wholesalers, retailers, distributors

• bulk distributors, cash and carry wholesalers

• online sales, manufacturer-owned retail stores, door-to-door sales

What are examples of the retailer channel of distribution?

• door-to-door sales, online sales, manufacturer-owned retail stores

• wholesalers, retailers, distributors

• department stores, specialty stores, supermarkets

• real estate agents, insurance brokers

What are examples of the wholesaler channel of distribution?

• bulk distributors, cash and carry wholesalers

• real estate agents, insurance brokers

• specialty stores, supermarkets

• produce recalls, recycling programs

What is dual distribution?

• manufacturers selling through their website and also through retailers

• manufacturers having control over real estate agents and wholesalers

• fast food chains and retail franchises working together

What is reverse distribution + one example?

• involves using multiple channels to reach consumers. A producer may sell products both directly to consumers and through intermediaries + manufacturers selling through retailers

• Agents or brokers facilitate the sale and transfer of products between producers and buyers but do not take ownership of the goods + real estate agents

• involves the return of products from consumers back to the producers; recycling programs

• a distribution model where individuals or entities (franchisees) operate under the brand and business model of a franchisor + fast-food chains

What is selective distribution + one example?

• aims to make a product available through as many outlets as possible. This strategy is common for convenience products. + soft drinks

• involves using a limited number of outlets to sell a product. This approach is often used for products with specific requirements or premium positioning. + luxury goods

• involves the return of products from consumers back to the producers. It is often associated with product returns, recycling, or product recall. + recycling programs

• a distribution model where individuals or entities (franchisees) operate under the brand and business model of a franchisor + fast-food chains

What is intensive distribution + one example?

• involves using a limited number of outlets to sell a product. This approach is often used for products with specific requirements or premium positioning. + high-end electronics

• involves the return of products from consumers back to the producers. It is often associated with product returns, recycling, or product recalls + recycling programs

• aims to make a product available through as many outlets as possible. This strategy is common for convenience products. + snack foods

• a distribution model where individuals or entities (franchisees) operate under the brand and business model of a franchisor + fast-food chains

When is it most appropriate to use manufacturer-owned retail stores as a channel of distribution?

• When the manufacturer wants full control over the retail experience, including branding, pricing, and customer service

• For products that require demonstration or personal interaction with consumers, such as home appliances or vacuum cleaners.

• When targeting specific demographics or geographic areas with tailored sales pitches.

• When reaching a large number of retailers or businesses efficiently, especially for products with broad appeal.

When is it appropriate to use door-to-door sales as a channel of distribution?

• for businesses looking to reduce distribution costs by eliminating intermediaries

• when targeting specific demographics or geographic areas with tailored sales pitches

• for niche or specialized products that require direct communication with consumers

• for reaching a wide consumer base and providing convenient access to products